Today, March 10, 2017, Hank Van Bakel has been promoted to President of ORTECH Consulting, an operating subsidiary of Kontrol Energy.
Hank brings a proven track record of operational leadership and team commitment,
which makes him a natural fit as the Head of ORTECH. Kontrol Energy will look to Hank
to successfully guide the company in a new direction of growth and opportunity.
TORONTO, Feb. 10, 2017 /CNW/ - Kontrol Energy Corp. (CSE:KNR) (the "Company") announces that it has completed the acquisition of Ortech Consulting Inc. ("ORTECH"). ORTECH is a leading engineering consulting firm specializing in Green House Gas ("GHG") reporting, air quality testing, emission testing and renewable energy/power consulting.
ORTECH has a 20-year successful operating history and has a stable client base, including some of Canada's largest integrated oil and gas companies. A material portion of ORTECH's annual revenue is from multi-year recurring contracts. For the last fiscal year ending March 31, 2016, ORTECH reported audited gross revenues of $5.3 Million and normalized EBITDA of $940,000.
"ORTECH is a leader and recognized brand in the Ontario GHG reporting and power generation market," says Paul Ghezzi, CEO of Kontrol Energy. "We are excited about the closing of this acquisition and we look forward to expanding ORTECH's unique services and solutions across Canada. With the recently announced Canadian Federal Government carbon tax, large emitters of GHG will be required to better track and verify their emissions. The ORTECH acquisition provides the Company with a leadership position in a rapidly growing market. Further, the acquisition aligns strategically with our intention to create carbon reduction and monetization programs for our customers," continues Paul Ghezzi.
The aggregate purchase price for the acquisition is $4.6 Million of which the Company has paid $4.6 Million in cash on closing. No common shares were issued as part of the acquisition. Ten (10%) of the purchase price will be held in escrow and be subject to any post-closing adjustments. In conjunction with the acquisition, the Company has closed on a $4 Million secured bridge loan with the Pinnacle Absolute Return Trust. The bridge loan has a term of 6 months and is secured by the assets of the Company and of ORTECH. It is anticipated that the bridge loan will be replaced by long-term senior secured debt financing over the next 6 months. Darvin Zurfluh, CEO of Pinnacle Absolute Return Trustee Corp., as Trustee of the Pinnacle Absolute Return Trust, says, "We are pleased to have completed a successful financing with Kontrol Energy Corp."
Following the acquisition the Company anticipates consolidated annual revenues for 2017 will be in the range of $10 to $11 Million and annual EBITDA in the range of $1.3 to $1.5 Million.
About Kontrol Energy Corp.
Kontrol Energy Corp. (CSE:KNR) is a leader in energy efficiency solutions and technology. Through a disciplined mergers and acquisition strategy, combined with organic growth, Kontrol Energy Corp. provides market-based energy solutions to our customers designed to reduce their overall cost of energy while providing a corresponding reduction in Green House Gas (GHG) emissions.
Additional information about Kontrol Energy Corp. can be found on its website at www.kontrolenergy.com and by reviewing its profile on SEDAR at www.sedar.com
Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward Looking Statements:
Certain information included in this press release, including information relating to future payments of holdback amounts, possible future acquisitions, anticipated consolidated revenue and anticipated annual EBITDA; the provision of solutions to customers to reduce overall energy costs and greenhouse gas emissions reductions, carbon reduction and monetization programs, growth strategy, the replacement of the secured bridge loan with long-term senior secured debt financing and other statements that express the expectations of management or estimates of future performance constitute "forward-looking statements". The forward-looking statements in this press release are presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. The forward-looking statements. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief are based on assumptions made in good faith and believed to have a reasonable basis. Such assumptions include, without limitation, that the ORTECH will be successfully integrated into the Company and that its revenues will be consistent with the Company's expectations, that suitable businesses and technologies for acquisition and/or investment will be available, that such acquisitions and or investment transactions will be concluded, that sufficient capital will be available to the Company, that technology will be as effective as anticipated, that organic growth will occur, that the Company will succeed in obtaining long-term senior secured debt financing, and others. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, lack of acquisition and investment opportunities or that such opportunities may not be concluded on reasonable terms, or at all, that sufficient capital and financing cannot be obtained on reasonable terms, or at all, that technologies will not prove as effective as expected that customers and potential customers will not be as accepting of the Company's (including ORTECH's) product and service offering as expected, and government and regulatory factors impacting the energy conservation industry. Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as at the date hereof and the Company does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise, except as required under applicable securities law.
SOURCE Kontrol Energy Corp.
For further information: Paul Ghezzi, CEO, paul@kontrolenergy.com; Kontrol Energy Corp., 5045 Orbitor Drive, Bldg. 9, Suite 401, Mississauga, ON L4W 4Y4, Tel: 905.766.0400, Toll free: 1.844.866.8123
ORTECH Comments on Long-Term Energy Plan
ORTECH Consulting Inc. (ORTECH), renewable energy, energy storage, greenhouse gas (GHG) and air emissions consulting, auditing and testing experts, would like to thank the Ministry for the opportunity to provide our view on the Long-Term Energy Plan (LTEP) and for providing substantive supporting documentation such as the Ontario Planning Outlook (OPO) to allow us to formulate a meaningful response.
