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LEGAL REPORT/Energy account when considering a venture in renewable energy. Experts say due diligence can be broken down into five key areas. Landing the contract In order to move a project forward in certain provinces, a power purchase agreement is required to sell the output of the power generation project. ���The holy grail is to get a PPA ��� a power purchase agreement,��� says Thomas Timmins, a partner at Gowling Lafleur Henderson LLP. ���Most of the PPAs that are going to be available in Ontario are already granted. FIT 2.0 is much smaller ��� 700 megawatts. FIT 1.0 was almost 9,000 megawatts.��� Each project depends very much on the market structure in a particular province. Typically there is either an authority or a Crown utility such as the Ontario Power Authority, BC Hydro, or Manitoba Hydro the output is being sold to. If you���re going to be making an investment in a renewable energy company, knowing which contracts they have or think they���ll get is critical. Many companies sought out the resource first ��� landing rooftop leases or ground-mount leases ��� and believed it was easy to get a contract. But a lot has changed since 2009. ���Understanding the contract itself is something some Professional Directory D. Lynne Watt Graham Ragan Guy R��gimbald Matthew Estabrooks With the assistance of: Brian A. Crane, QC Eduard J. Van Bemmel, Law Clerk 160 Elgin Street Suite 2600 Ottawa Ontario K1P 1C3 T 613-233-1781 montr��al ottawa toronto hamilton waterloo region calgary vancouver beijing moscow london Announcing CanLNC Experts ntitled-2 1 Case Merit Service: An invaluable early assessment13-01-14 of case facts, issues, players and strength MEDICAL MALPRACTICE PERSONAL INJURY The experts you need, The quality you deserve. CLASS ACTION TESTIFYING OR CONSULTING PLAINTIFF OR DEFENCE 44 ntitled-2 1 March 2013 www.CANADIAN www.CanLNCExperts.ca 855-278-9273 (toll free) Experts@CanLNCExperts.ca L a w ye r m a g . c o m Resource availability Closely connected to the contract is the availability of the renewable energy resource required to generate electricity ��� and enough of it to make it a valid investment. ���The FIT contract only pays for electricity that���s generated,��� says Williamson. ���So the fact people have developed models on what a particular rooftop or ground area could generate in wind or solar resource is different than what it will actually generate.��� For example, there were a large number of building rooftops leased by solar developers before they ever really analyzed what kind of solar rooftop facility could be built there. ���In some cases, some rooftops can���t accommodate a solar rooftop facility. So if you���re investing in a company that says, ���We have 500 solar rooftops leased,��� there may only be a small number of those that are ultimately going to be viable for building a solar facility,��� adds Williamson. Similarly, although there are some generally available descriptions of wind resources across the province, in some cases when people have gone to actually measure the wind in a particular site over a year or two, it���s been quite different than the generally available information about wind at that location. The NIMBY factor Supreme Court of Canada Counsel and Agency Services Henry S. Brown, QC investors haven���t spent as much time on,��� says Williamson. ���The NIMBY response to these projects has been something that I think everyone underestimated and it has proven to be a significant barrier to getting timely environmental approvals,��� says Vellone. ���A lot of the environmental approvals we see issued end up getting appealed by individuals who just don���t want to see the project proceed, which can delay the development timeline by whatever the duration of the statutory appeal process is.��� That means developers looking to get into the space need to work with the local communities and build buy-in from everyone and try to manage that NIMBY risk. ���It���s about stakeholder relationships whether it���s neighbours or aboriginal First Nations issues you have to contend with. The developers we have worked with who are most successful get in early, understand the need for engagement and continual engagement throughout the process,��� says Freitag. In the wind area, notwithstanding the fact the Green Energy and Green Economy Act of 2009 was supposed to smooth 2:30 PM the process of permitting, a Ministry of Energy approval is still required and can be a lengthy process, says Williamson. ���Particularly for the wind folks, it���s the community conversation that hasn���t always been as friendly as people like it to be.��� Development of the project If you have a contract you���ve got to now source equipment and services and conduct engineering due diligence, preferably independent of the developer. ���Something many of our clients are seeing right now, including those constructing facilities and those providing construction services, is that unlike many development businesses where things kind of happen 12-10-23 9:27 AM

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