As FIT fades away, competitive contracting is RE’s next pathway

by Myrna Velasco March 7, 2016

http://www.mb.com.ph/as-fit-fades-away-competitive-contracting-is-res-next-pathway/

Ontario, Canada – As feed-in-tariff (FIT) incentives for renewable energy fade away, competitive bidding takes the reign on supply procurement from clean energy sources.

In developed markets, staving off the FIT system as guarantee to project sponsors’ revenue stream not only casts some sign of a power market’s maturity but similarly marks the investors’ true-to-form contribution to solving the world’s climate change dilemmas.

Kim Warren, vice president for Market and System Operations of Ontario’s Independent Electricity System Operator (IESO), has noted that their power market is already winding down on FIT incentives for renewable energy investments.

So far, many markets can already afford to be “not too covetous’ when it comes to FIT availments – the form of subsidy for RE investments that are either government doled-out or extracted from consumers via their electric bills.

That had been on account of developments that RE technology costs have been precipitously going down – by roughly 80-percent for solar; while that of wind had been falling by about 50-percent.

For Ontario, the alternative marketing strategy for RE capacities is done through competitive bidding as another layer of its spot market – or what they refer to as “large renewable procurement” system.

“FIT has been into play from 2010, but that is now winding down. Now, we’re having our competitive model for RE capacity procurement,” Warren said. Ontario power market itself has 4,000 megawatts of wind capacity and about 300MW of on-grid solar installations.

In laying down the auction parameters, the Ontario power market which is integrated with the system operator, also looks at the transmission reliability variable when it comes to accepting capacity offers from RE developments.

Warren further explained, “basically the market determines available transmission zone with acceptable amount of congestion. They will then set up targets that they hope to hit based on technology and a price ceiling. And then they allow developers to compete.