ORTECH commend the government as well as their agencies and their partners in industry in pursuing the goal of a supply of energy that is sustainable both environmentally and economically. Energy is fundamental to all forms of activity today and many take for granted its reliability and convenience of access. Energy is the fuel which drives not only our economic activities but also much of what we do in our everyday lives. A LTEP in today’s changing world must be broad and far reaching, and touch on many different areas.
The breadth of the LTEP is important for Ontario to continue driving down GHG emissions. As clearly identified in the Fuels Technical Report (FTR), the GHG emissions associated with electricity have been falling for some time and are now a very small contributor to Ontario’s total GHG emissions. Electrification of other energy uses such as heating and transportation will allow the use of decarbonized electricity to displace more GHG in these other energy use categories. This represents a new approach to energy planning as previous LTEPs have had a very dominant focus on electricity. Such an approach will require coordinated action from multiple Ministries and agencies.
ORTECH comments on the LTEP are structured to follow the Discussion Guide and are provided in the order of the subject areas presented in that document.
Distribution and Grid Modernization
The global trend towards behind-the-meter generation will have substantial impacts on the utility sector. With the continually falling cost of photovoltaic solar and the steadily increasing retail cost of electricity, the push to self-generation is constantly increasing. ORTECH is encouraged to see that the Ministry is embracing these changes with proposed updates to the net metering regulation such as Single Entity Virtual Net Metering, removal of the 500 kW cap, and explicitly acknowledging the role of energy storage in net metering type applications.
One concern with distributed generation is the phenomenon referred to as the “Utility Death Spiral”. As rooftop solar reaches grid parity customers begin to switch towards self-generation. This reduces the amount of energy delivered by the local distribution company (LDC) which is at least partially compensated on a per kWh delivered basis. Rates are often increased to make up for lost revenue, however higher rates only serve to further incentivize self-generation, resulting in a feedback loop or Utility Death Spiral.
One possible way to avoid the Utility Death Spiral is by having the LDCs play a larger role in distributed generation. LDC’s understand their customers and dealing with distributed electrical infrastructure is their core business. They are ideally positioned to facilitate further uptake of distributed generation, increase the penetration rates of clean energy, and alleviate the need to bring power from distant centralized generators to the load centres where it is needed. Powerstream’s award winning Power House pilot program is an example of this and shows how utility-customer partnerships may work in the future.
Microgrids
Microgrid solutions are not only for remote communities. Microgrids can operate in parallel with the grid, providing the advantages of resiliency and robust infrastructure. Combining microgrids with district energy or community energy resources can create strong nodes where energy can be supplied even in extreme circumstances. Many applications demand very high reliability of energy supply resulting in mission critical equipment with high costs for low utilization. A microgrid approach to these applications can enable those systems to provide other benefits allowing for better use of existing equipment.
Microgrids can also be used to provide alternate benefits such as improved power quality, load shifting and peak shaving, amongst others. Using microgrids in this way can provide more reliability than traditional fossil fired back-up generators as microgrid systems will essentially be continuously tested.
Energy Storage
Achieving Balance stated that the government was to include energy storage technologies in its procurement process starting with 50 MW and assessing engagement on an ongoing basis. This was to include: “commissioning an independent study to establish the value of energy storage’s many applications throughout the system; examining the opportunities for net metering and conservation policies to support energy storage; and providing opportunities for storage to be included in large renewable procurements.”
At the end of 2016, it appears that energy storage procurement started and ended with 50 MW. The Large Renewable Procurement (LRP) was to have “mechanisms to encourage innovative technologies and approaches, including considering proposals that integrate energy storage with renewable energy generation for upcoming procurement cycles”. While an on-peak/off-peak pricing mechanism was included in LRP 1, it did little to encourage energy storage integration. The benefit and capability of energy storage to smooth variable generation as well as provide additional reliability was not valued by the LRP 1 RFP. The sole mechanism for incorporating energy storage was for power shifting. However, this one application discounted the benefits provided by energy storage. As an explanation, the LRP 1 RFP determined the “effective capacity value” of various generation technologies which represented “the amount of capacity that can be counted on at the time of system peak”. Adding energy storage to a variable generator for the purposes of power shifting would significantly increase this value, but the RFP scoring rubric did not allocate any benefit for this.
ORTECH would like to commend the Ministry on moving forward with the first 50 MW of procurement. This program put Ontario at the forefront of the emerging industry of grid scale energy storage and marked the province as a global leader in the space. However, a lack of additional support for energy storage will pose the risk of being surpassed by other jurisdictions.
Innovation and Economic Growth
Start-stop procurements can be quite disruptive to industry. Gearing up for major RFPs followed by long periods of no activity hinders private sector planning and exacerbates the boom-bust cycle. The Feed in Tariff (FIT) program is a good example of how programs can operate more smoothly with similar sized procurements that are repeated over short time frames. However, even with FIT procurement, program windows are announced one at a time resulting in considerable uncertainty as to future market opportunities. Smaller procurements that are repeated more frequently will smooth out the roller-coaster type activity level in the Ontario industry, and greater certainty in future procurements and activity will help the industry develop the right level of capabilities to address needs.
