3. The Approval Process: First in Construction, First Served
The approval process is based on the principle of "first in construction, first served," and is designed so that a prospective proponent must progressively demonstrate that their project is advancing towards construction and commissioning within a prescribed time period.
After one year of experience, Natural Resources Canada is making some adjustments to the program's approval process, which will improve program delivery. Under the new approval process, the submission of an Environmental Assessment, which was Step 2 under the previous approval process, will now become Step 3 and the Technical Project Information application, which was previously Step 3 previously, will now become Step 2. Details on these changes are described below.
To promote openness and ensure fairness to renewable power producers who are interested in obtaining an incentive under the program, all contribution agreements with potential Eligible Recipients, including the proponent's name, project, type and size of project, and aggregated amount of the signed contribution agreements, will be posted regularly on the program's Web site.
In the event that demand exceeds the annual budget reference level for contribution funding, the program may designate the commissioning date of qualifying projects to align with the program's fiscal framework.
Expenses incurred during project development will be undertaken solely at the proponent's risk and expense and will not constitute any form of entitlement for funding under the program.
Step 1: Notice of Project Application
The development of large-scale renewable power projects is expensive. The cost per installed megawatt of capacity can vary substantially from technology to technology and from site to site. To help proponents assess renewable or energy efficiency projects, Natural Resources Canada has developed a pre-feasibility assessment software tool called RETScreen® International. The software, available free of charge, evaluates the energy production, life-cycle costs, emission reductions, financial viability and risk for various types of renewable energy technologies and energy efficiency projects. This tool can be very useful in evaluating the basic financial requirements of a project. More information about RETScreen® and a copy of the software can be obtained at www.retscreen.net.
To formally apply to the ecoENERGY RP, a proponent must complete a Notice of Project Application and provide a project description that meets the requirements of the Canadian Environmental Assessment Act (CEAA) (available at http://www.ceaa-acee.gc.ca/050/index-eng.cfm). A guidance document for preparing project descriptions for ecoENERGY projects is also available upon request. The Notice of Project Application form can be found in Annex A.
Recent court decisions have clearly established that there is a proactive requirement on the Crown to consult Aboriginal groups and, if required, accommodate their interests, when the Crown has knowledge of an existing or potentially existing Aboriginal or treaty rights and contemplates an action that may infringe upon these rights.
Proponents are thus requested to identify, at the time of the NPA, all Aboriginal groups that may be impacted by the project or that may have an established or asserted Aboriginal treaty right claim on the area occupied by the project, and demonstrate that these groups have been contacted and made aware of the project. Natural Resources Canada strongly encourages all proponents to engage interested Aboriginal groups early in the pre-planning stage of their project and during the environmental assessment process.
Natural Resources Canada may also contact any Aboriginal groups that may have an interest in the project and invite them to identify any issues or concerns regarding the proposed project, particularly any effect the project may have on the environment, traditional use, or any Aboriginal or treaty rights.
On receipt of the Notice of Project Application, Natural Resources Canada will verify that all the required information has been submitted. Natural Resources Canada will have 30 business days to review the documentation and assess whether the project fulfils the first basic eligibility criteria of the program. Failure to provide all the required information will result in the rejection of the application. A prospective proponent can reapply when all information becomes available.
Once Natural Resources Canada has approved the Notice of Project Application, it will notify the proponent and issue a project registration number. Natural Resources Canada will then publish information a, b, c1, e2, i and k of the Notice of Project Application form on its Web site.
The proponent may then proceed to Step 2, the Technical Project Information application, as soon as all the required information to review the project can be provided.
Step 2: Technical Project Information
To demonstrate that their project is at a sufficiently advanced stage of planning and development, and to provide information required for the Contribution Agreement, proponents must meet the requirements outlined in the Technical Project Information application form.
