Regulation - LGIC
Supporting Residential Roof-Top Solar and other renewable resources by clarifying eligibility of third-party leasing and financing net metering arrangements
Regulation Number(s):
386/22
541/05
387/22
389/10
541/05
387/22
389/10
Instrument Type:
Regulation - LGIC
Bill or Act:
Ontario Energy Board Act, 1998, Energy Consumer Protection Act, 2010
Summary of Decision:
On April 14, 2022, Ontario filed O. Reg. 386/22, a regulation to amend O. Reg. 541/05 (Net Metering), made under the Ontario Energy Board Act, 1998, and O. Reg. 387/22, a regulation to amend O. Reg. 389/10 (General), made under the Energy Consumer Protection Act, 2010.
These regulatory changes, set to come into force July 1, 2022, clarify what types of third-party ownership arrangements a customer can enter into for renewable generation equipment or to purchase renewable electricity for the purposes of net metering. These changes also address regulatory barriers for third-party electricity retailers to sell the electricity a customer would use for net metering.
Third-party ownership net metering arrangements allow a customer to participate in net metering while not owning and/or operating the renewable generation facility that is generating the electricity. Instead, the customer has an agreement with a third-party to lease, rent or finance the generation equipment and related systems, or to purchase the electricity through a power purchase agreement.
Through these changes, we have broadened options for customers to access net metering by no longer requiring customers to finance the upfront capital costs of installing a renewable generation system themselves. This also creates new opportunities for renewable energy businesses, including installers, developers, and service providers to offer distributed energy solutions that better meet customer needs, such as power purchase agreements that allow customers to pay based on the amount of electricity generated.
These regulatory changes, set to come into force July 1, 2022, clarify what types of third-party ownership arrangements a customer can enter into for renewable generation equipment or to purchase renewable electricity for the purposes of net metering. These changes also address regulatory barriers for third-party electricity retailers to sell the electricity a customer would use for net metering.
Third-party ownership net metering arrangements allow a customer to participate in net metering while not owning and/or operating the renewable generation facility that is generating the electricity. Instead, the customer has an agreement with a third-party to lease, rent or finance the generation equipment and related systems, or to purchase the electricity through a power purchase agreement.
Through these changes, we have broadened options for customers to access net metering by no longer requiring customers to finance the upfront capital costs of installing a renewable generation system themselves. This also creates new opportunities for renewable energy businesses, including installers, developers, and service providers to offer distributed energy solutions that better meet customer needs, such as power purchase agreements that allow customers to pay based on the amount of electricity generated.
Analysis of Regulatory Impact:
The proposed regulatory changes would impact a broad range of stakeholders including electricity consumers, renewable energy businesses and local distribution companies.
Direct compliance costs are anticipated to be related to licensing fees (administered by the Ontario Energy Board) for renewable energy businesses that participate as third-party generators retailing electricity through a power purchase agreement to customers for net metering. Direct compliance costs for local distribution companies would include costs to update their net metering application processes and customer information systems administered to accommodate the regulatory changes.
All electricity consumers would be impacted by a small increase in electricity system costs that would result from the anticipated increase in net metering uptake caused by adoption of third-party ownership arrangements. The overall increase in costs is estimated to be approximately 0.01%.
The main benefit to stakeholders would be greater customer choice by enabling more customers to participate in net metering, providing homeowners, farms, and businesses with new opportunities to save on their energy costs and achieve their sustainability goals, such as renewable energy targets and greenhouse gas emissions reductions. Broadening access to net metering will also create new market opportunities for renewable energy businesses to offer distributed energy solutions to customers.
Direct compliance costs are anticipated to be related to licensing fees (administered by the Ontario Energy Board) for renewable energy businesses that participate as third-party generators retailing electricity through a power purchase agreement to customers for net metering. Direct compliance costs for local distribution companies would include costs to update their net metering application processes and customer information systems administered to accommodate the regulatory changes.
All electricity consumers would be impacted by a small increase in electricity system costs that would result from the anticipated increase in net metering uptake caused by adoption of third-party ownership arrangements. The overall increase in costs is estimated to be approximately 0.01%.
The main benefit to stakeholders would be greater customer choice by enabling more customers to participate in net metering, providing homeowners, farms, and businesses with new opportunities to save on their energy costs and achieve their sustainability goals, such as renewable energy targets and greenhouse gas emissions reductions. Broadening access to net metering will also create new market opportunities for renewable energy businesses to offer distributed energy solutions to customers.
Further Information:
Link to Environmental Registry
Proposal Number:
22-ENDM009
Posting Date:
Summary of Proposal:
Contact Address:
Effective Date:
April 14, 2022
Decision:
Approved