Climate change is a global concern. Clear and effective long term programs will allow Ontario industry to refine the expertise to address these challenges providing a basis to assist other jurisdictions reduce their environmental footprint, and to benefit from these export opportunities. However, a healthy domestic market that supports renewable energy and energy storage industries is required.
It is generally acknowledged that environmental permitting is slowing down the development of projects. This year’s Burden Reduction Act introduces the possibility of streamlining the permitting process. However, it’s not yet clear if this will have appreciable benefit for energy projects.
Clean Energy Supply
The OPO identified potential scenarios where electrical demand is increased. These are related to electrification and a shift away from fossil fuel usage in transportation and heating. It is important that additional electricity generated to meet these needs is clean energy otherwise no GHG benefit would realized from electrification. For example, if higher electrical demand is mostly met by natural gas fired generators, the benefit of displacing natural gas fired heating with electrical heating is diminished.
Since the Green Energy and Economy Act of 2009 came into effect, Ontario has aggressively pursued renewable energy development resulting in substantial amounts of renewable generation capacity being installed. This domestic demand for wind, solar and other forms of renewable generation allowed a strong industry to develop in the province. With advances in generating technologies and a strong local industry that is ready to deliver projects, Ontario is in a position to build wind and solar projects at competitive rates.
The LRP 1 (in 2015) procured wind energy for a capacity weighted average of $86 per MWh and solar for $157 per MWh. These rates are competitive with other generation technologies, with wind being one of the lowest cost forms of generation in the province and solar rapidly closing the gap. This is supported by the OPO Data Tables which list current technology characteristics and show the range of levelized unit costs of electricity for wind and solar to be cost competitive with all other forms of generation. It should also consider that wind and solar are still experiencing significant cost declines as the technology matures and the industry increases in scale. While Conservation First remains the strongest economic performer in the province, Ontario’s supply of clean energy will be most efficiently procured from wind and solar.
Summary
ORTECH recognizes the importance of the LTEP to the Province of Ontario and thanks the Ministry for the opportunity to provide comments. ORTECH comments are summarized in pint form below:
A strong domestic clean energy industry will allow for GHG reductions beyond our borders through clean energy trade. Ontario is already a net exporter of electricity and the jurisdictions where our clean electricity is being sold include regions that still rely heavily on coal-fired power plants. While the GHG emissions associated with the electricity used in province is already very low, additional low carbon electricity still has the potential to reduce GHG emissions on a global scale.
Written by Michael Tingle and Ka-Ming Lin
The answer depends on your view of the trend in future electricity pricing. If you feel the price of electricity is going to drop or stay the same, this may not be for you. However, if the price of electricity for Commercial and Industrial (“C&I”) users will continue to rise in the next 5-15 years, net metering with solar photovoltaic (PV) may be of interest.
This graphic depicts the historic, and forecasted price of electricity versus the install price for a solar PV facility. Although there are many variables, this serves as a reasonable guide.
Other assumptions considered in the preparation of this graphic are:
Price of solar based on a typical < 100 kW Feed-in-Tarrif (FIT) rooftop facility,
Price of solar (forecast) is based on a 4% annual reduction in costs,
Electricity prices are the time of use (TOU) rates based on 50% on-peak, 30% mid-peak and 20% off-peak plus typical local distribution company (LDC) delivery charges,
The delivery charge benefit would only apply to load displaced, you do not get delivery charges back on energy returned to the system under net metering, and
The electricity price (forecast) is based on the Bank of Canada’s target 2% rate of inflation.
What is Net Metering with Solar PV? Net metering allows an electricity user to install a solar PV facility onsite (or close to it) to generate electricity which can be used with any access delivered to the grid with compensation in the form of a credit on a future electricity bill. Net metering has been an option since 2015 and is governed under an Ontario Regulation (O. Reg. 541/05: Net Metering). However, only more recently has the price of electricity and the cost of installing a solar PV facility made net metering with solar PV more worthy of consideration.
As shown in the graphic above, even if you were to install the solar PV facility today, the price of solar exceeds current electricity prices. However, looking forward not too far in the future, price parity and beyond are possible. Some key business drivers you should consider when evaluating whether Net Metering with solar PV makes sense now (2017), instead of waiting until 2020 are described below.
Whats Next? Making a decision on net metering with solar PV requires a level of analysis. You will need to understand how you pay for electricity and review monthly bills (1 or more years of history) to determine your peak demand and load profile. This in combination with an assessment of which of the above drivers are most important to you should assist in the decision making process. The solar industry
in Ontario is flush with capable and knowledge firms and individuals, reach out to them for assistance and advice to determine whether net metering with solar PV may be right for you now.
For more information on ORTECH's Net Metering with Solar PV, click here.
You have received your Power Purchase Agreement, Feed-in Tariff contract offer or RFP Win; now you are thinking “I need to get my project debt financed!”
