The Birth of Green Choice
Nova Scotia’s Sustainable Development Goals Act (the “SDGA”), passed in 2019, sets out the province’s renewable energy (“RE”) targets, including the reduction of greenhouse gas emissions by at least 53% below 2005 levels by 2030 and net zero emissions by 2050.
And, following on the federal government commitment to source 100% renewable electricity for federal buildings by 2022, Nova Scotia announced it would source 100% renewable electricity for provincial buildings by 2025. Further, Nova Scotia announced its intention to obtain 80% of its total electricity from RE by 2030.
Nova Scotia’s goals, some of the most ambitious set by a Canadian province, are facilitated by amendments to the Electricity Act (the “Act”) introduced in March 2020 under Bill 232 (the “Amendments”), and the accompanying Renewable Electricity Regulations (the “Regulations”).
Significantly, amendments allow Cabinet to appoint a procurement administrator to conduct the procurement of renewable electricity in specified circumstances, while prohibiting the appointment of government employees as procurement administrator. This allows an independent body to carry out the competitive procurement process, presumably in an effort to create a transparent process. Another amendment enables RE procurement from Independent Power Producers (“IPPs”) to allow customers the option of replacing non-RE electricity.
The Amendments effectively gave rise to the new Green Choice Program (the “GCP”), a green power offering developed through collaboration involving the Province, the private utility Nova Scotia Power Inc. (“NSPI”), IPPs, and large-scale energy consumers (“GCP Consumers”).
If you are a Consumer
The program will allow GCP Consumers to purchase up to 100% of their electricity from new, local renewable electricity developments through a competitive procurement process. The consumer qualification load threshold is a minimum 3-year average annual load of 10,000 MWh. Public institutions with a load over 2,000 MWh/year may aggregate with other public institutions to meet the threshold.
Eligible GCP Consumers may purchase renewable electricity by paying a “Green Tariff” comprising of the price payable under the Power Purchase Agreement (“PPA”) between NSPI and IPPs for new RE projects plus an administrative charge. The cost will present as a new line item on customers’ power bills, alongside GCP credits, which reflect the value of the GCP Consumer’s portion of energy delivered by the GCP assets to the grid. It is expected that the net of the program costs and credits will approximately offset each other over the course of the GCP Consumer’s contract term; however, more information will be available once PPAs are finalized.
At the outset, GCP Consumers will be asked to fill out an Expression of Interest (“EOI”) , indicating their required yearly RE load and contract term length, among other information. The EOI window is followed by engagement of the parties to align the utility and IPPs on the Request for Proposals (“RFP”), align subscribers and the utility on the Subscriber Agreements, align the utility and IPPs on PPA specifics, and obtain approval from the Utility and Review Board, before issuing the RFP.
Once new projects are awarded, NSPI will enter long-term PPAs with the IPPs, and eligible applicants may choose to enter into Subscriber Agreements with NSPI. Applicants are not obligated to sign Subscriber Agreements and may first consider the finalized costs after the conclusion of the RFP before signing. No penalties are applicable (except forfeiture of the application fee), if an applicant does not proceed to sign a Subscriber Agreement.
If you are a Generator
CustomerFirst Renewables, a US based independent energy advisory firm designated as the procurement administrator, will conduct an independent and competitive RFP process. This will ultimately determine PPA prices, which depends on RE asset procurement. The RFP and program size are designed to meet subscriber demand. Therefore, the terms of the RFP will depend on the customer’s required RE load and contract term length. In short, the more subscribers under long-term contracts with high percentages of RE (i.e., the higher the aggregated load), the more RE that will need to be purchased from IPPs under an RFP which is likely to provide some cost-efficiencies.
Bidders on an RFP must meet certain Minimum Criteria. These include producing “Low-Impact Renewable Energy” as defined in the Regulations, being a new build or an expansion which is physically located in Nova Scotia, and having completed a feasibility study regarding grid interconnection requirements. Bidders are also required to disclose:
- how their proposed project complies with the requirements of the Regulations
- how the project will be economically viable
- proof that the bidder has the technical capacity to complete the proposed project
- the projected date the facility will be in-service
- previous experience with renewable electricity projects
The primary basis on which bids will be evaluated under an RFP is the degree to which the proposed project provides the best value from renewable electricity for customers. Certain criteria will be scored to determine value, including: Price (35pts), Social & Local Economic Benefits (25pts), Project Readiness & Risk (20pts), Grid Benefit & Regional Dispersion (10pts), and Developer Experience & Risk (10pts).
Program Costs and Benefits
All GCP Consumers will pay a fixed rate for the duration of their selected term. GCP Consumers with longer term contracts will also pay lower associated tariffs.
RE procured on behalf of GCP Consumers will go toward both meeting their energy needs, as well as contributing to carbon emission reduction commitments. This is done by claiming environmental attributes associated with RE procurement towards reducing their Scope 2 Greenhouse Gas footprint. The GCP will also enable GCP Consumers to mitigate their exposure to the carbon tax, as customers will not be charged a carbon tax on their electricity load that equates to the volume of RE they receive under the GCP. The specifics around how this will be implemented are still being finalized.
On July 10, 2021, then Premier of Nova Scotia, Iain Rankin, (his Liberal government was replaced by a Progressive Conservative government in the election of August 17), announced an initiative titled “Rate Based Procurement,” seeking to procure 350MW of renewable electricity in Nova Scotia. While this announcement was not associated directly with the GCP, it is widely understood that this procurement will be used as a pilot for the GCP.
Regulations specifically designed for the GCP were slated to be finalized near the end of August, 2021, with the EOI window tentatively slated to begin in November.
It remains to be seen, however, how the newly elected Progress Conservative government in Nova Scotia will carry through with this important initiative.
David Reid and Mohammad Ali Raza are partners in the Business Group of Cox & Palmer’s Halifax office and members of the Firm’s Renewable Energy Group. This article was written with the assistance of Miguel deMello, a law student working at Cox & Palmer.
This article originally appeared on The Lawyer’s Daily website published by LexisNexis Canada Inc.