How Does Ontario's Cap and Trade System Affect my Business?

In conjunction with the Canadian Independent Petroleum Marketers Association during their Canadian Fuel Marketing Conference , Ciara De Jong, Principal Consulting at ORTECH Consulting Inc will be conducting a one hour workshop on How Does Ontario's Cap and Trade System Affect my Business?

ABSTRACT: Ontario’s first Auction under the Cap-and-Trade program is scheduled for March 22, 2017. The format of the auction has created a high degree of uncertainty amongst participants, not only related to the workings of the auction platform but also regarding the price and quantity to bid.   This workshop will provide a summary of what took place at the March Auction including lessons learned and key developments.  Were auction participants in a “buying mood” or do the results indicate a more of a “wait and see approach”?  Although not intended as auction advice, the workshop will also delve into what your business may consider in moving forward which such topics as reporting and Cap and Trade strategies.

To register, please click here.

Making it happen: 2017, the year for US Offshore Wind

The first offshore turbines arrived off the coast of New England last year in the form of a $300m utility-scale scheme called Block Island. Now, new projects are starting to follow suit and the US Offshore Wind Industry is starting to gather pace.

There is every reason to believe that the US will follow the same course as Europe and embrace offshore wind as part of a wider drive to decarbonize electricity generation. For example, the Commonwealth of Massachusetts has enacted a law that requires its utilities to buy 1.6GW of their energy from offshore sources by 2027.

To read more, click here.

or

For more information, visit www.windenergyupdate.com/offshore-usa or contact Adam Minkley at adam@WindEnergyUpdate.com

Kontrol Energy Completes Acquisition of Ortech Consulting Inc.

TORONTO, Feb. 10, 2017 /CNW/ - Kontrol Energy Corp. (CSE:KNR) (the "Company") announces that it has completed the acquisition of Ortech Consulting Inc. ("ORTECH"). ORTECH is a leading engineering consulting firm specializing in Green House Gas ("GHG") reporting, air quality testing, emission testing and renewable energy/power consulting.

ORTECH has a 20-year successful operating history and has a stable client base, including some of Canada's largest integrated oil and gas companies. A material portion of ORTECH's annual revenue is from multi-year recurring contracts. For the last fiscal year ending March 31, 2016, ORTECH reported audited gross revenues of $5.3 Million and normalized EBITDA of $940,000.

"ORTECH is a leader and recognized brand in the Ontario GHG reporting and power generation market," says Paul Ghezzi, CEO of Kontrol Energy. "We are excited about the closing of this acquisition and we look forward to expanding ORTECH's unique services and solutions across Canada. With the recently announced Canadian Federal Government carbon tax, large emitters of GHG will be required to better track and verify their emissions. The ORTECH acquisition provides the Company with a leadership position in a rapidly growing market. Further, the acquisition aligns strategically with our intention to create carbon reduction and monetization programs for our customers," continues Paul Ghezzi.

The aggregate purchase price for the acquisition is $4.6 Million of which the Company has paid $4.6 Million in cash on closing. No common shares were issued as part of the acquisition. Ten (10%) of the purchase price will be held in escrow and be subject to any post-closing adjustments. In conjunction with the acquisition, the Company has closed on a $4 Million secured bridge loan with the Pinnacle Absolute Return Trust. The bridge loan has a term of 6 months and is secured by the assets of the Company and of ORTECH. It is anticipated that the bridge loan will be replaced by long-term senior secured debt financing over the next 6 months. Darvin Zurfluh, CEO of Pinnacle Absolute Return Trustee Corp., as Trustee of the Pinnacle Absolute Return Trust, says, "We are pleased to have completed a successful financing with Kontrol Energy Corp."

Following the acquisition the Company anticipates consolidated annual revenues for 2017 will be in the range of $10 to $11 Million and annual EBITDA in the range of $1.3 to $1.5 Million.

About Kontrol Energy Corp.

Kontrol Energy Corp. (CSE:KNR) is a leader in energy efficiency solutions and technology. Through a disciplined mergers and acquisition strategy, combined with organic growth, Kontrol Energy Corp. provides market-based energy solutions to our customers designed to reduce their overall cost of energy while providing a corresponding reduction in Green House Gas (GHG) emissions.

Additional information about Kontrol Energy Corp. can be found on its website at www.kontrolenergy.com and by reviewing its profile on SEDAR at www.sedar.com 

Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.

Caution Regarding Forward Looking Statements:

Certain information included in this press release, including information relating to future payments of holdback amounts,  possible future acquisitions, anticipated consolidated revenue and anticipated annual EBITDA; the provision of solutions to customers to reduce overall energy costs and greenhouse gas emissions reductions, carbon reduction and monetization programs, growth strategy, the replacement of the secured bridge loan with long-term senior secured debt financing and other statements that express the expectations of management or estimates of future performance constitute "forward-looking statements". The forward-looking statements in this press release are presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. The forward-looking statements. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief are based on assumptions made in good faith and believed to have a reasonable basis. Such assumptions include, without limitation, that the ORTECH will be successfully integrated into the Company and that its revenues will be consistent with the Company's expectations, that suitable businesses and technologies for acquisition and/or investment will be available, that such acquisitions and or investment transactions will be concluded, that sufficient capital will be available to the Company, that technology will be as effective as anticipated, that organic growth will occur, that the Company will succeed in obtaining long-term senior secured debt financing, and others. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, lack of acquisition and investment opportunities or that such opportunities may not be concluded on reasonable terms, or at all, that sufficient capital and financing cannot be obtained on reasonable terms, or at all, that technologies will not prove as effective as expected that customers and potential customers will not be as accepting of the Company's (including ORTECH's) product and service offering as expected, and government and regulatory factors impacting the energy conservation industry. Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as at the date hereof and the Company does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise, except as required under applicable securities law.

SOURCE Kontrol Energy Corp.