Enclosed is a list of Best Practices to make this process as easy as possible. The example below is based on either a ground mount or rooftop solar Facility that is not constructed. However, this process can be used for constructed projects or Wind Power, Waterpower, Renewable Natural Gas or Energy Storage projects with some modifications.
Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.
Tip #1: Agreeing to use the debt providers IE can simplify the process
Debt providers will have their preferred technical due diligence service providers often referred to as Independent Engineer (I.E.). Some developers may indicate that they have their own favourite . However, the IE needs to be truly independent.
Tip #2: Get all your documents in order
The first phase of technical risk management services conducted by the I.E. typically includes the provision of essential documents for review (see below for list). The requested documentation will be dictated by the status of the Facility under consideration (e.g. early development, pre-construction, post-commissioning, etc.). To complete the review efficiently and to minimize scope creep, the I.E. will typically start the review once all documentation is provided.
Tip #3: Missing documentation is a major red flag and will cost time and money to complete the review. Do it right the first time.
It is common that the initial batch of documentation provided is not complete. This means the I.E. will need to review the preliminary batch for completeness only (i.e. not a technical review at this stage) and notify the developer of key documents that are missing if any. It is important to note that initiating the formal technical review while documentation is missing or deemed insufficient will ultimately be reflected in the draft I.E. report.
Tip #4: Save costs by providing all the documentation up front, at one time.
Following the document review, the I.E. will issue a draft examination of documents report providing analysis and commentary on the reasonableness, accuracy and completeness of the documentation and identify the main risk factors and possible impact, if any, on the ability of the Facility to generate the expected level of energy/revenue. That last part is key to any debt provider. The review must indicate an ability to service the debt.
Tip #5: Use up-to-date documentation because the site visit will end badly if you don’t!
Following document review, a site visit should be performed. The site visit will involve physical inspection of critical components for consistency with the provided documentation and confirmation of overall Facility design and compliance with the major Contract parameters including:
Debt financing is usually the last thing developers think about, but you need to be prepared. That preparation should be in the form of well-organized, complete Documentation.
Here is a list of Documents you should have handy to make this process as easy as possible. The example below is based on either a ground mount or rooftop solar Facility that is not constructed. However, this process can be used for constructed projects or Wind Power, Waterpower, Renewable Natural Gas or Energy Storage projects with some modifications.
Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.
What Documentation do you need to prepare?
Essential documentation that will be reviewed for accuracy, completeness and technical suitability as applicable and available before the site visit, may include the following:
Previous due diligence report, if applicable.
This can save time and provide the debt provider with a sense of comfort if another I.E. previously reviewed the Facility. If you have a previous report available, provide it.
Power Purchase Agreement / Feed-in Tariff (“FIT”) documentation: Includes: contract, contract assignment and term buyback documentation, if applicable.
This provides important confirmation that the Facility is “real” and viable.
Key project design documentation: Includes: as-built, signed/stamped electrical single line diagrams (“SLD”), main equipment specifications (panels, inverters, racking) including capacity, efficiency, warranty, the status of warranty assignment (if applicable) and facility layout drawings. The design documentation is important and should meet industry standards. This documentation will be compared with observations made during the site visit, if there are differences, explanations will be required and documented.
EPC warranty and commissioning report: Includes: Warranty contracts and reports from the EPC signing off of the project including performance testing reports.
Understanding warranty is important from a debt provider hold back point of view, and the commissioning report will provide valuable information to the I.E. as to the ability of the Facility to perform over time.
Grid Connection documentation: Includes: A metering plan (if applicable), LDC connection cost agreement and status of assignment, if applicable. Jurisdictions will not allow a Facility to connect to the grid without following a process. This documentation will help to mitigate risk in the eyes of the debt provider f that the distribution company has signed off on the Facility.
Environmental permitting and documentation: Includes: Permitting approval documents from the local government agency. Environmental permitting is important. Facilities cannot begin construction until the required permits or approvals are in place. The debt provider is also interested in the conditions of the permits and whether the ongoing costs to meet these conditions are adequately considered when assessing the ability of the Facility to service the debt.
Land status documentation: Includes: confirmation that a lease agreement is in place for suitable duration, building permit or Certificate of Completion. The debt provider wants to understand any risks associated with the lease agreements like length of term or that zoning will not allow for buildings that can cause shading to be built.
Energy output information: Includes: calculations and /or Solar Resource Assessment
This is very important. If you provide a poor quality resource report that is not consistent with industry standard, the I.E. will likely raise this as a red-flag and/or may require the analysis be redone costing additional time and money.
Financial Model: Includes: breakdown of main capital cost items (panels, inverters, racking, roof upgrades, other) and operating cost items (O&M contract, monitoring, lease, roof repairs, insurance, administration, other) and debt service calculation, if available.
This will be reviewed in depth so ensure the assumptions and costs can be validated
Constructability assessment documentation:
The I.E. will look for any issues that might cause unusual challenges during the construction of the Facility (e.g. geotechnical study.)
Notice to Proceed (“NTP”) related documents:
For construction financing, this confirms the Facility has been approval to begin construction. This is very important document when shopping for debt financing.
