Report to/Rapport au :
Comité de l'environnement
and Council / et au Conseil
07 January 2011/ le 07 janvier 2011
Submitted by/Soumis par : Nancy Schepers, Deputy City Manager, Directrice municipale
adjointe, Infrastructure
Services and Community Sustainability, Services d'infrastructure
et Viabilité des collectivités
Contact Person/Personne-ressource : Johanne
Levesque, Director/Directrice, Community Sustainability/Viabilité des
collectivités
(613)
580-2424 x12257, Johanne.Levesque@ottawa.ca
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CREATION
OF THE CITY OF OTTAWA LARGE Rooftop solar ENERGY PROGRAM |
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OBJET
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CRÉATION DU PROGRAMME D’ÉNERGIE SOLAIRE SUR
LES GRANDS TOITS DE LA VILLE D’OTTAWA |
That the Environment Committee recommend that
Council:
1.
Approve an
agreement with Energy Ottawa Limited to install solar energy panels on up to
twenty (20) of the City’s largest rooftops, as part of an enhanced partnership
with Energy Ottawa as the City’s preferred energy partner;
2.
Authorize
the City Manager to negotiate and finalize the rooftop solar agreement with Energy
Ottawa for a period of twenty (20) years, based
on the terms and conditions described in this report; and
3.
Direct that staff
report back to committee in Q1 2012 on the results of the program and its
progress to date.
RECOMMANDATION DU
RAPPORT
Que le Comité de l’environnement recommande au
Conseil :
1.
d’approuver
une entente avec Énergie Ottawa limitée en vue d’installer des panneaux
solaires sur au plus vingt (20) des plus grands toits d’Ottawa dans le cadre
d’un partenariat amélioré avec Énergie Ottawa à titre de partenaire privilégié
en matière d’énergie de la Ville;
2.
d’autoriser
le directeur municipal à négocier et à finaliser l’entente relative aux
panneaux solaires de grands toits sur la base d’une location pendant vingt (20)
ans à Énergie Ottawa; et
3.
De
demander au personnel de faire rapport au Comité durant le 1er trimestre de
2012 sur les résultats de résumer les progrès du programme à ce jour.
Municipalities across the province are increasingly aware of the importance of sustainability and the impact of fossil fuel use on GHG emissions and climate change. This recognition has accelerated with the passing of the Ontario Green Energy Act and its related Feed-in-Tariff (FIT) and MicroFIT Programs, which provide long-term price guarantees for renewable electricity generators in Ontario as a way to encourage the development of green energy.
Since the approval of the Act on May 14, 2009, the City has taken a number of important steps to increase its solar energy generation capacity and position itself as a green energy leader:
§
In
May 2010, the City partnered with Energy Ottawa to create a new solar energy
park on City-owned lands near the Trail Road Waste Facility
(ACS2010-ICS-CSS-0004). Energy Ottawa
will act as the owner/operator of both fields with the resulting green power to
be sold to the provincial energy grid. When
constructed, the ground-based solar array will generate approximately 12 MW of
energy, enough to power approximately 1,500 homes. Once the project has been approved by the
Ontario Power Authority, it is expected to be in commercial
operation in 24 to 36 months;
§
In
the 2010 budget, Council approved funding to construct two rooftop solar pilots
as part of the Smart Energy Initiative (one of the projects associated with the
City’s Service Innovation and Efficiency Program). The solar energy pilots are located on the rooftops
of Ottawa City Hall (110 Laurier) and the Integrated Transit Operations Control
Centre (875 Belfast Road). Each array is 10 kW in size, and combined, will
generate enough electricity to power approximately 2.5 homes. Both solar arrays were installed in Fall 2010
and are now connected to the provincial energy grid. Revenues under microFIT will begin once the
final contract with Ontario Power Authority is signed.
An opportunity now exists for the City of Ottawa to partner with Energy Ottawa (a wholly-owned subsidiary of Hydro Ottawa, and therefore 100 per cent owned by the City), to significantly expand the rooftop solar program. To realize this vision, the City of Ottawa intends to build on its relationship with Energy Ottawa as the City’s preferred energy partner, by leasing its largest rooftops for rooftop solar photovoltaic (PV) array systems. It is expected that when fully implemented, the amount of solar energy produced will be enough to power more than 300 homes.