For further information: Paul Ghezzi, CEO, paul@kontrolenergy.com; Kontrol Energy Corp., 5045 Orbitor Drive, Bldg. 9, Suite 401, Mississauga, ON L4W 4Y4, Tel: 905.766.0400, Toll free: 1.844.866.8123

ORTECH Comments on Long-Term Energy Plan

ORTECH Comments on Long-Term Energy Plan

ORTECH Consulting Inc. (ORTECH), renewable energy, energy storage, greenhouse gas (GHG) and air emissions consulting, auditing and testing experts, would like to thank the Ministry for the opportunity to provide our view on the Long-Term Energy Plan (LTEP) and for providing substantive supporting documentation such as the Ontario Planning Outlook (OPO) to allow us to formulate a meaningful response.

ORTECH commend the government as well as their agencies and their partners in industry in pursuing the goal of a supply of energy that is sustainable both environmentally and economically.  Energy is fundamental to all forms of activity today and many take for granted its reliability and convenience of access.  Energy is the fuel which drives not only our economic activities but also much of what we do in our everyday lives.  A LTEP in today’s changing world must be broad and far reaching, and touch on many different areas.

The breadth of the LTEP is important for Ontario to continue driving down GHG emissions.  As clearly identified in the Fuels Technical Report (FTR), the GHG emissions associated with electricity have been falling for some time and are now a very small contributor to Ontario’s total GHG emissions.  Electrification of other energy uses such as heating and transportation will allow the use of decarbonized electricity to displace more GHG in these other energy use categories. This represents a new approach to energy planning as previous LTEPs have had a very dominant focus on electricity. Such an approach will require coordinated action from multiple Ministries and agencies.

ORTECH comments on the LTEP are structured to follow the Discussion Guide and are provided in the order of the subject areas presented in that document.

Distribution and Grid Modernization

The global trend towards behind-the-meter generation will have substantial impacts on the utility sector.  With the continually falling cost of photovoltaic solar and the steadily increasing retail cost of electricity, the push to self-generation is constantly increasing.  ORTECH is encouraged to see that the Ministry is embracing these changes with proposed updates to the net metering regulation such as Single Entity Virtual Net Metering, removal of the 500 kW cap, and explicitly acknowledging the role of energy storage in net metering type applications.

One concern with distributed generation is the phenomenon referred to as the “Utility Death Spiral”.  As rooftop solar reaches grid parity customers begin to switch towards self-generation.  This reduces the amount of energy delivered by the local distribution company (LDC) which is at least partially compensated on a per kWh delivered basis. Rates are often increased to make up for lost revenue, however higher rates only serve to further incentivize self-generation, resulting in a feedback loop or Utility Death Spiral.

One possible way to avoid the Utility Death Spiral is by having the LDCs play a larger role in distributed generation.  LDC’s understand their customers and dealing with distributed electrical infrastructure is their core business.  They are ideally positioned to facilitate further uptake of distributed generation, increase the penetration rates of clean energy, and alleviate the need to bring power from distant centralized generators to the load centres where it is needed. Powerstream’s award winning Power House pilot program is an example of this and shows how utility-customer partnerships may work in the future.

Microgrids

Microgrid solutions are not only for remote communities.  Microgrids can operate in parallel with the grid, providing the advantages of resiliency and robust infrastructure.  Combining microgrids with district energy or community energy resources can create strong nodes where energy can be supplied even in extreme circumstances. Many applications demand very high reliability of energy supply resulting in mission critical equipment with high costs for low utilization.  A microgrid approach to these applications can enable those systems to provide other benefits allowing for better use of existing equipment.

Microgrids can also be used to provide alternate benefits such as improved power quality, load shifting and peak shaving, amongst others.  Using microgrids in this way can provide more reliability than traditional fossil fired back-up generators as microgrid systems will essentially be continuously tested.

Energy Storage

Achieving Balance stated that the government was to include energy storage technologies in its procurement process starting with 50 MW and assessing engagement on an ongoing basis.  This was to include: “commissioning an independent study to establish the value of energy storage’s many applications throughout the system; examining the opportunities for net metering and conservation policies to support energy storage; and providing opportunities for storage to be included in large renewable procurements.”

At the end of 2016, it appears that energy storage procurement started and ended with 50 MW.  The Large Renewable Procurement (LRP) was to have “mechanisms to encourage innovative technologies and approaches, including considering proposals that integrate energy storage with renewable energy generation for upcoming procurement cycles”.  While an on-peak/off-peak pricing mechanism was included in LRP 1, it did little to encourage energy storage integration.  The benefit and capability of energy storage to smooth variable generation as well as provide additional reliability was not valued by the LRP 1 RFP.  The sole mechanism for incorporating energy storage was for power shifting.  However, this one application discounted the benefits provided by energy storage.  As an explanation, the LRP 1 RFP determined the “effective capacity value” of various generation technologies which represented “the amount of capacity that can be counted on at the time of system peak”.  Adding energy storage to a variable generator for the purposes of power shifting would significantly increase this value, but the RFP scoring rubric did not allocate any benefit for this.

ORTECH would like to commend the Ministry on moving forward with the first 50 MW of procurement.  This program put Ontario at the forefront of the emerging industry of grid scale energy storage and marked the province as a global leader in the space.  However, a lack of additional support for energy storage will pose the risk of being surpassed by other jurisdictions.

Innovation and Economic Growth

Start-stop procurements can be quite disruptive to industry.  Gearing up for major RFPs followed by long periods of no activity hinders private sector planning and exacerbates the boom-bust cycle.  The Feed in Tariff (FIT) program is a good example of how programs can operate more smoothly with similar sized procurements that are repeated over short time frames. However, even with FIT procurement, program windows are announced one at a time resulting in considerable uncertainty as to future market opportunities.  Smaller procurements that are repeated more frequently will smooth out the roller-coaster type activity level in the Ontario industry, and greater certainty in future procurements and activity will help the industry develop the right level of capabilities to address needs.

