On Dec. 19, 2014, the Ontario Power Authority (now merged with Ontario's Independent Electricity System Operator, the "IESO") announced the availability of new interim funding under the auspices of the Aboriginal Renewable Energy Fund (the "AREF"). The AREF is designed to fund the planning stages of renewable energy project development for Aboriginal communities within the province of Ontario. The new interim funding is intended to enable First Nations and Métis communities to undertake due diligence work that will foster future participation in Ontario's Large Renewable Procurement ("LRP") Program for renewable energy projects (expected to be launched in 2015) and in Ontario's existing feed-in tariff ("FIT") program.

The AREF forms part of a larger initiative to establish the Aboriginal Energy Partnerships Program, in response to the ministerial direction issued by the Ontario Minister of Energy on Nov. 21, 2014. Consistent with the objectives outlined in the latest Long-Term Energy Plan, this Program is designed to promote Aboriginal community participation in the renewable energy sector.

New Funding Available for Large Projects

The present version of the AREF rules provide that an applicant may receive funding for one or more LRP projects, to a maximum of $40,000. This maximum amount may form up to 80% of the eligible external expenses for one or more LRP Projects. An LRP Project is any project that is intended to be the subject of a LRP I Contract, undertaken by a qualified LRP I RFQ applicant.

The new AREF funds are earmarked for "Partnership Stream" activities, which include the independent legal, technical, and financial due diligence costs incurred to determine whether an applicant will move forward on a project with a particular project partner. These are referred to as "eligible external expenses".

Previous Funding Programs Continue

The AREF continues to provide funding for small and large FIT projects, either under the Partnership Stream or the Organizational Development Stream (or both). The Organizational Development Stream includes the legal costs accrued to establish a structure to organize and run the project. FIT Projects may receive up to $40,000, comprising up to 80% of the applicant's actual eligible costs. Funding is proportionate to the number of projects being pursued: a single project only qualifies an applicant for $20,000 in funding, while pursuing two raises the maximum to $30,000; three or more projects may qualify an applicant for the full $40,000.

Funding is also still available via a Development and Approvals Stream, which assists Aboriginal communities with certain "soft costs" of developing a renewable facility, such as engineering and legal services. This funding is available for up to five projects that have a nameplate capacity between 10 to 500kW. Each project may receive up to $100,000, to cover 50% of eligible costs. Funding is also available for projects of over 500 kW in amounts up to $500,000.

General Applicant Requirements

To qualify for the AREF, applicants must be: (i) a First Nation that is a "band" under the Indian Act; (ii) the Métis Nation of Ontario (or any of its active Chartered Community Councils); or (iii) a person, other than a natural person, which represents the collective interests of an Aboriginal community.

Other Restrictions

In order to be eligible for funding, proposed projects must be capable of constituting a renewable generating facility (that is, using biogas, biomass, landfill gas, wind, solar, or water power) and be located in Ontario. The project must have the support of the Aboriginal community, and have Aboriginal participation (as defined in the project documents) of at least 15% for a project under 100MW, and 10% for projects equal to or greater than 100 MW.