Canada Energy Transition Blog

New renewable energy procurement announced in Nova Scotia

Aug 24, 2021 6 MIN READ
Richard J. King

Partner, Regulatory, Indigenous and Environmental, Toronto

Evan Barz

Associate, Disputes, Toronto

Marleigh Dick

Associate, Disputes, Toronto

Power stations

On August 13, 2021, the Province of Nova Scotia (through its Procurement Administrator, CustomerFirst Renewables) issued a draft Rate Base Procurement (RBP) [PDF] request for proposal (RFP) to procure a target of 1,100 gigawatt hours (GWh) or 350 megawatts (MW) of renewable low-impact electricity[1] from independent power producers. The supplier(s) selected through the RFP process will be awarded a 25-year Power Purchase Agreement(s) with Nova Scotia Power Incorporated (NSPI).

The RBP is intended to assist the province in achieving its 80% renewable electricity standard by 2030[2] and support the province’s goals of achieving 53% reduction in greenhouse gas (GHG) emissions by 2030 and net-zero by 2050.

In this blog post, we discuss the procurement process contemplated by the draft RFP and the implications of the procurement initiative for Nova Scotia’s energy industry.

The RFP process

The draft RFP is open for public comment from August 13 to August 27, 2021. It contains some highlighted sections that require further development, including sections on federal funding for projects, the compensation framework during curtailment, ancillary services and allowable nameplate capacity. The form of Power Purchase Agreement will be released for comment independently.

The final RFP will be issued in late October 2021 and will be posted on the Nova Scotia RBP page. Proponents will be notified 10 business days in advance of the release date of the final RFP.

To participate in the RFP process, proponents must submit a Notice of Intent to Bid Form and associated fee, due two weeks after the RFP release date, and prepare and submit a proposal eight weeks after the date of issuance.

The Procurement Administrator will select a “Shortlist Portfolio” within six weeks following the proposal submission deadline. The suppliers selected for the Shortlist Portfolio will be required to attend an interview in the two-week period following the release of the Shortlist Portfolio. The purpose of the interview is to (i) fill in any gaps in the Procurement Administrator’s understanding of the strengths and risks associated with a proposal and (ii) develop confidence in a proponent’s ability to deliver on their offer. Within three weeks of their interview, proponents will be notified as to whether their bid is successful. Within 60 days of the notification date, the Procurement Administrator will release a report outlining, among other things:

  • a comparative analysis of the bids received
  • details of any relevant considerations that support the Procurement Administrator’s selection of the successful bidder(s)
  • for any contract awarded to a bidder:
    • the price for electricity under the contract
    • the nameplate capacity of the generation facility under the contract
    • the annual amount of electricity expected to be generated by the generation facility under the contract

The target date for execution of the Power Purchase Agreement(s) between the successful bidder(s) and NSPI is eight weeks after the successful bidder(s) are selected by the Procurement Administrator.

Evaluation of bids

To be eligible to participate in the RFP process, proposals must meet certain “Minimum Criteria.” If a proposal meets the Minimum Criteria, it will then be evaluated against “Scored Criteria” to enable the Procurement Administrator to select the highest scoring projects.

The Minimum Criteria and Scored Criteria are described below.

Minimum Criteria

To satisfy the Minimum Criteria, a proposed project must

  • be a Renewable Low-Impact Electricity Generation Facility, which is defined in the Renewable Energy Regulations to be a facility that generates low-impact electricity and which has received all approvals and permits required under the Regulations or any other applicable legislation
  • be a new build or an expansion (i.e., none of the capacity or energy that forms the basis of the proposal can be under an existing contract with NSPI or another entity). An expansion is defined as new generation at a renewable energy-generating facility that provides additional capacity added at the site of an existing project
  • be physically located in Nova Scotia and connected to the Nova Scotia electricity transmission grid
  • include a fixed price for energy on a $/MWh basis (price bids with an escalator will not be considered)
  • have a Commercial Operation Date between January 1, 2022, and December 21, 2025
  • include the annual project output over the 25-year contract term and for one year at the probability of exceeding 50%, 90% and 99%, and the expected Net Capacity Factor
  • include a Project Nameplate Capacity of no more than 100 MW

In addition, proposals will not be considered that have not achieved certain milestones or thresholds in development related to site control, interconnection (completed Feasibility Study), a Project Plan, resource assessment, regulatory approvals, environmental risk, community engagement, financing, experience and governance.

Scored Criteria

The “Scored Criteria” are evaluated using a rubric to assign points to each proposal. Each proposal can receive a maximum score of 100 points.

The draft “Scored Criteria” include

  • Project Risk (30 points), which assesses the likelihood the proposed project will meet its Commercial Operation Date and operate successfully over the lifetime of the asset and consists of criteria such as interconnection status, financing plan, proponent experience, environmental risk, stage of permitting, site control status, etc.
  • Price (40 points), with projects allocated points based on a percentile ranking of their bid price below the Competitive Price Threshold of $89/MWh
  • Social & Economic Benefits (20 points), which incorporates the value the project adds to the social and financial well-being of local Nova Scotians, utilizing criteria that includes points for project with full/part ownership by Mi’kmaq, an “underrepresented group” or a Nova Scotia municipality
  • Grid Benefit (10 points), which awards points based on a project’s point of interconnection

The Procurement Administrator will stack projects from lowest to highest total score. From this stack, it will select the highest performing project(s) as the successful bidder(s). In the event of a tie between one or more proposals, the Procurement Administrator will give the higher ranking to the proposal with the higher score for Price as the first tie-breaker, followed by the proposal with the higher score for Social & Economic Benefits as the second tie-breaker.

Implications of the procurement

The release of Nova Scotia’s draft RFP represents an important step towards achieving its 80% renewable electricity standard by 2030 (the province’s installed capacity is just over 3,000 MW). Like other Canadian jurisdictions that have initiated renewable procurements, Nova Scotia’s RFP puts in place measures aimed at ensuring that the successful projects bring benefits to rural and Indigenous communities in the province. The Procurement Administrator has estimated that the RFP will create 4,000 jobs, primarily in rural Nova Scotia, and generate more than $550 million in construction activity, while reducing Nova Scotia’s GHG emissions by more than 1 million tons each year.

For renewable energy developers, the RFP represents an opportunity to enter into a long-term power purchase agreement with a provincially regulated electric utility, in a part of the country that may well see further renewable development in the short- to mid-term.

[1] “Renewable low-impact electricity” is defined in s. 3(1) of the Renewable Electricity Regulations, N.S. Reg. 155/2010, made under Section 5 of the Electricity Act, S.N.S. 2004, c.25, to mean electricity produced from any of the following: (i) solar energy; (ii) wind energy; (iii) run-of-the-river hydroelectric energy; (iv) ocean-powered energy; (v) tidal energy; (vi) wave energy; (vii) biomass that has been harvested in a sustainable manner; (viii) landfill gas; and (xi) any resource that, in the opinion of the Minister of Energy and consistent with Canadian standards, is able to be replenished through natural processes or through sustainable management practices so that the resource is not depleted at current levels through consumption.

[2] The province’s renewable energy standard is prescribed by section 6B(1) of the Renewable Electricity Regulations, which provides that, each year beginning with the calendar year 2030, each load-serving entity must supply its customers with renewable electricity in an amount equal to or greater than 80% of the total amount of electricity supplied to its customers as measured at the customers’ meters for that year. The incoming PC Government, in its election platform, re-affirmed the 80% figure reflected in the Regulations.