Climate change is a global concern.  Clear and effective long term programs will allow Ontario industry to refine the expertise to address these challenges providing a basis to assist other jurisdictions reduce their environmental footprint, and to benefit from these export opportunities.  However, a healthy domestic market that supports renewable energy and energy storage industries is required.

It is generally acknowledged that environmental permitting is slowing down the development of projects.  This year’s Burden Reduction Act introduces the possibility of streamlining the permitting process.  However, it’s not yet clear if this will have appreciable benefit for energy projects. 

Clean Energy Supply

The OPO identified potential scenarios where electrical demand is increased.  These are related to electrification and a shift away from fossil fuel usage in transportation and heating.  It is important that additional electricity generated to meet these needs is clean energy otherwise no GHG benefit would realized from electrification.  For example, if higher electrical demand is mostly met by natural gas fired generators, the benefit of displacing natural gas fired heating with electrical heating is diminished.

Since the Green Energy and Economy Act of 2009 came into effect, Ontario has aggressively pursued renewable energy development resulting in substantial amounts of renewable generation capacity being installed. This domestic demand for wind, solar and other forms of renewable generation allowed a strong industry to develop in the province. With advances in generating technologies and a strong local industry that is ready to deliver projects, Ontario is in a position to build wind and solar projects at competitive rates.

The LRP 1 (in 2015) procured wind energy for a capacity weighted average of $86 per MWh and solar for $157 per MWh.  These rates are competitive with other generation technologies, with wind being one of the lowest cost forms of generation in the province and solar rapidly closing the gap.  This is supported by the OPO Data Tables which list current technology characteristics and show the range of levelized unit costs of electricity for wind and solar to be cost competitive with all other forms of generation. It should also consider that wind and solar are still experiencing significant cost declines as the technology matures and the industry increases in scale. While Conservation First remains the strongest economic performer in the province, Ontario’s supply of clean energy will be most efficiently procured from wind and solar.

Summary

ORTECH recognizes the importance of the LTEP to the Province of Ontario and thanks the Ministry for the opportunity to provide comments.  ORTECH comments are summarized in pint form below:

  • Have the LDCs play a larger role in distributed generation
  • Combine microgrids with district energy or community energy resources
  • Assess the full value and expand the support for energy storage to ensure Ontario remains at the forefront of this evolving technology
  • Expand clear and consistent procurement programs (e.g. FIT) to ensure market certainty which will lead to the development of the right level of capabilities to address needs
  • Further streamline the environmental permitting process
  • Wind and solar are becoming increasingly more cost competitive and thus represent an opportunity for expanded development while addressing further reductions GHG emissions from the overall energy supply system  

A strong domestic clean energy industry will allow for GHG reductions beyond our borders through clean energy trade.  Ontario is already a net exporter of electricity and the jurisdictions where our clean electricity is being sold include regions that still rely heavily on coal-fired power plants. While the GHG emissions associated with the electricity used in province is already very low, additional low carbon electricity still has the potential to reduce GHG emissions on a global scale.

 

Is Net Metering with Solar PV the RIGHT choice for your company in Ontario?

Written by Michael Tingle and Ka-Ming Lin

The answer depends on your view of the trend in future electricity pricing.  If you feel the price of electricity is going to drop or stay the same, this may not be for you.  However, if the price of electricity for Commercial and Industrial (“C&I”) users will continue to rise in the next 5-15 years, net metering with solar photovoltaic (PV) may be of interest.

Ontario Electricity Prices vs Cost of Solar PV

This graphic depicts the historic, and forecasted price of electricity versus the install price for a solar PV facility. Although there are many variables, this serves as a reasonable guide.

Other assumptions considered in the preparation of this graphic are:

Price of solar based on a typical < 100 kW Feed-in-Tarrif (FIT) rooftop facility,
Price of solar (forecast) is based on a 4% annual reduction in costs,
Electricity prices are the time of use (TOU) rates based on 50% on-peak, 30% mid-peak and 20% off-peak plus typical local distribution company (LDC) delivery charges,
The delivery charge benefit would only apply to load displaced, you do not get delivery charges back on energy returned to the system under net metering, and
The electricity price (forecast) is based on the Bank of Canada’s target 2% rate of inflation.

What is Net Metering with Solar PV?  Net metering allows an electricity user to install a solar PV facility onsite (or close to it) to generate electricity which can be used with any access delivered to the grid with compensation in the form of a credit on a future electricity bill.   Net metering has been an option since 2015 and is governed under an Ontario Regulation (O. Reg. 541/05: Net Metering).  However, only more recently has the price of electricity and the cost of installing a solar PV facility made net metering with solar PV more worthy of consideration.

As shown in the graphic above, even if you were to install the solar PV facility today, the price of solar exceeds current electricity prices.  However, looking forward not too far in the future, price parity and beyond are possible. Some key business drivers you should consider when evaluating whether Net Metering with solar PV makes sense now (2017), instead of waiting until 2020 are described below.

  1. Cost Certainty of Electricity: Electricity prices are expected to rise in the short and long term.  When you factor in all the components of your electricity bill, the type of power user you are (time of use, class A/B) and global adjustment, you might want to lock in the price of electricity in the future. A Net Metering solution with solar PV can help you do that.
     
  2. Time Sensitivity:  Your Local Distribution Company (“LDC”) has a limit on the percentage of net metering solutions with PV they can manage on their distribution network.  Once they hit that level, you will not be able to participate in the net metering program although you could still be a “Behind the Meter” generator.  When it comes to net metering “the early bird has the best chance of getting the worm”. 
     
  3. Speed to Operation:  This solution has advantages over other renewable energy procurement processes as there is no environmental permitting unless you decide to go for a ground mount solar PV facility for which there is a simplified permitting process. Securing the connection with the LDC is likely to be the main hurdle.
     
