Toronto: A range of public and private organizations have set their sights on the early release of an improved standard offer for combined heat and power (CHP) in Ontario. In a joint letter to the Ontario Power Authority February 17, the groups recognized the work the OPA has done in the area and encouraged it to move quickly to resolve the program design and pricing model. Signatories were diverse, including Northland Power, the Toronto Atmospheric Fund, Golder Associates, Enwave, Honeywell, Union Gas and the Pembina Institute.
The province has announced that it would release a standard offer for CHP on more than one occasion in recent years, but for various reasons, the program never got off the ground. Now that the FIT program is underway, and with delivery constraints becoming a more serious issue in some areas, there are indications that the time for CHP has finally come. The letter from this informal alliance noted that such a program would be “a perfect compliment to the renewable FIT program introduced last year,” and that prompt release would “create certainty to enable investment.”
The letter also noted that the benefits of such a program would include “Help[ing] avoid the need for the proposed $600 million third transmission line to downtown and central Toronto through the City’s east end,” and “Reduc[ing] transmission and distribution losses.” It put forward what it called “Five key principles” intended to “enable Ontario to extend our current leadership in green energy to include CHP under the CESOP program and make it a reality.” The principles were:
1. Availability to all sectors: The CHP policy should be applicable to all projects within the targeted areas, including institutional, commercial and industrial projects and public/private partnerships.
2. Prioritization based on Need and Efficiency: If priorities are to be established in the selection of CHP projects, the primary metric should be a project’s efficiency favouring projects that capture waste heat and pressure.
3. Project Size: In principle, all sizes of projects should be eligible assuming that there is sufficient demand for the electricity that is produced. If a project size cap is to be imposed under the CESOP program it should be no lower than 20 MW.
4. Appropriate Pricing: As in any market, the most important principle will be to establish a price that is fair for both proponents and rate payers. An acceptable pricing formula would:
• Recognize the nature of combined heat and power, with payment based on benchmark heat rates or based on a minimum run-time;
• Provide for a linkage of natural gas costs to electricity revenue;
• Compensate for benefits to the distribution system (such as payment for avoided line-loss and location-specific avoided transmission costs); and
• Consider the marginal avoided cost of new supply from other sources
5. Simplicity: Just as important as getting the price right is the need to keep the contract terms as simple and predictable as possible.
The group met with OPA CEO Colin Andersen in advance of the OPA board meeting, and brought along with them representatives from the health and community housing sectors. Toronto Mayor David Miller sent a letter on February 18th to Minister Duguid in support of the initiative. For more information on the initiative, interested parties are invited to contact Julia Langer at the Toronto Atmospheric Fund (
At approximately the same time, APPrO was developing a relatively detailed set of recommendations with the help of some of the same organizations. For more information on APPrO’s working group or the recommendations, please contact Jake Brooks at APPrO.