Ontario Biogas System Update: Feed-In Tariff, Green Energy Act and Regulated Mixed Anaerobic Digestion Facility Rules

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Table of Contents

1. The Feed-In Tariff (FIT) Program
2. Approvals Process for a Biogas System
3. Renewable Energy Approvals
4. Overall Implications of New Rules and Programs

The biogas sector in Ontario is off to a good start. Many projects are under construction or are operational, in part with funding through the Ontario Biogas Systems Financial Assistance Program. A variety of changes to provincial policies and regulations are now in place to assist even more biogas projects. Research projects, best management practices and safety programs are being developed. This infosheet outlines these new and improved opportunities for biogas systems, summarizing the basic components and details of the programs, policies, and regulations. Please refer to the original source materials for more in-depth information.

The Feed-In Tariff (FIT) Program

The Feed-In Tariff (FIT) program is Ontario's electricity price program for power from renewable energy sources. The FIT program is being deployed by the Ontario Power Authority to support the Green Energy and Green Economy Act. FIT is the next generation of pricing, replacing the former Renewable Energy Standard Offer Program (RESOP). FIT offers a range of prices for electricity from different technologies based on the cost of power production from those systems. Table 1 provides the current FIT prices for biogas systems.

Location Restriction	Size	Contract Price (¢/kWh)
On-Farm	≤ 100 kW	19.5
On-Farm	>100 kW to ≤ 250 kW	18.5
-	>250 kW to ≤ 500 kW	16
-	>500 kW to ≤ 10 MW	14.7
-	>10 MW	10.4

There are many details associated with securing a contract with these prices. Check FIT program documentation at the Ontario Power Authority website for more program details at fit.powerauthority.on.ca.

Several important factors related to the FIT prices include:

• There are additional bonuses in the FIT program, including a "Community Price Adder" for biogas projects involving the local community (0.4 ¢/kWh) and an "Aboriginal Price Adder" for projects with aboriginal community participation (0.6 ¢/kWh). The community adder is available for projects when there are one or more Ontario residents directly investing in any size renewable energy project. Individual farmers applying for a FIT contract may be able to satisfy this criteria, securing the 0.4 ¢/kWh bonus.
• There is an incentive to operate during peak hours. On-peak hours are 11 am to 7 pm on business days. Any other time is considered off-peak. Projects will earn the posted FIT price multiplied by 1.35 during peak periods, and the FIT price multiplied by 0.9 during off-peak periods. The posted "contract" price is a calculated return and assumes a 75 per cent operational capacity. Through good planning, biogas systems should be able to capture virtually all on-peak hours, potentially earning more than the posted contract price.
• To satisfy the "On-Farm" designation, biogas systems must be a "Regulated Mixed Anaerobic Digestion" facility under the Nutrient Management Act. This approval is discussed later on page 2-3 of this infosheet.

Behind-the-Meter Billing Eliminated

Under the former Renewable Energy Standard Offer Program (RESOP), biogas systems set up "behind-themeter" with other on-site electricity use (such as for the barn or farmstead) avoided certain electricity system expenses for the power they used when their biogas system was operating. This process has been eliminated for projects under FIT.

Streamlined Grid Connection Process: "Capacity Allocation Exempt" (CAE) Facility

Green energy projects are required to go through a review process when they wish to connect to the electrical grid. It is critical to work with a knowledgeable professional to navigate this process. The Ontario Energy Board (OEB) has established streamlined connection rules for "capacity allocation exempt" (CAE) generation facilities - that is, for facilities that have a name-plate rated capacity of:

• ≤ 250 kW and are connected to a < 15 kV electrical line; or
• ≤ 500 kW and are connected to a ≥ 15 kV electrical line;
• and that are not a "micro-embedded generation facility". (Micro-embedded generation facilities are embedded systems smaller than 10 kW, and have additional allowances in the OEB Distribution System Code).

