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Smaller generating facilities that are located close to consumers of electricity can play an important role in addressing local supply needs. Distributed generation can help improve transmission and distribution reliability by reducing losses and congestion on the power lines. In most cases, distributed generation projects can be completed faster than large-scale projects.

Distributed generation projects can take many forms:

  • Small-scale generation projects that typically use natural gas or renewable energy sources designed specifically to supply electricity to the local utility or to the wholesale market.
  • Electricity produced by companies who have generators installed within their facilities. This type of self-generation is created primarily to meet the company's own electricity needs, although it may choose to sell extra power to its utility or the wholesale market.

What you need to know:

  • If you plan to connect to the distribution system (less than 50 kilovolts (kV)), contact your local utility about the technical requirements. If you plan to connect to the transmission grid (50 kV or higher), contact the applicable transmitter. All connections to transmission lines as well as any generation project greater than 10 megawatts (MW) must be reviewed by the IESO.
  • If you connect directly to the transmission lines, you must register with the IESO as a market participant.
  • You will need a generator licence from the Ontario Energy Board.
  • If you connect to the distribution lines, carefully review your costs to determine whether it is better to sell to your local utility or participate in the wholesale market.
    • Your utility will buy electricity from you at the wholesale price as long as you are able to meet technical and metering requirements set out in the Distribution System Code. The government changed the net metering provisions to allow customers to receive credit for excess energy from renewable sources for all eligible projects that produce up to 500 kilowatts.
    • You can sell electricity to the wholesale market and, depending on whether you can control the timing and amount of your output, you can also receive payments to provide operating reserve. There are, however, costs associated with registering and participating in the wholesale market. More information about registering as a market participant is available in the "Inside the Market" section of this site or by contacting the IESO.

Renewable Energy

The Ontario government has committed to a target of ensuring that five per cent (1,350 MW) of all generating capacity comes from renewable energy sources by 2007, increasing to 10 per cent by 2010. To that end, the Ontario Ministry of Energy has announced a number of new efforts to promote new generation projects -- particularly in the areas of renewable and clean generation.

Ontario's renewable energy supply is increasing with a series of Requests for Proposals (RFPs) intended to stimulate the development of generation from renewable sources. More information about these and other new supply projects being developed through the Ontario government's RFP process is available on the Inside the Market Section of this site.

Developers of renewable and clean energy projects can refer to a new Ministry of Energy publication: "REDO - Renewable Energy Development in Ontario" Here, you will find detailed information about government programs, the approvals process for new projects, as well as links to useful contacts.