  4. Greenhouse Gas (GHG) Emissions: If you generate emissions, as a course of operating your company or plant, net metering with solar PV will allow you to reduce or offset your emissions. This solution will enable you to retain your emission reduction credits. (currently emitters above 25MT only)
     
  5. Saving Money:  The benefit of net metering is that when you are not using electricity at your plant, you are allowed to inject power back into the grid and receive a credit on your next bill. Currently, you can bank this credit for 11 months which can help balance cash flow.
     
  6. Reputation: In addition to future cost saving, there are marketing and promotional advantages to be realized. Maybe your owners, board of directors or shareholders have given you a mandate to “GO GREEN”.  Generating your own electricity using renewable energy such as solar PV fits the bill. 

Whats Next?  Making a decision on net metering with solar PV requires a level of analysis. You will need to understand how you pay for electricity and review monthly bills (1 or more years of history) to determine your peak demand and load profile. This in combination with an assessment of which of the above drivers are most important to you should assist in the decision making process.  The solar industry

in Ontario is flush with capable and knowledge firms and individuals, reach out to them for assistance and advice to determine whether net metering with solar PV may be right for you now.

For more information on ORTECH's Net Metering with Solar PV, click here.

5 Tips to get your Solar Facility financed

You have received your Power Purchase Agreement, Feed-in Tariff contract offer or RFP Win; now you are thinking “I need to get my project debt financed!”  

Enclosed is a list of Best Practices to make this process as easy as possible.  The example below is based on either a ground mount or rooftop solar Facility that is not constructed.   However, this process can be used for constructed projects or Wind Power, Waterpower, Renewable Natural Gas or Energy Storage projects with some modifications.

Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.

Getting Started:

Tip #1: Agreeing to use the debt providers IE can simplify the process

Debt providers will have their preferred technical due diligence service providers often referred to as Independent Engineer (I.E.). Some developers may indicate that they have their own favourite .  However, the IE needs to be truly independent.  

Tip #2: Get all your documents in order

The first phase of technical risk management services conducted by the I.E. typically includes the provision of essential documents for review (see below for list). The requested documentation will be dictated by the status of the Facility under consideration (e.g. early development, pre-construction, post-commissioning, etc.). To complete the review efficiently and to minimize scope creep, the I.E. will typically start the review once all documentation is provided.

Tip #3:  Missing documentation is a major red flag and will cost time and money to complete the review.  Do it right the first time.

It is common that the initial batch of documentation provided is not complete.  This means the I.E. will need to review the preliminary batch for completeness only (i.e. not a technical review at this stage) and notify the developer of key documents that are missing if any. It is important to note that initiating the formal technical review while documentation is missing or deemed insufficient will ultimately be reflected in the draft I.E. report.  

Tip #4: Save costs by providing all the documentation up front, at one time.

Following the document review, the I.E. will issue a draft examination of documents report providing analysis and commentary on the reasonableness, accuracy and completeness of the documentation and identify the main risk factors and possible impact, if any, on the ability of the Facility to generate the expected level of energy/revenue.  That last part is key to any debt provider. The review must indicate an ability to service the debt.  

Tip #5:  Use up-to-date documentation because the site visit will end badly if you don’t!

Following document review, a site visit should be performed. The site visit will involve physical inspection of critical components for consistency with the provided documentation and confirmation of overall Facility design and compliance with the major Contract parameters including:

  • facility type (i.e. rooftop or non-rooftop solar) and physical location,
  • nameplate capacity including approval of DC overbuild and record of inverter production, if visibly accessible,
  • main equipment components (panel, inverter and racking suppliers),
  • connection point location, and
  • review of power production or data log information, if available, for the purpose of performing a high-level check of the Facility’s ability to achieve maximum capacity.

What documentation is required to get financing for your Solar Facility?

Debt financing is usually the last thing developers think about, but you need to be prepared. That preparation should be in the form of well-organized, complete Documentation. 

Here is a list of Documents you should have handy to make this process as easy as possible.  The example below is based on either a ground mount or rooftop solar Facility that is not constructed.   However, this process can be used for constructed projects or Wind Power, Waterpower, Renewable Natural Gas or Energy Storage projects with some modifications.
Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.

What Documentation do you need to prepare?   
Essential documentation that will be reviewed for accuracy, completeness and technical suitability as applicable and available before the site visit, may include the following:

Previous due diligence report, if applicable.
This can save time and provide the debt provider with a sense of comfort if another I.E.  previously reviewed the Facility.  If you have a previous report available, provide it.

Power Purchase Agreement / Feed-in Tariff (“FIT”) documentation: Includes: contract, contract assignment and term buyback documentation, if applicable.
This provides important confirmation that the Facility is “real” and viable.

Key project design documentation:  Includes: as-built, signed/stamped electrical single line diagrams (“SLD”), main equipment specifications (panels, inverters, racking) including capacity, efficiency, warranty, the status of warranty assignment (if applicable) and facility layout drawings.  The design documentation is important and should meet industry standards. This documentation will be compared with observations made during the site visit, if there are differences, explanations will be required and documented.

EPC warranty and commissioning report: Includes: Warranty contracts and reports from the EPC signing off of the project including performance testing reports.
Understanding warranty is important from a debt provider hold back point of view, and the commissioning report will provide valuable information to the I.E. as to the ability of the Facility to perform over time.

Grid Connection documentation:  Includes: A metering plan (if applicable), LDC connection cost agreement and status of assignment, if applicable. Jurisdictions will not allow a Facility to connect to the grid without following a process. This documentation will help to mitigate risk in the eyes of the debt provider f that the distribution company has signed off on the Facility.

Environmental permitting and documentation: Includes: Permitting approval documents from the local government agency. Environmental permitting is important. Facilities cannot begin construction until the required permits or approvals are in place. The debt provider is also interested in the conditions of the permits and whether the ongoing costs to meet these conditions are adequately considered when assessing the ability of the Facility to service the debt.

Land status documentation: Includes: confirmation that a lease agreement is in place for suitable duration, building permit or Certificate of Completion. The debt provider wants to understand any risks associated with the lease agreements like length of term or that zoning will not allow for buildings that can cause shading to be built.