Commercial Operation Date (“COD”) related documents:
This confirms that the project has been signed off. This document can be called a number of things in different markets.
Operation and maintenance (“O&M”) documentation:
The I.E. will want to understand the plan, cost and approach. The debt provider will want to see how these costs, including key component replacement, are accounted through the entire lifecycle of the Facility.
In Summary, spend the time to get your documentation together. Provide the I.E. with a complete package of documentation and provide access to your Facility. You do not want to give the I.E. or the debt provider a reason to question your Facility, if there are issues, work collaboratively with the I.E. to resolve them.
Many power generating facilities lack training of new personnel, up-to-date procedures, and true preventative and predictive maintenance protocols. Several companies may be unprepared to answer the question of what will happen when their seasoned veterans walk out the door and hand the reigns over to a new, less-experienced operator. Plant managers and owners understand their personnel will retire soon, but fail to realize knowledge will also leave with those employees. A majority of utility companies and generating facilities have neither prioritized the transferal of knowledge and skills to the new generation nor updated their plants to digital platforms.
The Problem of an Aging Workforce
One third of all baby boomers have hit retirement age. Consequently, the power market is due for a large generational shift. This will result in loss of invaluable industry knowledge. According to the Department of Labor, 50 percent of the utility workforce will be retired within 10 years with almost 45 percent of the non-nuclear generation technicians currently above 53 years of age. A survey conducted by the Center for Energy Workforce Development states: “The non-nuclear generation workforce, specifically Operators and Technicians, show the largest number of employees still eligible to retire...The results clearly reflect a need to put more emphasis on skilled technician and engineering positions.” Not only who is going to replace veteran baby boomer but also how do you gain their technological expertise? Will younger staff be able to retain their knowledge through word of mouth and continue to build on it? According to a report from PWC, “The growing number of retirement-eligible employees, rising turnover costs and the generational shift in utility personnel are driving a loss of productivity in the power sector. Traditional ‘word-of-mouth,’ on-the-job training of utility workers is not sustainable. More than ever before, work processes and procedures should be documented and continuously improved.” Power-Eng says “Establishing a program for transferring knowledge is an essential element for dealing with “brain drain.” Veteran utility workers tend to pass valuable institutional knowledge orally, rather than documenting and updating the information systematically. This intellectual capital is often lost when the worker retires because there is no formal program to capture their know-how.” This conversation must include a plan for replacement as well as transferal of technological expertise.
A Reliable Fix
One way to answer these tough questions is to utilize third party technical services companies, who provide operations and maintenance help. These companies develop site specific training videos, operating procedures, which helps reduce human error, improve operator knowledge and improve facility performance and could reduce insurance costs. For preventative and predictive maintenance, a computerized maintenance management system (CMMS) can reduce unscheduled breakdowns of equipment, increase plant reliability and reduce maintenance costs. Another area a third party technical service company can help with is the creation of Smart Piping and Instrumentation Drawings (P&ID’s), which may allow facilities to be a digitally based plant. The P&ID’s are a powerful way to represent the flow, layout, controls of a system as well as maintain a sortable and searchable database of all the systems contained therein. The drawings and database contain the pipe diameter, line number, valves, instruments, controls and respective tags. If other information is found on existing drawings such as type of material, insulation thickness, equipment capacity etc., then this is typically incorporated into the drawings and database. This database is helpful to plant personnel since they can record service dates, look up manufacturer’s parts and replacement parts and can input the location within the building.
Conclusion
Through simple, third party initiatives your plant can have fully trained personnel, up to date procedures, preventative and predictive maintenance management systems. By implementing just a few of these options, power plants can successfully be brought into the digital age and retain the skilled knowledge that is leaving while also improving reliability and safety.
How are you migrating your experienced knowledge to a digital format and the younger generation?
You have received your Power Purchase Agreement, Feed-in Tariff contract offer or RFP Win; now you are thinking “I need to get my project debt financed!”
Enclosed is a list of Best Practices to make this process as easy as possible. The example below is based on either a ground mount or rooftop solar Facility that is not constructed. However, this process can be used for constructed projects or Wind Power, Waterpower, Renewable Natural Gas or Energy Storage projects with some modifications.
Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.
Tip #1: Agreeing to use the debt providers IE can simplify the process
Debt providers will have their preferred technical due diligence service providers often referred to as Independent Engineer (I.E.). Some developers may indicate that they have their own favourite . However, the IE needs to be truly independent.
Tip #2: Get all your documents in order
The first phase of technical risk management services conducted by the I.E. typically includes the provision of essential documents for review (see below for list). The requested documentation will be dictated by the status of the Facility under consideration (e.g. early development, pre-construction, post-commissioning, etc.). To complete the review efficiently and to minimize scope creep, the I.E. will typically start the review once all documentation is provided.
Tip #3: Missing documentation is a major red flag and will cost time and money to complete the review. Do it right the first time.
It is common that the initial batch of documentation provided is not complete. This means the I.E. will need to review the preliminary batch for completeness only (i.e. not a technical review at this stage) and notify the developer of key documents that are missing if any. It is important to note that initiating the formal technical review while documentation is missing or deemed insufficient will ultimately be reflected in the draft I.E. report.