This report discusses the rooftop solar opportunity, the nature of the recommended partnership with Energy Ottawa, and the resulting benefits for both the City and Hydro Ottawa/Energy Ottawa. City staff is also exploring how the City can best support the construction of small-scale community-led solar energy arrays. A number of private firms have also approached the City in terms of accessing its rooftops. These discussions and related recommendations will be the subject of a further report to Environment Committee.
The Province of Ontario has set an ambitious goal to become a North American leader in the promotion and production of renewable energy. Central to this goal is the provincial Feed-in-Tariff (FIT) program, which is a cornerstone of the Ontario Green Energy Act. The introduction of the Ontario FIT program (and the MicroFIT program for smaller installations) together with increasing municipal commitments to renewable energy have created incentives for many Ontario cities to develop their own solar initiatives and programs.
Ontario Feed-in-Tariff (FIT) and MicroFIT Programs
Launched in September 2009, the FIT and MicroFIT programs provide long-term price guarantees for renewable electricity generators in Ontario. Prices paid under the programs vary by energy source and the size of the project. For solar photovoltaic energy, the pricing for roof-mounted installations is as follows:
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Rooftop Solar PV
Pricing |
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Size |
Contract Price (¢/kWh) |
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≤ 10kW (microFIT) |
80.2 |
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> 10kW ≤ 250kW |
71.3 |
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> 250kW ≤ 500kW |
63.5 |
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> 500kW |
53.9 |
This rate is guaranteed for twenty (20) years.
Not surprisingly, the FIT and MicroFIT programs have created significant interest in renewable energy facilities in Ontario. By early December 2010, the OPA announced that it had offered more than 1,530 contracts totalling 2,693 MW of renewable energy – enough electricity to power more than 620,000 homes. The majority of projects submitted thus far are for solar generation.
It is important to note that all
projects under the FIT and MicroFIT programs are contingent upon receiving
approval (i.e. a contract) from the OPA and that approval is not guaranteed. There
are a number of factors which may impact whether or not a project is approved
by the OPA including whether domestic
content requirements are met (i.e. the percentage of labour and materials that
must be sourced from within the province), the ability of the provincial power
grid to accommodate the new power source, and whether or not the application
accommodates, if any, updates and changes of rules made to the program.
Energy Ottawa will take these factors into consideration when conducting
technical and financial due diligence on the viability and rate of return of the
project, which could impact whether the project proceeds, as well as the size
and timing.
Ontario Municipal Approaches
to Rooftop Solar
Best practice research shows that there are a number of Ontario municipalities which are beginning to install rooftop solar, and that most are partnering with their local hydro or energy provider. Under these partnerships, the city provides rooftop space to its hydro or energy company, which in turn purchases, installs, maintains and delivers the solar program while providing a portion of revenues earned through the FIT and/or MicroFIT programs back to the city via a lease payment.
Examples of cities that are using similar models include:
·
Hamilton
– In July 2010, the City of Hamilton announced that it would partner with Horizon
Energy Solutions Inc. (a subsidiary of Horizon Holding Inc. which is jointly
owned by Hamilton Utilities Corporation and St. Catharine’s Hydro) who will finance,
design, install and maintain solar PV systems on a number of City-owned
facilities. It should be noted that Hamilton Utilities Corp. itself is wholly
owned by the City of Hamilton. The City
of Hamilton is expected to receive over $1 million in revenue from the
partnership over a period of 20 years, subject to confirmation of technical and
economic feasibility.
·
Thunder
Bay – In 2010, the City of Thunder Bay partnered with Thunder Bay Hydro
Corporation (wholly owned by the City) who will finance, design, install and
maintain solar PV systems. Thunder Bay
Hydro will invest $14 million in solar PV installations.
· City of Vaughan – In 2009, the City of Vaughan through its wholly-owned subsidiary Vaughan Holdings Inc. (VHI) is investing $27.2 million in equity shares in PowerStream (jointly owned by VHI, Barrie Hydro and Markham Enterprise Corporation) to install solar panels on City and commercial rooftops. The equity financing will be done over a period of time, and further investments are being made towards other renewable energy initiatives, such as geothermal and wind systems.