Proposed hydro-electric and biomass energy installations will also need to be certified under Environment Canada's Environmental ChoiceM Program for low-impact renewable electricity (see http://www.ul.com). These projects will need to provide Natural Resources Canada with a Letter of Opinion from the Environmental ChoiceM Program administrator, as stipulated in the Environmental ChoiceM Program literature, with their Technical Project Information application.
The Technical Project Information application form can be found in Annex B. The Technical Project Information application and related documents must be provided in binders. Please provide one hard copy of the Technical Project Information and related document and one electronic/digital format. Scanned documents in PDF format are acceptable.
On receipt of the Technical Project Information application, Natural Resources Canada will verify that all required information has been submitted. The Department will then issue a letter acknowledging receipt of the document. If the Technical Project Information application is incomplete or information is missing, the Technical Project Information application will be rejected and the proponent will have to resubmit the Technical Project Information with the required information.
Natural Resources Canada will undertake a technical review of the Technical Project Information applications as they are received, provided that:
- the applications are complete;
- funds are available and the project may be eligible for a Contribution Agreement;
- the expected construction start date of the project is less than 8 months from the date of receipt of the Technical Project Information; and
- the expected date of commissioning of the project is less than 20 months from the date of receipt of the Technical Project Information.
Natural Resources Canada will have 30 days to review the information provided under the Technical Project Information application and determine the eligibility of the project for a contribution agreement.
If information needed to complete Natural Resources Canada's technical review of the Technical Project Information application is missing, the department will request the additional information and will consider the date of reception of the additional information as the new date of reception of the Technical Project Information application and will continue its technical review accordingly. Proponents will have 30 days to provide the additional information requested. Failure to meet this timeline may result in the Technical Project Information application for the project being rejected from further technical review and being placed on the waiting list (see below).
Upon a positive review of the Technical Project Information, and subject to all other conditions of the program, including availability of funds, Natural Resources Canada will proceed to negotiate and sign a contribution agreement with the proponent.
When all program contribution funding has been committed, Natural Resources Canada will establish a waiting list of prospective projects based on the date and time of receipt of Technical Project Information applications. The department will verify and begin the technical review of projects on the waiting list only when contribution funding becomes available.
A proponent will officially become an Eligible Recipient once it has signed a contribution agreement with Natural Resources Canada. The signing of a contribution agreement signifies that the Eligible Recipient qualifies for an incentive payment under the ecoENERGY RP, subject to meeting all of the requirements and terms and conditions set out in the contribution agreement for the project.
Proponents that start construction of their projects before signing a contribution agreement do so at their own risk.
Natural Resources Canada will list projects with signed contribution agreements on its Web site. Information will include the proponent's name, the type, size and location of the project, as well as its anticipated commissioning date. The aggregated amount of funding provided for all projects with signed contribution agreements will also be shown.
Step 3: Environmental Assessment Process
In most cases, a proponent will need to conduct an environmental assessment pursuant to the Canadian Environmental Assessment Act, which, depending on the nature of the project, may be a screening, comprehensive study or review panel type assessment. Certain projects may be captured under the Exclusion List Regulations of the Canadian Environmental Assessment Act and will not require an environmental assessment. In all cases, proponents must comply with all applicable federal legislation, such as the Species at Risk Act, the Migratory Birds Convention Act and the Fisheries Act.
Natural Resources Canada will become a Responsible Authority under the Canadian Environmental Assessment Act for a project once a contribution agreement is signed.
NRCan will continue to participate as a Responsible Authority for three months in the environmental assessment of projects for which the federal environmental assessment process was started under the program’s approval process established in the April 2007 terms and conditions. If a proponent is not able to submit a Technical Project Information application and sign a contribution agreement for a project within this timeframe, NRCan will no longer be a Responsible Authority for that project.
The Department will resume the review of the project’s environmental assessment once the Technical Project Information requirements are met and a contribution agreement is signed.