Tip #4: Save costs by providing all the documentation up front, at one time.
Following the document review, the I.E. will issue a draft examination of documents report providing analysis and commentary on the reasonableness, accuracy and completeness of the documentation and identify the main risk factors and possible impact, if any, on the ability of the Facility to generate the expected level of energy/revenue. That last part is key to any debt provider. The review must indicate an ability to service the debt.
Tip #5: Use up-to-date documentation because the site visit will end badly if you don’t!
Following document review, a site visit should be performed. The site visit will involve physical inspection of critical components for consistency with the provided documentation and confirmation of overall Facility design and compliance with the major Contract parameters including:
Essential documentation that will be reviewed for accuracy, completeness and technical suitability as applicable and available before the site visit, may include the following:
Previous due diligence report, if applicable.
Power Purchase Agreement / Feed-in Tariff (“FIT”) documentation: Includes: contract, contract assignment and term buyback documentation, if applicable.
Key project design documentation: Includes: as-built, signed/stamped electrical single line diagrams (“SLD”), main equipment specifications (panels, inverters, racking) including capacity, efficiency, warranty, the status of warranty assignment (if applicable) and facility layout drawings.
EPC warranty and commissioning report: Includes: Warranty contracts and reports from the EPC signing off of the project including performance testing reports.
Grid Connection documentation: Includes: A metering plan (if applicable), LDC connection cost agreement and status of assignment, if applicable.
Environmental permitting and documentation: Includes: Permitting approval documents from the local government agency.
Land status documentation: Includes: confirmation that a lease agreement is in place for suitable duration, building permit or Certificate of Completion
Energy output information: Includes: calculations and /or Solar Resource Assessment
Financial Model: Includes: breakdown of main capital cost items (panels, inverters, racking, roof upgrades, other) and operating cost items (O&M contract, monitoring, lease, roof repairs, insurance, administration, other) and debt service calculation, if available.
Constructability assessment documentation:
Notice to Proceed (“NTP”) related documents:
Commercial Operation Date (“COD”) related documents:
Operation and maintenance (“O&M”) documentation:
In Summary, spend the time to get your documentation together. Provide the I.E. with a complete package of documentation and provide access to your Facility. You do not want to give the I.E. or the debt provider a reason to question your Facility, if there are issues, work collaboratively with the I.E. to resolve them.
There are a lot of Source/Stack/Emission (“Source”) vendors out in the marketplace. How do you decide which one. The following checklist may help you decide.
Ask your vendors for a list of clients, investigate whether they have received positive feedback from both clients and regulators. It is important to confirm the vendor has a track record including testing report accepted by the regulator. Make sure your vendor has experience in your industry as well. Testing requirements do change from industry to industry.
Make sure your vendor understands your local regulations, the process, the report formats and the intricacies of the permitting culture. Ask for references or examples of compliance reports or pre-test plans. This will illustrate their experience and more importantly, understanding of the regulations. This will save you time and money.
Training is essential. The Source Evaluation Society (“SES”) has an accredited program called Qualified Source Testing Individual (“QSTI”). The goal of the SES QSTI exam and abilities assessment is to determine whether a candidate demonstrates the knowledge and capacity to apply source testing methods and fundamental engineering and chemistry principles in a manner consistent with that of a field test team leader. The SES QSTI program is one way to satisfy the accreditation standard for organizations, and potentially new regulations, as the SES QSTI exams are designed to assess competence and a basic understanding of source testing methods.
Ask if your vendors have this training.
Your vendor should be able to conduct testing that does not impact your operations for weeks. A large team will allow for simultaneous testing at multiple locations if necessary thus reducing the overall impact on operations. Also, schedules change, so your vendor should be able to accommodate last minute issues that cause testing windows to shift. Ask your vendor whether they have the internal resources to complete the job or whether they will require sub-contractors.
Equipment: Your vendor should have the in-house equipment resources to handle large and demanding jobs. Renting equipment can create scheduling challenges and can cause testing problems due to unknown calibration and maintenance records.
Your vendor should have a culture of safety. Training is important, but the breadth of training is essential. Training that should be considered depending on the scope of the testing program include:
Your vendor should conduct monthly safety toolbox meetings with field personnel to keep safety foremost in everyone’s mind. Your vendor should conduct and document a detailed Job Safety Analysis (JSA) before arriving on the site which provides a step by step safety analysis of the work to be performed. Also, your vendor should complete a Field Level Job Safety Analysis (FLJSA) each day they are on-site.