Energy output information: Includes:  calculations and /or Solar Resource Assessment
This is very important. If you provide a poor quality resource report that is not consistent with industry standard, the I.E. will likely raise this as a red-flag and/or may require the analysis be redone costing additional time and money.

Financial Model: Includes: breakdown of main capital cost items (panels, inverters, racking, roof upgrades, other) and operating cost items (O&M contract, monitoring, lease, roof repairs, insurance, administration, other) and debt service calculation, if available.
This will be reviewed in depth so ensure the assumptions and costs can be validated

Constructability assessment documentation:
The I.E. will look for any issues that might cause unusual challenges during the construction of the Facility (e.g. geotechnical study.)

Notice to Proceed (“NTP”) related documents:
For construction financing, this confirms the Facility has been approval to begin construction.  This is very important document when shopping for debt financing.

Commercial Operation Date (“COD”) related documents:
This confirms that the project has been signed off. This document can be called a number of things in different markets.

Operation and maintenance (“O&M”) documentation:
The I.E. will want to understand the plan, cost and approach. The debt provider will want to see how these costs, including key component replacement, are accounted through the entire lifecycle of the Facility.

In Summary, spend the time to get your documentation together.  Provide the I.E. with a complete package of documentation and provide access to your Facility.  You do not want to give the I.E. or the debt provider a reason to question your Facility, if there are issues, work collaboratively with the I.E. to resolve them.

 

Ontario Cap and Trade Update

Yesterday, the Ontario Ministry of Environment and Climate Change posted its regulatory proposal to amend the Cap and Trade Program Regulation (O.Reg. 144/16), in order to include offsets provisions that will be developed to allow for high quality offset credits with integrity, transparency and financial value within Ontario’s cap and trade program. The deadline for feedback to this proposal is December 30th, 2016.
 
Per the EBR posting found here, Offset Credits are a compliance instrument contemplated under the current cap and trade regulation. Facilities and sectors not subject to the cap and trade regulation that are able to reduce greenhouse gases in accordance with the proposed requirements and associated protocols will be eligible to seek to have offset credits created and issued. Offset Credits may be used by capped facilities to meet up to 8% of a compliance obligation.
 
Ontario awarded a contract to the Climate Action Reserve to adapt 13 existing offset protocols (the rules specific to various project types such as forest management and fertilizer use) for use in Ontario and Quebec under the cap and trade program. Three protocols will be in place by early 2017 with the remainder by 2017-18.

The regulatory proposal provides an overview of the criteria, process and administrative requirements for the registration of offset initiatives and the creation and issuance of offset credits that can be used to meet a compliance obligation.

The offsets regulatory proposal outlines the policy for a number of program elements, including:

  • Offsets Initiative Registry
  • Start Dates
  • Crediting Periods
  • Reporting Requirements
  • Verification Requirements
  • Offset Credit Creation Criteria
  • Buffer Account
  • Offset Credit Issuance
  • Project Reversals

The EBR posting for this regulatory proposal also notes that while cap and trade will encourage reductions, there may also be opportunities to reduce greenhouse gases beyond the cap and trade program and the offset credits that form part of that program.

The government is leading by example and has committed to government operations being carbon neutral by 2018. As part of this commitment, the government will engage with relevant stakeholders on the development of a separate class of quality, branded, voluntary reduction instruments for use by government and the private sector. All of these voluntary reduction instruments will come from Ontario-based projects ensuring that the social and economic benefits accrue to the citizens of Ontario. Voluntary reduction instruments would be unique and could occur anywhere within the province including rural areas and in Northern Ontario.

The Ministry proposes to form a working group to provide advice and help identify the best means to foster voluntary reductions and removals of greenhouse gases. There will be a policy posting in 2017 that will expand on the Government’s approach to encouraging the creation of voluntary reduction instruments, which will be separate from cap and trade and distinct from the offset credits and other compliance instruments created for cap and trade.

If you have any questions on this, click here for ORTECH's Cap and Trade Readiness services.

Risk Mitigation: Successful Transition of the Power Plant

Many power generating facilities lack training of new personnel, up-to-date procedures, and true preventative and predictive maintenance protocols. Several companies may be unprepared to answer the question of what will happen when their seasoned veterans walk out the door and hand the reigns over to a new, less-experienced operator. Plant managers and owners understand their personnel will retire soon, but fail to realize knowledge will also leave with those employees. A majority of utility companies and generating facilities have neither prioritized the transferal of knowledge and skills to the new generation nor updated their plants to digital platforms.

The Problem of an Aging Workforce

One third of all baby boomers have hit retirement age. Consequently, the power market is due for a large generational shift. This will result in loss of invaluable industry knowledge. According to the Department of Labor, 50 percent of the utility workforce will be retired within 10 years with almost 45 percent of the non-nuclear generation technicians currently above 53 years of age. A survey conducted by the Center for Energy Workforce Development states: “The non-nuclear generation workforce, specifically Operators and Technicians, show the largest number of employees still eligible to retire...The results clearly reflect a need to put more emphasis on skilled technician and engineering positions.” Not only who is going to replace veteran baby boomer but also how do you gain their technological expertise? Will younger staff be able to retain their knowledge through word of mouth and continue to build on it? According to a report from PWC, “The growing number of retirement-eligible employees, rising turnover costs and the generational shift in utility personnel are driving a loss of productivity in the power sector. Traditional ‘word-of-mouth,’ on-the-job training of utility workers is not sustainable. More than ever before, work processes and procedures should be documented and continuously improved.” Power-Eng says “Establishing a program for transferring knowledge is an essential element for dealing with “brain drain.” Veteran utility workers tend to pass valuable institutional knowledge orally, rather than documenting and updating the information systematically. This intellectual capital is often lost when the worker retires because there is no formal program to capture their know-how.” This conversation must include a plan for replacement as well as transferal of technological expertise.