Being a CAE facility means that eligible projects get a fast-track into the assessment process. It does not guarantee connection to the grid. A Connection Impact Assessment (CIA) will still need to be completed by the local electrical distribution company (e.g. Hydro One Networks Inc). For areas of the province with limited capacity on the transmission system, capacity allocation exempt facilities will not have to meet requirements for transmission availability testing. However, as of December 8, 2010, it is proposed that capacity allocation exempt facilities will be required to include a connection capacity assessment in their FIT application.

Approvals Process for a Biogas System

There are four main approvals routes for biogas systems, based on the type of material being digested, and the type of energy being produced. The four processes are:

1. Nutrient Management Regulated Mixed Anaerobic Digestion Facility (RMADF) approval for manure-based biogas systems mixing up to 25 per cent of certain off-farm materials, and producing any type of power output
2. Renewable Energy Approvals (REA) for all electricity-based biogas projects, (except systems with RMADF approval or agricultural systems at a farm with a Nutrient Management Strategy)
3. Certificate of Approval for non-electricity biogas projects (such as using biogas as a heating fuel) using waste as inputs
4. No approval for non-electricity biogas systems using only exempt wastes such as agricultural waste.

Recent changes to the RMADF process, and the newly introduced REA process are outlined below.

Environmental Approvals to Mix Manure and Food Waste in a Biogas System at a Nutrient Management Regulated Mixed Anaerobic Digestion Facility

The Regulated Mixed Anaerobic Digestion Facility (RMADF) rules to allow the mixing of off-farm materials in manure-based biogas systems have been expanded. The original rules, developed jointly by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) and the Ontario Ministry of the Environment (MOE) were established to support manure treatment. Under RMADF rules, a biogas system at a farm is permitted to mix up to 25 per cent off-farm materials with agricultural material. Of the agricultural material, at least 50 per cent by volume must be manure. The regulations allow certain off-farm materials to be mixed with agricultural inputs without any pre-treatment (called Schedule 1 materials). Other materials require a thermal pre-treatment of 70°C for 1 hour, or 55°C for 20 hours (called Schedule 2 materials).

Changes made to the RMADF process in the summer of 2009 include:

• Expanding the list of eligible materials in Schedule 1 and Schedule 2 to include some post-consumer restaurant materials, materials containing meat and meat byproducts, and dissolved air flotation (DAF) materials;
• Increasing the maximum quantity of off-farm material that can be received at the biogas system from 5000 m3/year to 10,000 m3/year;
• Increasing the amount of off-farm material that can be received at a site from 100 m3/day to 200 m3/ day for material not considered livestock farm feed;
• Adding a maximum particle size requirement of 2.5 cm for treatment of Schedule 2 materials

The key advantages of the RMADF process for biogas projects are:

• RMADF effluent material is considered agricultural source material for the purposes of land application. This means it has to meet the same rules for spreading as conventional manure under the Nutrient Management Regulation (O. Reg. 267/03).
• The RMADF approvals process is established and provides a clear checklist approach to securing approval.

Farms that are operated under the RMADF rules are exempted from the REA process (described below), but will typically have to comply with OMAFRA's Minimum Distance Separation formula which provides specific setback distances from residential or other sensitive uses for biogas systems.

The RMADF rules can be found in the Nutrient Management Regulation at www.e-laws.gov.on.ca by searching for "267/03". Access to OMAFRA's Minimum Distance Separation rules can be found at www.ontario.ca/omafra by searching for "Publication 707".

Renewable Energy Approvals

The Renewable Energy Approval (REA) process for biogas systems classifies the biogas systems into three categories based on the type of input material and location. REA outlines the needed setback distances from new biogas systems to the nearest odour receptor, natural feature and water bodies; natural heritage, archaeological and cultural assessment requirements, as well as requirements of public, municipal and aboriginal consultation. Allowances for non-renewable fuel content, financial assurance requirements, and operating criteria for the biogas system are also considered through the process. This approval process has been developed to support the Green Energy and Green Economy Act.

The REA process is typically used for biogas systems when:

• An input material is used that is not permitted for Regulated Mixed AD Facilities;
• Greater than 25 per cent off-farm source material is used;
• Less than 50 per cent of the farm source material used in the system is manure; or
• The biogas system is not built on a farm.