By Steve Thorndyke ( sthorndyke@ortech.ca ) Reading time: 2 minutes 30 seconds
There are many ways to deal with Odour complaints, either proactively or reactively. Odours are not predictable, but you can manage them, if you receive a complaint. Here are some suggestions:
For more information on how ORTECH can assist your Air Quality needs, visit our Odour Assessment Page or ouremail us at mtingle@ortech.ca
Like it or not, environmental compliance and permitting (C&P) requirements can often be affected by day-to-day operations. Often, facilities are not aware of these impacts or do not consider environmental compliance in day-to-day decision making. This can lead to unanticipated issues, extra work, or poor quality estimates when addressing end-of-year reporting requirements such as those related to the National Pollutant Release Inventory (NPRI), Toxics Reduction Act (TRA), Greenhouse Gas (GHG) reporting, and preparing Annual Written Summaries (AWS) required by an Environmental Compliance Approval (ECA). Failure to consider C&P requirements can also lead to surprise findings if you are inspected by the Ministry of the Environment and Climate Change (MOECC).
Consider the following examples:
Other common occurrences include failing to amend an ECA for changes to processes or equipment, or not considering that the expansion of operations may result in exceeding a GHG reporting threshold. Sometimes, only knowing at year end that you are required to report can lead to difficult problems, since not everything can be remedied retroactively (such as the requirement to calibrate certain meters or measure certain parameters for Ontario GHG reporting).
The establishment of an environmental C&P due diligence process, which could be a simple as a checklist of considerations, can save you lots of headaches and costs when a requirement to report or reconcile comes around.
Need assistance? ORTECH can help you:
Service Ontario’s ONe-Source for business is an online service made available by the government of Ontario to provide access to government services, forms and information. The Ministry of the Environment and Climate Change (MOECC) uses ONe-Source for business to facilitate registrations on the Environmental Activity and Sector Registry (EASR) and section 20.18 order requests for the inclusion of EASR activities in an Environmental Compliance Approval (ECA) application. A section 20.18 order request is a commonly required as part of an ECA application – so the use of the ONe-Source is often required as part of a compliance & permitting project. The MOECC has also indicated that they plan to expand services delivered using ONe-Source in the future, for example, the ECA application process itself.
ONe-Source is accessed using an ONe-Key login ID. To access the MOECC services, the ONe-Key account must be registered with MOECC. This registration process requires the provision of a business number, postal code, and legal name for verification against information on file. Only one ONe-Key account can be registered with the MOECC per business number. For business operation several facilities on Ontario, it is especially important to keep track of the ONe-Key account information associated with the MOECC, since multiple facilities will need to use it and each facility’s ECA project could be led by completely different staff. Also, since ONe-Source is used for services not related to the MOECC, such as accessibility reporting requirements, a business may wish to keep all activities consolidated to a single account for convenience. If you are overseeing an ECA application project and are part of a multi-facility business, it is recommended that you coordinate with corporate or administrative staff to ensure that a record of the account is kept on file, or that access to an existing account can be arranged.
If the information for the ONe-Key account registered to your business number with the MOECC is lost, the administrative process of recovering the account can take up to several months resulting in significant days to project timelines.
Need assistance? ORTECH can help you:
The Ministry of the Environment and Climate Change (MOECC) will be updating the approved versions of the AERMOD and ASHRAE method dispersion models later this month through the publication of a notice on the Environmental Registry. A pre-notification of the incoming update was sent to stakeholders earlier this year. The approved versions will now be AERMOD version 14134 and the method described in the AHSRAE 2011 Handbook, chapter 44. A change in model version has the potential to result in increased point-of-impingement concentration (POI) predictions. This means that on the extreme end of the impacts, a facility could move from compliance to non-compliance as a result of the change, potentially triggering notification and abatement requirements. Other considerations include:
Facilities required to update an Emissions Summary and Dispersion Modelling (ESDM) report annually (e.g. Schedule 4 or 5 facilities) will need to use the newly approved versions for their updated report due March 31. This might result in additional costs for facilities that do not undergo year-to-year changes and previously updated simply with an administrative note.
Facilities with Environmental Compliance Approvals (ECAs) with Limited Operational Flexibility are required to keep an up-to-date ESDM report that demonstrates compliance. This means that the ESDM report would need to be updated to use the new versions once they are in effect. Additionally, if increases to POI predictions for contaminants without standards could trigger the requirement to submit a toxicological assessment request to the MOECC depending on interpretation.
The MOECC has indicated that existing ECA applications which have not yet been approved may be retroactively required to reassess using the new versions. This means that there is a potential for additional unanticipated costs if your facility currently has an ECA application using an older version in queue. The MOECC has also indicated that they will phase in new versions on an on-going basis. This creates additional uncertainty in the ECA application process as the time in queue is often longer that the lifespan of a model version. There is now a real risk that the assessment you submit in support of your ECA application will be obsolete and require update by the time it gets reviewed.
Need assistance? ORTECH can help you:
By Ka-Ming Lin (klin@ortech.ca)
The current Energy Storage environment in Ontario is a very dynamic situation. There are numerous drivers, both internal to the Ontario market and global factors which are creating the need for solutions like energy storage. It’s also very broad and has the potential to impact every level and all aspects of the energy industry from generators to transmission and distribution owners and operators to end-users.
Our whole approach to energy is changing. Fuel mix changes and renewable integration, conservation, grid modernization, distributed energy resources, load profile changes as the economy moves from traditional industrial to more knowledge based sectors, EVs and the upcoming electrification of everything, the emerging importance of resilience and climate change adaptation. Ontario’s current response to the changes was the green economy transformation but the cost implication of this shift has resulted in significant backlash. That’s going to affect what we do and when we get to do it.