A Reliable Fix

One way to answer these tough questions is to utilize third party technical services companies, who provide operations and maintenance help. These companies develop site specific training videos, operating procedures, which helps reduce human error, improve operator knowledge and improve facility performance and could reduce insurance costs. For preventative and predictive maintenance, a computerized maintenance management system (CMMS) can reduce unscheduled breakdowns of equipment, increase plant reliability and reduce maintenance costs. Another area a third party technical service company can help with is the creation of Smart Piping and Instrumentation Drawings (P&ID’s), which may allow facilities to be a digitally based plant. The P&ID’s are a powerful way to represent the flow, layout, controls of a system as well as maintain a sortable and searchable database of all the systems contained therein. The drawings and database contain the pipe diameter, line number, valves, instruments, controls and respective tags. If other information is found on existing drawings such as type of material, insulation thickness, equipment capacity etc., then this is typically incorporated into the drawings and database. This database is helpful to plant personnel since they can record service dates, look up manufacturer’s parts and replacement parts and can input the location within the building.

Conclusion

Through simple, third party initiatives your plant can have fully trained personnel, up to date procedures, preventative and predictive maintenance management systems. By implementing just a few of these options, power plants can successfully be brought into the digital age and retain the skilled knowledge that is leaving while also improving reliability and safety.

 

How are you migrating your experienced knowledge to a digital format and the younger generation?

How to get your Renewable Energy Project Debt Financed? Simple answer: Documentation!

You have received your Power Purchase Agreement, Feed-in Tariff contract offer or RFP Win; now you are thinking “I need to get my project debt financed!”  

Enclosed is a list of Best Practices to make this process as easy as possible.  The example below is based on either a ground mount or rooftop solar Facility that is not constructed.   However, this process can be used for constructed projects or Wind Power, Waterpower, Renewable Natural Gas or Energy Storage projects with some modifications.

Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.

Getting Started:

Tip #1: Agreeing to use the debt providers IE can simplify the process

Debt providers will have their preferred technical due diligence service providers often referred to as Independent Engineer (I.E.). Some developers may indicate that they have their own favourite .  However, the IE needs to be truly independent.  

Tip #2: Get all your documents in order

The first phase of technical risk management services conducted by the I.E. typically includes the provision of essential documents for review (see below for list). The requested documentation will be dictated by the status of the Facility under consideration (e.g. early development, pre-construction, post-commissioning, etc.). To complete the review efficiently and to minimize scope creep, the I.E. will typically start the review once all documentation is provided.

Tip #3:  Missing documentation is a major red flag and will cost time and money to complete the review.  Do it right the first time.

It is common that the initial batch of documentation provided is not complete.  This means the I.E. will need to review the preliminary batch for completeness only (i.e. not a technical review at this stage) and notify the developer of key documents that are missing if any. It is important to note that initiating the formal technical review while documentation is missing or deemed insufficient will ultimately be reflected in the draft I.E. report.  

Tip #4: Save costs by providing all the documentation up front, at one time.

Following the document review, the I.E. will issue a draft examination of documents report providing analysis and commentary on the reasonableness, accuracy and completeness of the documentation and identify the main risk factors and possible impact, if any, on the ability of the Facility to generate the expected level of energy/revenue.  That last part is key to any debt provider. The review must indicate an ability to service the debt.  

Tip #5:  Use up-to-date documentation because the site visit will end badly if you don’t!

Following document review, a site visit should be performed. The site visit will involve physical inspection of critical components for consistency with the provided documentation and confirmation of overall Facility design and compliance with the major Contract parameters including:

  • facility type (i.e. rooftop or non-rooftop solar) and physical location,
  • nameplate capacity including approval of DC overbuild and record of inverter production, if visibly accessible,
  • main equipment components (panel, inverter and racking suppliers),
  • connection point location, and
  • review of power production or data log information, if available, for the purpose of performing a high-level check of the Facility’s ability to achieve maximum capacity.

What Documentation do you need to prepare?   

Essential documentation that will be reviewed for accuracy, completeness and technical suitability as applicable and available before the site visit, may include the following:

Previous due diligence report, if applicable.

  • This can save time and provide the debt provider with a sense of comfort if another I.E. previously reviewed the Facility.  If you have a previous report available, provide it.

Power Purchase Agreement / Feed-in Tariff (“FIT”) documentation: Includes: contract, contract assignment and term buyback documentation, if applicable.

  • This provides important confirmation that the Facility is “real” and viable.

Key project design documentationIncludes: as-built, signed/stamped electrical single line diagrams (“SLD”), main equipment specifications (panels, inverters, racking) including capacity, efficiency, warranty, the status of warranty assignment (if applicable) and facility layout drawings.  

  • The design documentation is important and should meet industry standards. This documentation will be compared with observations made during the site visit, if there are differences, explanations will be required and documented.

EPC warranty and commissioning report: Includes: Warranty contracts and reports from the EPC signing off of the project including performance testing reports.

  • Understanding warranty is important from a debt provider hold back point of view, and the commissioning report will provide valuable information to the I.E. as to the ability of the Facility to perform over time.

Grid Connection documentationIncludes: A metering plan (if applicable), LDC connection cost agreement and status of assignment, if applicable.

  • Jurisdictions will not allow a Facility to connect to the grid without following a process. This documentation will help to mitigate risk in the eyes of the debt provider f that the distribution company has signed off on the Facility.

Environmental permitting and documentation: Includes: Permitting approval documents from the local government agency.

  • Environmental permitting is important. Facilities cannot begin construction until the required permits or approvals are in place. The debt provider is also interested in the conditions of the permits and whether the ongoing costs to meet these conditions are adequately considered when assessing the ability of the Facility to service the debt.

Land status documentation: Includes: confirmation that a lease agreement is in place for suitable duration, building permit or Certificate of Completion

  • The debt provider wants to understand any risks associated with the lease agreements like length of term or that zoning will not allow for buildings that can cause shading to be built.

Energy output information: Includes:  calculations and /or Solar Resource Assessment

  • This is very important. If you provide a poor quality resource report that is not consistent with industry standard, the I.E. will likely raise this as a red-flag and/or may require the analysis be redone costing additional time and money.