For a screening-level assessment, Natural Resources Canada will aim to decide on the project within eight months of receiving the Environmental Impact Statement (EIS). The proposed timing is a program objective and will depend on several factors, including: co-ordination with other responsible and/or federal authorities; consultations with the public and Aboriginal and First Nations people; harmonization with the province or territory; the quality of the initial EIS; and the quality of additional information received following the federal review. Projects that require a comprehensive study or a review panel assessment may require a longer period of time to assess.
Although a contribution agreement may be signed prior to completion of an environmental assessment, a positive decision must be rendered prior to Natural Resources Canada making any payment of the incentive on the production from the project under the contribution agreement.
Any information related to the environmental assessment of proposed projects is public information and, as such, will be made available to the public in accordance with the Access to Information Act, through the Canadian Environmental Assessment Registry.
The cost to undertake an environmental assessment of a proposed project varies from project to project. Proponents will assume the financial cost related to the development of an environmental assessment.
Step 4: Notification of the Start of Construction
After signing a contribution agreement for a Qualifying Project, the Eligible Recipient will have six months to demonstrate that construction of the project is ready to start as described under a) through d) below.
This step verifies that the Eligible Recipient is actually proceeding with construction and is not hampered by technical or financial difficulties, such as late delivery of equipment, investor or financial delays or other unforeseen problems with the project at the time of signing the contribution agreement. The Eligible Recipient must provide the following:
- a letter of approval from a financing authority to finance the project;
- a letter from the equipment manufacturer or supplier for the Qualifying Project, confirming the purchase order of the equipment, total nameplate capacity ordered and expected date of delivery;
- where applicable, a letter from an electrical utility or other purchaser, confirming that the power purchase agreement has been signed and confirming the expected annual production to be sold;
- a report that shows that the site construction has started (e.g. start of site and project engineering) and providing an update on the milestones of the project and on its final commissioning date.
On receiving the above information, Natural Resources Canada will verify it and issue a Notice of Start of Construction confirming that it has been made aware that construction has started.
Failure to provide the above information during the allotted six-month period after signature of the Contribution Agreement by both parties will result in the termination of the Contribution Agreement and the removal of the project from the program's approval process. The proponent can reapply, but must re-submit a new Technical Project Information application (Step 3).
The Eligible Recipient the ER may start construction of the project at any time before the six-month period.
Step 5: Commissioning of a Project
Because all projects must be commissioned before March 31, 2011, Natural Resources Canada requires that Qualifying Projects be commissioned within one year after the Notice of the Start of Construction (Step 4) has been issued. Natural Resources Canada may grant an extension beyond the 12-month construction period in the event that the project experiences delays beyond the proponent's control. In such case, the proponent will need to set construction milestones that are acceptable to Natural Resources Canada showing that construction is advancing as planned and that it will be able to commission the project as per these established milestones. Quarterly reports on construction will be requested by Natural Resources Canada. No extension will be granted beyond March 31, 2011.
Unless the Eligible Recipient can provide satisfactory assurances of its ability to complete the project within a period that is acceptable to Natural Resources Canada, the Department will issue a Notice of Termination of the Agreement.
Once a project has been built and commissioned, the Eligible Recipient must send to Natural Resources Canada a commissioning report that is signed by a professional engineer registered in Canada. The report must state the date of the project's commissioning and its rated capacity, and reconfirm the Qualifying Project's expected annual production based on long-term assessment of the resource.
For those projects that require EcoLogoM certification, the results of the Terra-Choice certification process must be provided as well as a copy of the EcoLogoM Certification with the commissioning report or as soon as it is available after commissioning.
Once Natural Resources Canada has received and approved the commissioning report, it will issue a letter of acknowledgment and acceptance of the report.
Once accepted and when the environmental assessment for the project has been approved, the Eligible Recipient will then be able to claim the incentive on the terms set out in the Contribution Agreement for the project.
Natural Resources Canada will update its Web site to indicate the date of the Qualifying Project's commissioning and environmental assessment status.
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