Standard offer contract
A standard offer contract (SOC) is a long-term agreement (10‒20 years) between a power authority and a renewable electricity generating facility. The power authority agrees to pay a qualifying electricity generator a tariff that is significantly higher than the wholesale market price. The long-term nature of SOCs allows smaller electricity generators to recover costs. Many SOC programs are used to stimulate rapid deployment of renewable energy sources and create additional generating capacity. Ontario's SOC program pays 11¢/kWh for power derived from wind and biomass, and 42¢/kWh for power derived from solar sources.
SOCs differ from other renewable energy credits, such as feed-in or micro-feed-in tariffs. SOC pricing is typically value-based, i.e. it does not distinguish between the type of resource and the value is often based on avoided costs. Feed-in tariffs are typically cost-based with different prices set for different renewable energy types. They also typically provide greater price stability and a long-term price schedule.
As part of its Green Energy Act, Ontario's Feed-in Tariff (FIT) program for systems greater than 10kW) and MicroFeed-in Tariff (microFIT) program for systems less than 10kW offer guaranteed pricing structures for renewable energy production. The program provides additional incentives for community-based projects. The FIT is expected to increase the share of renewable energy power production by 13 per cent by 2018. To date, the program has attracted more than $26 billion in private-sector investment, and generated an estimated 20,000 new jobs.
Nova Scotia adopted its 2010 Renewable Electricity Plan with a target of 25 per cent new renewable energy sources by 2015 and 40 per cent by 2020. Like Ontario, Nova Scotia provides guaranteed feed-in tariffs for renewable power, based on the project type and size, through its Community Feed-in Tariff program.
Renewable energy projects involving small electricity generators, particularly small wind and solar generators in urban areas.
- Long-term stability for smaller electricity generators, including municipally owned utilities or community cooperatives.
- Established and guaranteed prices for renewable energy sources provide predictable and stable funding and reduce the risks to municipalities, or their partners, to undertake projects.
- They stimulate the development of renewable electric generating capacity.
- More distributed energy generation, reducing waste from transmission lines.
Barriers and challenges
- The financial burden (administrative costs, tariffs) may be too high for very small community-based projects.
- Generally less cost-effective per megawatt of energy produced than generators developed through the RFP process.
- Programs are often politically contentious at the provincial level, leading to an unstable future or longevity, and some FIT programs have struggled in contracting and connecting available projects.
Resources and notes
- SOC: One of the largest wind turbines in an urban setting in North America is at Toronto's Exhibition Place. The turbine is co-owned by WindShare, a wind energy cooperative, and Toronto Hydro Energy Services. The SOC has also been applied to a 100-kW solar PV plant atop Exhibition Place's Horse Palace.
- microFIT: In Blind River, ON, North Shore Power Group (a municipally owned corporation) and Menova Energy Inc. provide solar PV installations for residential, municipal, institutional and business properties; funded through a $49.5 million municipal debenture. North Shore owns the PV systems, and revenues generated under Ontario's microFIT program are shared with property owners.
- COMFIT: In Nova Scotia, the latest round of COMFIT approvals has gone to Spiddle Hill, Wedgeport, Bayswater, Cheticamp and North Preston; all for wind energy systems ranging from 50 kW to 4.6MW.