Financial Model: Includes: breakdown of main capital cost items (panels, inverters, racking, roof upgrades, other) and operating cost items (O&M contract, monitoring, lease, roof repairs, insurance, administration, other) and debt service calculation, if available.

  • This will be reviewed in depth so ensure the assumptions and costs can be validated

Constructability assessment documentation:

  • The I.E. will look for any issues that might cause unusual challenges during the construction of the Facility (e.g. geotechnical study.

Notice to Proceed (“NTP”) related documents:

  • For construction financing, this confirms the Facility has been approval to begin construction.  This is very important document when shopping for debt financing.

Commercial Operation Date (“COD”) related documents:

  • This confirms that the project has been signed off. This document can be called a number of things in different markets.

Operation and maintenance (“O&M”) documentation:

  • The I.E. will want to understand the plan, cost and approach. The debt provider will want to see how these costs, including key component replacement, are accounted through the entire lifecycle of the Facility.

In Summary, spend the time to get your documentation together.  Provide the I.E. with a complete package of documentation and provide access to your Facility.  You do not want to give the I.E. or the debt provider a reason to question your Facility, if there are issues, work collaboratively with the I.E. to resolve them.

 

What to look for in a Source/Stack/Emission Testing firm?

There are a lot of Source/Stack/Emission (“Source”) vendors out in the marketplace.  How do you decide which one.  The following checklist may help you decide.

  1. Testing Experience,
  2. Regulatory Experience,
  3. Trained and Qualified Staff,
  4. Large Team,
  5. Equipment, and
  6. Safety Training.

Testing Experience:

Ask your vendors for a list of clients, investigate whether they have received positive feedback from both  clients and regulators.  It is important to confirm the vendor has a track record including testing report  accepted by the regulator.  Make sure your vendor has experience in your industry as well.  Testing requirements do change from industry to industry.

Regulatory Experience:

Make sure your vendor  understands your local regulations, the process, the report formats and the intricacies of the permitting culture.  Ask for references or examples of compliance reports or pre-test plans.  This will illustrate their experience and more importantly, understanding of the regulations.  This will save you time and money.

Trained and Qualified Staff:

Training is essential. The Source Evaluation Society (“SES”) has an accredited program called Qualified Source Testing Individual (“QSTI”). The goal of the SES QSTI exam and abilities assessment is to determine whether a candidate demonstrates the knowledge and capacity to apply source testing methods and fundamental engineering and chemistry principles in a manner consistent with that of a field test team leader. The SES QSTI program is one way to satisfy the accreditation standard for organizations, and potentially new regulations, as the SES QSTI exams are designed to assess competence and a basic understanding of source testing methods.

Ask if your vendors have this training.

Large Team:

Your vendor should be able to conduct testing that does not impact your operations for weeks.  A large team will allow for simultaneous  testing at multiple locations if necessary thus reducing the overall impact on operations.  Also, schedules change, so your vendor should be able to accommodate last minute issues that cause testing windows to shift.  Ask your vendor whether they have the internal resources to complete the job or whether they will require sub-contractors. 

Equipment:   Your vendor should have the in-house equipment resources to handle large and demanding jobs.  Renting equipment can create scheduling challenges and can cause testing problems due to unknown  calibration and maintenance records. 

Health and Safety:

Your vendor should have a culture of safety. Training is important, but the breadth of training is essential.  Training that should be considered depending on the scope of the testing program include:

  • Health and Safety Due Diligence
  • Asbestos Awareness
  • Confined Space Awareness
  • Fall Protection / Working at Heights
  • SCBA
  • Lock Out Tag Out
  • First Aid/CPR
  • Transportation of Dangerous Goods
  • Respirator Fit Testing (Quantitative Testing)
  • Annual internal training includes WHMIS and respirator fit testing
  • Qualified for radiological work

Your vendor should conduct monthly safety toolbox meetings with field personnel to keep safety foremost in everyone’s mind. Your vendor should conduct and document a detailed Job Safety Analysis (JSA) before arriving on the site which provides a step by step safety analysis of the work to be performed.  Also, your vendor should complete a Field Level Job Safety Analysis (FLJSA) each day they are on-site. 

White Paper: Managing Odour Complaints Best Practices

By Steve Thorndyke ( sthorndyke@ortech.ca )  Reading time: 2 minutes 30 seconds

There are many ways to deal with Odour complaints, either proactively or reactively.  Odours are not predictable, but you can manage them, if you receive a complaint.  Here are some suggestions:

  • Encourage odour complainants to notify the plant as soon as possible after an odour episode and fill out a standard questionnaire with details about the odour event such as date, time, meteorological conditions (e.g. wind direction), odour frequency, odour intensity (perceived strength) and the character of the odour (what the odour smells like).
     
  • Verify that the complaint is genuine or appears to be real and that it originates from the plant by noting the wind direction at the time of the complaint and visit the site of the complaint if the odour persists.
     
  • If possible, correlate the odour complaints with specific activities at the plant which may have caused the complaint, including continuous activities at the facility and short-term activities such as loading a truck.
     
  • Conduct periodic odour surveys in the plant and at areas surrounding the plant, with emphasis on sensitive odour receptors such as residences, schools and other places frequently visited by the public, to obtain data which will complement the complaint data.
     
  • If there are several potential sources of odour emissions at the plant, conduct an odour emission survey with atmospheric dispersion modelling to assess the effect of these sources, both individually and in aggregate, at off-site odour receptors and use the dispersion modelling to rank the potential sources. Develop a plan to reduce odour emissions at the sources, perhaps starting with the most significant odour emission sources.
     
  • Repeat the odour emission survey and atmospheric dispersion modelling to assess the effects of any new odour reduction efforts at the plant, and consult with the complainants to determine if the reduction in odour concentration at the receptors is sufficient.
     
