NS Moves Closer to Commercial-scale Tidal Renewable Electricity Generation

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NS Moves Closer to Commercial-scale Tidal Renewable Electricity Generation

January 27, 2014

By Sara Mahaney, Former Lawyer at McInnes Cooper,
Matthew Clarke, Former Lawyer at McInnes Cooper

On January 21, 2014, the Nova Scotia government amended the Renewable Electricity Regulations, effective immediately. The amendments move N.S. forward in its goal of achieving commercial-scale tidal renewable electricity generation. The highlights of the amendments are:

Developmental Tidal Arrays Eligible For Feed-In-Tariff PPA. Privately-owned “developmental tidal arrays” – as defined in the amended Regulations – are now eligible to apply for a feed-in-tariff approval and therefore a power purchase agreement (PPA) with Nova Scotia Power Inc. (NSPI).
Development Tidal Array Tariff. The N.S. Utility and Review Board (UARB) recently approved the pricing for energy purchased pursuant to the developmental tidal array feed-in tariff. The Regulations establish the criteria for a project to qualify for the tariff.
Developmental Tidal Feed-In Tariff Approval. The amendments also set out the process by which a developer can apply for a developmental tidal array feed-in tariff approval (including the contents of the application), establish a “one-window” committee, and expand Ministerial discretion in approving or rejecting an application.

Interested tidal energy developers – and their lenders – will likely welcome these amendments to the Regulations. However, it remains to be seen how the Minister and his Department put them into practice.

Developmental Tidal Arrays Eligible for Feed-In Tariff PPA

Eligibility. The Regulations now provide that privately-owned developmental tidal arrays qualify as a class of generator eligible to receive a feed-in-tariff approval under the Electricity Act and Regulations. Therefore, such developmental tidal array projects may be eligible for a PPA with NSPI.

Definitions. The amendments add some key definitions:

“Developmental Tidal Array”. This term is now defined as:
- a tidal generation facility consisting of a single device with a capacity greater than 0.5 MW; or:
- a tidal generation facility consisting of multiple devices, each with a capacity greater than 0.5 MW.
“Device”. “Device” in the definition of “Developmental Tidal Array” means one or more turbines on a single frame or platform.
“Turbine”. A “turbine” is defined as a rotating blade or appliance designed to capture the kinetic energy of the ocean.

Open Berths. In December 2013, the N.S. provincial government closed its Request for Proposals for the open berth at the Bay of Fundy’s Fundy Ocean Research Center for Energy (FORCE) research site. On January 20, 2014, the Province announced that there are three qualified bidders and that an additional berth has opened up at the FORCE site. We expect the Province to award both berths at the same time from the pool of qualified bidders in March 2014.

Developmental Tidal Array Tariff

In November 2013, the UARB approved the pricing for energy purchased pursuant to the developmental tidal array feed-in tariff.

Rates. The UARB approved energy rates ranging from $575 per MWh to $375 per MWh. The rates depends upon several criteria, including the project’s location (i.e., whether it is located at the FORCE site or not) and its phase of operation.

Qualification Criteria. To qualify for the developmental tidal array tariff, the generation facility must:

Be located in the Province of N.S., now defined to include the offshore territory under N.S. jurisdiction pursuant to the federal-provincial offshore regime.
Meet the definition of “developmental tidal array”.
Interconnect with the electrical grid.
Have been issued a feed-in tariff approval.

Developmental Tidal Fee-in Tariff Approval

The Regulations now set out the process for a developer to apply for a developmental tidal array feed-in tariff approval.

Responsive Only. Developers may only apply for approval in response to an invitation or a public call for applications from the Minister of Energy. The Minister may issue an invitation or make a public call for applications at any time, in respect of any location, and on any terms, he considers appropriate. The Minister hasn’t issued an invitation or call yet, and the Regulations don’t indicate when he might do so.

Application Contents. The amended Regulations set out the required contents of an application for a developmental tidal array feed-in tariff approval. These include plans concerning such information as the project’s financial viability, risk management and stakeholder engagement. The Minister may waive some or all of the required information if he’s satisfied that the applicant has previously provided sufficient information to the Department of Energy; for example, the applicant may have provided the required information in response to a prior RFP.

“One-window” Committee. The Regulations create a “one-window” committee of specific provincial and federal government agencies to coordinate applications for developmental tidal array feed-in tariff approvals. The “one-window” committee gives the applicant a single government point of contact to coordinate project permitting matters.

Ministerial Discretion. The amended Regulations expand the scope of the Minister’s discretion in deciding whether to issue an approval. The Minister may approve or reject an application for a feed-in tariff approval if both:

The application satisfies the requirements of the Act and the Regulations.
The Minister determines the application is consistent with the Department’s policies and objectives for the development of renewable low-impact electricity resources and industries.

The Minister may also take into account any matter he considers relevant and in the public interest.

Deemed PPA. A developer that receives a developmental tidal array feed-in tariff approval is now deemed to have entered into a PPA with NSPI effective from the date of the approval – rather than the date NSPI put the applicant in the interconnection queue, as was the case before the amendments.

PPA Form. The Department has previously indicated that it is preparing a standard form of PPA for the Developmental Tidal Feed-in Tariff program. This form will be subject to UARB approval. We expect the UARB will hold a hearing to consider the proposed form of PPA, and that interested parties will have an opportunity to make submissions regarding it.

Moving Forward – But Not Yet at Goal

Interested tidal energy developers – and their lenders – will likely welcome these amendments to the Regulations:

Policy Made Law. The Regulations formally establish in legislation what the Province had previously only expressed as policy: commercial-scale tidal projects may qualify for a feed-in-tariff approval under the regime set out in the Act and Regulations.

Application Process. The Regulations also add clarity to the application process.

However, there are still some questions about when the Minister will call for applications and how he will exercise his enhanced discretionary power in assessing applications. We must now wait to see how the Minister and his Department put these new Regulations into practice.

Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Renewable Energy Team to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

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