In general, farm-based biogas systems at a non-nutrient management regulated farm, and using only exempt waste such as agricultural waste are called Class 1 systems under REA. Farm-based biogas systems using exempt waste and/or off-farm waste are called Class 2 under REA, and off-farm biogas systems are called Class 3. Systems approved under the RMADF process described previously in this infosheet and biogas facilities processing non-regulated waste on farms that are subject to a Nutrient Management Strategy are exempt from REA.

Setback Distances

For Class 1 and Class 2 biogas systems with power generation of less than or equal to 500 kW, a basic setback of 250 m from nearest odour receptor is in place under REA. The setback can be reduced down to 125 m for some components of the biogas system by meeting specified best management practices which reduce odour risk, or by incorporating odour mitigation into the facility design.

For Class 1 and Class 2 biogas systems with power generation of greater than 500 kW, a basic setback of 250 m from nearest odour receptor is in place. In addition, these systems must also include a minimum of 5 per cent manure as feed material and be equipped with a gas storage cover with design permeability as specified in the regulation. The minimum required set back of 250 m for Class 1 and 2 systems with power generation of greater than 500 kW can be reduced if the proponent prepares and submits the following three studies with the completed application for approval by the Ministry of the Environment:

• Emission Summary and Dispersion Modelling Report;
• Noise Study; and
• Odour Study

Class 3 biogas systems are required to undertake three studies identified above plus they must be equipped with a gas storage cover with a design permeability specified in the regulation and a high efficiency flare system.

Public Consultations

Class 1 and 2 biogas facilities are required to notify the public about the project as part of the REA approval, but are not required to hold public meetings. Class 3 biogas facilities under REA are required to notify or consult with local municipalities (lower and upper tier), local authorities, aboriginal communities and the public.

Non-renewable Fuel Allowances

The REA process includes allowance for 5 per cent or 10 per cent non-renewable fuels (for systems >500 kW and <500 kW respectively). This is relevant for operators with a dual-fuel biogas system.

Financial Assurance

There are financial assurance requirements for Class 2 and 3 biogas systems. A Financial Assurance is a tool used by the Ministry of Environment to ensure that if there are clean-up costs associated with a project, there are enough funds available to cover that cost. For more information about Financial Assurance and acceptable forms, reference should be made to the "Financial Assurance Guideline", Guideline F-15, PIBS 0226e03 from the Ministry of Environment. For Class 2 biogas systems, the financial assurance is limited to the removal and disposal of non-exempt wastes at the facility.

Operating Criteria

Under REA, the approval document may specify operating criteria such as minimum retention times, operating temperatures, record keeping requirements, and so on.

For detailed questions about the REA, consult the Renewable Energy Approval Regulation (O. Reg. 359/09) Renewable Energy Approvals under the Environmental Protection Act at www.e-laws.gov.on.ca.

Or contact the Renewable Energy Facilitation Office: E-mail: refo@ontario.ca or call: 1-877-440-REFO or visit: www.ontario.ca/renewableenergyprojects.

Overall Implications of New Rules and Programs

While it remains to be seen how the biogas sector will respond to these new rule and program changes, there are several positive implications for biogas developers in Ontario:

1. Better prices: The improvement in price over the RESOP value will mean that new biogas systems at all scales are expected to have a better bottom line.
2. Smaller: The significant increase in FIT prices for smaller scale systems may encourage more medium-sized farm operators to actively consider biogas systems. In addition, the improved access into the grid connection process for smaller projects may help move these projects forward faster.
3. On-farm: There are a number of factors that make farm-based biogas systems attractive, including:
   1. the higher-value FIT prices are available for farm-based systems;
   2. the increased allowances for type and quantity of material acceptable through the RMADF rules (which are only applicable to farm-based systems using manure), and the ability to manage the resulting effluent as agricultural source material; and
   3. the streamlined Renewable Energy Approvals process for projects that do not meet the RMADF process.

These changes to rules and programs clear a broad path for biogas systems to move forward in Ontario. It will be exciting to see the outcomes as the biogas sector moves from early adoption to broader implementation in Ontario's agricultural and food sectors.