This model has been preferred over the direct ownership/direct procurement model as it eliminates the need for direct capital investment. All direct financial, operational and technological risks are assumed by the utility company, while allowing the municipality to generate a new revenue stream where none existed before. This arrangement also means that the municipality does not have to have the resources to implement the program in house, including qualified solar installers with the necessary solar PV training. In addition, the hydro and energy providers that are partly or wholly-owned by municipalities, are well established entities with generally excellent credit ratings and have significant bargaining power when purchasing the solar PV systems.
Not all municipalities are using the model described above. Both the City of Brockville and the Region of Waterloo are implementing solar projects through the direct procurement model. In this approach, the municipality purchases, installs and maintains the solar PV array(s) directly.
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Brockville
– In January 2009, the City of Brockville announced that it would invest $1.4 million
to build a 221 kW system, which is estimated to generate just over 3,000 kWh
annually, enough to power 23 homes. The City estimates that it will receive revenues
of approximately $200,000 annually. In August 2010, Brockville’s FIT
application was approved by the OPA.
· Waterloo – In January 2010, the Regional Municipality of Waterloo accepted a proposal from ARISE Technologies Corporation to supply and installation of a 150 kW system, at a cost of approximately $1.1 million. The system is estimated to generate over 170,000 kWh annually, and provide the Region with approximately $124,000 in revenues each year. To date, Waterloo awaits approval from the OPA.
City of Ottawa – Energy Ottawa
Strategic Energy Partnership
As the City’s preferred energy partner, the City now wishes to further extend its partnership with Energy Ottawa to construct rooftop solar arrays on large City-owned buildings. The proposed partnership is very similar in structure to the one approved by Council in May 2010 for the Trail Road Solar Energy Park - with Energy Ottawa leasing the space from the City, constructing, owning and operating the facility, and providing financial benefits to the City as a result of revenues generated.
This partnership is consistent with the approach taken by the majority of municipalities described above. It is also consistent with Hydro Ottawa’s 2008-2012 Strategic Direction, endorsed by Council in June 2008, which identifies as a key priority a growing relationship between Hydro Ottawa and the City in order to reduce the costs of municipal services and at the same time enhance energy-conservation and renewable energy efforts.
City of Ottawa Large Building Profile
There are a number of City-owned facilities that are potentially suited for large-scale rooftop solar (that is a roof area sufficient to generate more than 10 kW per site) given their large rooftop space and relatively new roofs. Below is a list of potential sites for rooftop leases:
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Site Name |
Street Address |
Est. Area (sq. ft) |
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1585
Tenth Line Rd |
75,000+ |
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Nepean
Sportsplex |
1701
Woodroffe Ave |
40,000+ |
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Jim
Durrell Recreation Complex |
1265
Walkley Rd |
40,000+ |
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Kanata
Recreation Complex |
100
Walter Baker Pl |
40,000+ |
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OC
Transpo St Laurent South Garage |
1500
St Laurent Blvd |
30,000+ |
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Osgoode Arena & Community Centre |
5660
Osgoode Main St. |
20,000+ |
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R. J. Kennedy Arena & Community Hall |
1115
Dunning Rd |
20,000+ |
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Goulbourn Recreation Complex |
1500
Shea Rd |
20,000+ |
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Merivale Arena |
1765
Merivale Rd |
20,000+ |
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Jack Charron Arena |
10
McKitrick Dr |
20,000+ |
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Fred G. Barrett Arena |
4561
Bank St |
20,000+ |
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Bernard Grandmaitre Arena |
309
McArthur Ave |
20,000+ |
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Equestrian Park |
401
Corkstown Rd |
20,000+ |
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St. Laurent Complex |
515
Cote St |
20,000 |
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Kanata Leisure Centre |
70
Aird Pl |
15,000 |
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Ben Franklin Place |
101
Centrepointe Dr |
10,000 |
It is important to note that only buildings having rooftop spaces greater than 10,000 square feet, with planned replacements in 2025 or later were selected. Where a rooftop requires replacement during the life of the 20-year contact, Energy Ottawa will be responsible for the dismantling and removal of the array during repairs. The above list also identifies buildings that could accommodate solar PV systems higher than 40 kW, a threshold that Energy Ottawa requires for the project to be financially viable.