  • Develop an odour management plan for the plant and protocols for dealing with odour complaints.  Hold public meetings to discuss the details of the plan and any progress in implementing the plan.

For more information on how ORTECH can assist your Air Quality needs, visit our Odour Assessment Page or ouremail us at mtingle@ortech.ca

The Ultimate Guide to Managing Odour Complaints!

You receive an email or a phone call from an irate neighbour complaining about an odour potentially from your facility, What do you do?  ORTECH has a structured approach to cost effectively manage the entire situation.

Gather Information: This means everything you can get your hands on.

Complainant: Ask them the following questions:

  • What was your location when you first encountered the odour
  • What day and time of day was it?
  • Was the odour weak or strong?
  • What did it smell like?
  • What direction was the wind blowing?

Internal:  Ask the following questions:

  • Does your operation generate odours as a standard business process?
  • If yes, are these odours continuous or intermittent?
  • Were you operating at the time of the complaint?
  • Did anything unusual happen that might releae an odour at the time of the complaint (Poll your employees)?
  • What were the weather conditions at the time (wind direction, wind speed, temperature)?
  • Have you changed your processes or added any new activities that may generate odour?

External:  Ask the following questions:

  • Were there any active construction sites operating nearby?
  • Do you have neighbours that were operating at the time of the complaint and could have released an odour?
  • Were there any other activities outside of your plant that could have contributed to the odour issue?

When gathering this information, best practices to keep in mind include:

  1. Be calm and professional in all internal and external communications. The complainant will appreciate the behaviour and act accordingly.
  2. Communicate with the complainant and acknowledge their concerns.
  3. Agree to look into the situation but do not make any commitments  until you know your plant is responsible.  

Following this initial information gathering, it may be beneficial to hire a consultant.  A good odour consultant will have the ability to quickly assess the initial information and evaluate the potential source(s) of the odours and if warranted sample odours and quantify using an odour panel and dispersion modelling to provide evidence of the level of odour that was present in the area at the time.  Next steps to managing and odour complaint may include:    

 
 
  1. Provide all the information you have gathered to an odour consultant. Be honest and complete.  If the situation is your fault, there are a number of easy to implement solutions that can mitigate an odour issue.
     
  2. Your consultant should perform a site visit along with you. You should visit the location of the complaint and the last known location of the expected source(s) of odour.  Some odours may linger which might present an opportunity to spot sample or setup odour sampling equipment that can collects samples over a period of time.
     
  3. It is vital to determine if you were capable of causing the odour at the location that generated the complaint.  In some cases, the wind was blowing in the wrong direction or it was just physically impossible for your facility to release an odour and have it migrate to the location of the complaint.  A dispersion modeling analysis is a valuable tool for evaluating these type of situations. A good odour consultant will have this ability.  A detailed odour assessment report is an excellent way to back up your case to regulators or municipal bylaw officers or in the worst case, a court of law.
  4. If practical considering the frequency and duration of the operation of the odourous source(s), your consultant can collect and analyze sample for content.  A lot of odours have known substances with odourous properties such as sulphur compounds or ammonia. Analysis for known substances may help to confirm whether or not your operations are responsible. 

In addition, odour can be quantified using an odour panel. An odour panel is a group of six or more people pre-screened to have a “normal” level of odour sensitivity and who are trained to assess odours. The results in combination with dispersion modeling will provide you with further evidence on the level and extent of odour emanating beyond the boundaries of your plant

In summary, if you have an odour complaint, do not panic. Remain calm, ask questions, gather information and contact an odour professional that can assist you with solutions or building a case to defend your company against regulatory or legal action.

For more information or if you have questions, please contact Michael Tingle at mtingle@ortech.ca or via phone at 905 822 4120 x680

 

 

Keeping Track of Environmental Compliance & Permitting

Like it or not, environmental compliance and permitting (C&P) requirements can often be affected by day-to-day operations. Often, facilities are not aware of these impacts or do not consider environmental compliance in day-to-day decision making. This can lead to unanticipated issues, extra work, or poor quality estimates when addressing end-of-year reporting requirements such as those related to the National Pollutant Release Inventory (NPRI), Toxics Reduction Act (TRA), Greenhouse Gas (GHG) reporting, and preparing Annual Written Summaries (AWS) required by an Environmental Compliance Approval (ECA). Failure to consider C&P requirements can also lead to surprise findings if you are inspected by the Ministry of the Environment and Climate Change (MOECC).

Consider the following examples:

  •       A facility switches from a mix of xylene and toluene solvents for cleaning equipment to purely xylene solvent. This change pushes xylene usage above the threshold for TRA requirements. At year end, the facility is shocked to find out that they must prepare a reduction plan and complete in-depth toxics accounting for xylene, a significant and costly effort.
     
  •     A facility makes the minor change of re-ducting an existing paint spray booth exhaust under the Limited Operational Flexibility conditions on their ECA. The plant manager does not remember the continuous assessment requirements imposed by the ECA, and no updated assessment is prepared until the AWS is due. When the assessment is completed, it is determined that the exhaust relocation does not comply with emissions standards due to the close proximity to a neighboring unit’s air intake. There is now a requirement for retroactive abatement.

Other common occurrences include failing to amend an ECA for changes to processes or equipment, or not considering that the expansion of operations may result in exceeding a GHG reporting threshold. Sometimes, only knowing at year end that you are required to report can lead to difficult problems, since not everything can be remedied retroactively (such as the requirement to calibrate certain meters or measure certain parameters for Ontario GHG reporting).

The establishment of an environmental C&P due diligence process, which could be a simple as a checklist of considerations, can save you lots of headaches and costs when a requirement to report or reconcile comes around.

Need assistance? ORTECH can help you:

  •       Establish an environmental C&P due diligence process
  •       Report to the NPRI
  •       Prepare a Toxics Substance Reduction Plan and complete Toxics Substance Accounting
  •       Apply for an Environmental Compliance Approval with Limited Operational Flexibility
  •       Prepare and submit an Annual Written Summary