There are applications that are starting to become economic, as well as potential new applications related to the changing grid. The hardest part of figuring this out is the timing. A lot of these changes are interrelated, and the rate of uptake on things such as EVs or conservation is going to change the needs and demands on the grid. So I see a lot of change coming, with some parts counter-balancing others, and a lot of uncertainty as well.
For more information on ORTECH's Energy Storage Services, click here.
- Clean energy investments are on the retreat. Worldwide investments in clean energy totaled $42.4 billion in the third quarter of 2016, down 31% from the second quarter and down a striking 43% from the equivalent three-month period of 2015. The summer quarter is typically sluggish, but the main reason is because investments in China and Japan have slowed considerably.
- Featured resource: After three years, Comcast has finalized its plan to reduce energy use and CO2 and achieve sustainability. AES Members have access to Comcast's strategic plan.
- New questions have been raised about the climate impact of biofuels. Some scientists, including the US DoE, have argued that using biofuels to replace gasoline significantly reduced CO2 emissions. On the other hand, new research suggests that once all the emissions associated with growing feedstock crops and manufacturing biofuel are factored in, biofuels actually increase CO2 emissions.
- The departments of both Energy and Interior just released the National Offshore Wind Strategy report, the federal government's playbook to build 22 GW of offshore wind capacity by 2030 and 86 GW by 2050.
- In an effort to cut costs and reduce carbon emissions, a popular Paris public swimming pool is heating its water by recovering the warmth generated by local sewers.
- In the five boroughs of New York City there are 5,300 solar installations, up from 186 in 2011; an additional 1,900 are in the pipeline.
- Percent of electricity generated from wind in 2015 for European countries: Denmark (50%); Ireland (23%); Portugal (22%); Spain (18%); Germany (13%)
- Bill Gates has invested again in biomass, this time with Renmatix, a company that converts plant waste and biomass into sugars that can be converted into biofuels.
For more information on ORTECH's Renewable Energy Services, see below:
Petroleum
- Now that oil prices have stabilized, perhaps it's time to look back and assess the carnage ... according to OPEC Secretary General Mohammad Barkindo, cartel member nations lost the equivalent of $1 trillion (USD) over the course of the three-year slump.
- Much like the world’s major oil exporters — Nigeria, Venezuela, Saudi Arabia, Iraq, etc. — the US has its own petro-states whose specialized economies suffer when oil prices drop; they include: Alaska, Wyoming, Louisiana, North Dakota and Oklahoma.
Natural gas
- Featured story: The US Department of State considers the spread and use of natural gas around the world a key geopolitical strategy, calling the fuel "critical to economic growth" and democracy. The department is working with national governments to put "the right investment climate in place," according to Robin Dunnigan, deputy assistant secretary of state for energy diplomacy.
Coal
- In the first half of 2016, six former Soviet countries produced 232 million tons of coal, the highest output in a six-month period since 1996. Meanwhile, China's National Developm has asked 74 coal mines to boost thermal coal output by 500,000 tons per day in order to ease supply shortages ahead of the winter; this directive will bring another 15 million tons of new supply each month to the market.
- Don Blankenship, who led Massey Energy Co. during the 2010 Upper Big Branch disaster that killed 29 miners in 2010, wrote a 68-page booklet from prison declaring that he is a victim of long-running animosity from labor unions, the Obama administration, the judiciary system and Hillary Clinton. AES Members have access to his self-published book.
Nuclear
- In 2010, Japan got 25% of its electricity from nuclear power; today, it gets .4%.
As of today, there are only 39 days left to register in Ontario’s Cap and Trade Program. This deadline (November 30th, 2016) cannot be extended.
You must be registered in Ontario’s Cap and Trade Program before you can participate in Ontario’s first cap and trade auction in March 2017. Registration is also required if you wish to participate in a practice auction that will be held in January 2017.
Cap and Trade Program Registration
Registration takes time to complete.
Auction and Practice Auction
Ontario will host training webinars in December before the practice auction in January 2017.
To be eligible to participate in an auction, your CITSS registration must be submitted early enough so that it can be reviewed and approved in time to participate in a scheduled auction. Register in CITSS as soon as possible to be eligible to participate in the January 2017 practice auction.
Additional auction information will be posted to Ontario’s cap and trade website (https://www.ontario.ca/page/cap-and-trade) next week.
Ontario’s Cap and Trade Help Desk team is available to answer your registration and auction questions. Contact the help desk by email at CThelp@ontario.ca or toll free at 1-888-217-3326.
As of today, there are only 39 days left to register in Ontario’s Cap and Trade Program. This deadline (November 30th, 2016) cannot be extended.
You must be registered in Ontario’s Cap and Trade Program before you can participate in Ontario’s first cap and trade auction in March 2017. Registration is also required if you wish to participate in a practice auction that will be held in January 2017.
From Greenhouse Gas Emissions Reduction Office
at Ministry of the Environment and Climate Change