Details
of the City of Ottawa-Energy Ottawa Rooftop Solar Partnership
The main elements of the rooftop solar partnership are as follows:
City of Ottawa
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At the end of the agreement, the City
can choose to purchase the solar arrays from Energy Ottawa (based upon a
mutually agreeable market value determined at that time); extend Energy
Ottawa’s lease agreement; or request that the rooftop arrays be decommissioned,
at the cost of Energy Ottawa.
Energy Ottawa
The partnership is expected to provide the following benefits:
City of Ottawa
Energy Ottawa and Hydro Ottawa
Project Timeline
Subject to Council approval of this report, Energy Ottawa will work with City staff to carry out detailed technical and financial assessments of all sites this winter/spring to determine rooftop feasibility and priority. It is anticipated that FIT applications can be prepared in parallel with this process and be submitted to the OPA in Q2/Q3 2011.
It is intended that a
total of up to 20 systems will be constructed over a period of three years - five
projects in the first year, seven projects in year two and eight projects in
year three.
Subject to confirmation and technical and financial feasibility and subsequent contract offers from the OPA, it is anticipated that the first solar arrays could be constructed and operational in 2012.
In Q1 2012, staff
will report back to committee on the results of the program and its progress to
date.
The creation of the Large Rooftop Solar Energy Program will create a new source of clean, renewable energy and reduce the amount of greenhouse gas emissions produced from an equivalent amount of conventional energy. It is expected that when fully implemented, the amount of solar energy produced will be enough to power more than 300 homes.
The project is directly aligned with both the Choosing our Future initiative and its Energy goal which aims to have energy used efficiently and be supplied from green, renewable sources and the City’s Environmental Strategy, with its supporting document, Air Quality and Climate Change Management Plan, which seeks to “promote and facilitate the development of new alternative energy projects using green or renewable energy”.
Three City facilities have been identified in the rural area for large-scale rooftop solar - R.J. Kennedy Arena and Community Hall, Osgoode Arena and Community Centre and Goulbourn Recreation Complex, which are located within the village limits of Cumberland, Osgoode, and Goulbourn respectively.
There will be no disturbance of the existing rural landscape or to rural land uses with the approval of the recommendations contained within this report. By introducing the majority of solar PV arrays onto existing City rooftops within the existing urban boundary and village limits, major agricultural areas will remain protected from further fragmentation and competing uses. In effect the recommendations within this report will maintain the rural heritage and rural landscape.
CONSULTATION
Staff from Building and Technical Services, Real Estate Partnership and Development, Environmental Sustainability, Finance and Legal Services have provided input into the development of this report. Hydro Ottawa and Energy Ottawa staff was also consulted in the preparation of this report.
Public Works Comments:
Public Works staff have reviewed the report and support the recommendations. Should Committee and Council approve this report, Public Works staff will assist the Community Sustainability Department in implementing the recommendations.
N/A
Legal assistance will be required in negotiating and executing the agreement with Energy Ottawa. This agreement once negotiated will result in a long term obligation of the City in accordance with the terms and conditions set out in the agreement. There are no additional legal/risk management implications.
This initiative is directly aligned with the following City Strategic Plan priorities - Solid Waste and the Environment (Objective 1- Enhance environmental sustainability and reduce greenhouse gas emissions) and Sustainable Finances (Objectives 2 - Increase new sources of funding).
N/A
It is anticipated that based on the terms of the agreement there will be no incremental cost to the City to develop and operate the roof-mounted solar PV arrays throughout the City of Ottawa. Energy Ottawa will be responsible for funding all costs associated with the design, construction, operation and maintenance of the solar arrays.
Energy Ottawa will enter into a lease agreement for the properties with the City subject to receiving approval from the Ontario FIT Program and assuming the final due diligence on the project demonstrates an appropriate financial return. The estimated effective date is 2012.
A potential annual lease payment of $200,000 - $250,000 would be receivable, subject to final negotiations. Lease payments are due as each site becomes fully operational and is payable for a 20-year term.
The City would potentially benefit from increased Hydro Ottawa dividends where the utility’s annual net income increases as a result of the FIT program.
The tax assessment unit will also determine the extent of additional realty tax revenues that may be generated by the project.
Upon approval by Council, staff will work with Energy Ottawa to carry the technical assessments of the rooftops, and negotiate and finalize the rooftop lease agreement with Energy Ottawa.