NextStar Energy (“NextStar”)…

NextStar Energy (“NextStar”) appreciates the opportunity to offer our response to ERO Posting 019-7853 regarding proposed amendments related to the treatment of Corporate Power Purchase Agreements.

NextStar Energy is an innovative joint venture company between LG and Stellantis with a mission to revolutionize the North American EV industry. We’re doing this by advancing the construction of a cutting-edge battery manufacturing plant in Windsor, Ontario. This state-of-the-art facility will be the first of its kind in Canada and is being built with the goal of becoming the foremost battery hub in North America.

We are tremendously proud of our progress to make energy more accessible, efficient, and safe for our customers. Inspired by the opportunity to further serve our communities, we remain committed to building a better tomorrow through transformative investments in Ontario’s distribution network to provide cost-effective short-, medium- and long-term benefits.

To support this objective, NextStar is committed to playing a constructive role in the process of enabling Corporate Power Purchase Agreements, while building and maintaining a reliable, affordable, and sustainable system for the benefit of all Ontarians.

To this end, NextStar would like to discuss the following items as it relates to the consultation:
Enabling the Environment
Recommendations on the Proposed Regulation
Points of Needed Clarity

Please do not hesitate to contact us should you have any questions or require any clarification.

Enabling the Environment
Corporate Power Purchase Agreements (PPAs) play a crucial role in facilitating renewable energy development and sustainability efforts. The contractual arrangement between a renewable energy project developer and a corporate entity to purchase a specified amount of energy at an agreed-upon price, encourages companies to focus their efforts on decarbonization with a sustainable path forward.

Corporate PPAs provide a stable revenue stream for renewable energy projects, making them more attractive to developers. This, in turn, stimulates investment in the renewable energy sector, leading to
increased deployment of clean energy sources. Enabling corporate PPAs encourages a diverse energy mix by promoting the development of various renewable sources. This helps reduce dependence on traditional fossil fuels, leading to a more resilient and sustainable energy infrastructure.

Enabling the environment for Corporate PPAs would be beneficial for Ontarians in several ways, including:
• Economic Growth and Job Creation: The growth of the renewable energy sector supported by Corporate PPAs contributes to economic development by creating jobs in project development, construction, and maintenance. It also attracts investment, fostering innovation and technological advancement in the clean energy space.
• Greenhouse Gas Emission Reduction: By encouraging the adoption of renewable energy sources, Corporate PPAs contribute to the reduction of greenhouse gas emissions. This aligns with global efforts to combat climate change and promotes a more environmentally sustainable energy system.
• Energy Price Stability: Corporate entities entering into bilateral PPAs benefit from price stability and predictability. This helps shield them from the volatility associated with traditional energy markets and helps in long-term financial planning.
Recommendations on the Proposed Regulations
Following the review of the proposed amendment and recognizing the value and benefit Corporate PPAs could bring to Ontario, NextStar would like to provide additional recommendations for consideration to be incorporated into the regulatory amendments:
• NextStar supports the inclusion of all resource types. Diversifying the resource types in a Corporate PPA helps mitigate risks associated with energy production. Different resources, such as solar, wind, hydro, bioenergy, battery storage and geothermal, have varying operating patterns and are influenced by different factors. By combining these resources, a company can reduce the impact of intermittency and variability, ensuring a more reliable and stable energy supply.
Including different resource types can also provide a more stable and predictable energy price. Some renewable resources, like solar and wind, complement each other in terms of generation patterns. This diversity helps in smoothing out fluctuations in energy production and can contribute to a more consistent and reliable energy supply.
• NextStar supports the inclusion of a hybrid approach, in terms of a supply mix. Hybrid systems can enhance the resilience and stability of the electric grid. Integrating complementary technologies, such as solar and storage or wind and storage, allows for more predictable energy generation, reducing the impact of fluctuations on the grid. It is unlikely that one energy source alone without pairing it with a technology like storage could reliably meet the needs of our JV considering the intermittent nature of some renewable resources and the volume of our needs from a capacity and energy perspective.
• NextStar supports flexibility on both new and existing resources. A mix of new and existing resources provides the flexibility to optimize the energy portfolio. It allows loads and generators to leverage the benefits of newer technologies while continuing to benefit from existing, well-established resources that may still be economically viable. NextStar recommends openness to both existing resources (whether currently online or recontacted/repowered) as well as new resources in order to provide generators and loads the flexibility to craft an arrangement that best meets the needs of the unique situation at hand.
• To maximize the benefit of the contract, NextStar believes the allocated MWs under the PPA contract should not be capped or term length constrained within the regulation. Corporate PPAs are typically long-term agreements, often spanning 10 to 20 years. Business strategies and energy needs can evolve significantly over such a timeframe. Limits on project size could prevent certain projects that are otherwise viable to not move forward. We are a large load requiring flexibility in terms of the size, participation, and allowance of different permutations of arrangements to meet our needs. Not capping the MW capacity provides the flexibility needed for the corporate buyer to plan for the long term and adapt to changing circumstances.
• Recognizing that a single generating facility may not be sufficient to satisfy the needs of the industrial off-taker, NextStar recommends that the ability to engage in multiple bilateral agreements should not be prohibited.
• NextStar also recommends that this regulatory amendment be long term – loads and generators need certainty of an enabling regulatory environment moving forward to confidently enter into these arrangements.
Points of Needed Clarity
Enabling Corporate PPAs requires a supportive regulatory and policy framework. Clear and favorable regulations, along with incentives such as tax credits or subsidies, can encourage both renewable energy project developers and corporate buyers to participate in these agreements. While the current proposed regulation has an open framework, NextStar would like to seek clarity on the following items in the final regulation:
• Requirements and responsibilities under the provincial permitting and approvals processes for generating and/or energy storage facilities
• Requirements and responsibilities regarding local community engagement
• Requirements regarding Indigenous community engagement
• Settlement protocol as a Class A customer
Corporate PPAs can contribute to reinforcing domestic clean electricity generation, promoting energy independence and security. This in turn enhances the resilience of the energy system and reduces Ontario’s vulnerability to geopolitical and economic uncertainties.
In the context of Ontario, creating a conducive environment for Corporate PPAs involves aligning regulatory frameworks, providing financial incentives, and promoting awareness about the benefits of renewable energy. Policymakers, businesses, and the community all play vital roles in fostering an environment that supports the attractiveness of Corporate PPAs, contributing to a more sustainable and resilient energy future.
NextStar thanks the Government of Ontario and Ministry of Energy for their leadership in advancing these regulatory amendments in support of the province's clean energy infrastructure and to help advance economic development in the province. NextStar is committed to playing a constructive role in the consultation process and is happy to discuss our submission with the Ministry of Energy at your convenience.