After years of discussion, the policy to guide the purchase of electricity from independent power producers was released Friday afternoon.

Energy, Mines and Resources Minister Ranj Pillai said the policy will support the local development of renewable resources.

It was with a great amount of effort by his staff and staff from Yukon Energy and ATCO Electric Yukon that the work was completed, he told reporters at a briefing.

Pillai noted this policy will, for instance, help displace 190,000 litres of diesel fuel in Old Crow by providing the Vuntut Gwitchin First Nation with the ability to sell renewable solar generated energy back to ATCO.

“Technical people who worked on this did a tremendous job to get us to the finish line and also make sure we had the mechanism and tools where we could roll this out,” Pillai said.

He explained the policy sets out the guidelines that private investors can review and weigh to determine if a proposal is financially viable.

Renewable sources of energy include solar, wind, geothermal and hydro.

Natural gas, as originally provided for by the previous Yukon Party government, has been removed from the list, in keeping with a 2016 Liberal campaign promise, Pillai said.

When the Old Crow solar farm begins producing, he said, it will be the first time in a very long time that the diesels in the remote village won’t be running.

While several parties have expressed an interest in the Independent Power Production Policy (IPP), there are three out in front: Old Crow’s solar farm; the Kluane First Nation’s wind farm and the Haeckel Hill wind project proposed by a private company in partnership with the Kwanlin Dün First Nation.

ATCO general manager Jay Massie said it’s possible Old Crow could be generating and selling power back to ATCO at a commercial rate later this year but most likely no later than next year.

The first discussion paper around a policy to facilitate the commercial purchase of large amounts of power was first released in 2009.

There was also the discussion of a micro-generation policy, which has now been in place since 2013.

Under the latter policy, homeowners and others who generate renewable energy with solar panels or some other means can sell excess power back to the grid. The Yukon government subsidizes the program by paying for the power, so as not to affect ratepayers.

Currently, there are 225 micro-generators on the system. Figures for how much the government paid out in 2018 are not yet available, but it did pay out $58,044 to 119 micro-generators in 2017.

Unlike the micro-generation policy, the IPP sets the ground rules for buying large amounts of power without affecting ratepayers.

It also ensures producers do not have to become public utilities like ATCO and Yukon Energy, and thereby do no have to go before the Yukon Utilities Board for approval of the project but rather must follow the guidelines of the policy.

On Friday, the cabinet passed three orders-in-council required to bring the policy into effect.

Shane Andre, the director of the energy branch, explained the policy is broken up into three different categories: the standing offer agreement, the unsolicited proposal and the call for the power.

One of the fundamental principles of the policy is paying producers the equivalent of displacing the cost of generating electricity with fossil fuels – diesel and natural gas, he explained.

The policy, said Andre, empowers the private sector, First Nations and communities with the ability to bring forward projects that ultimately help the territory keep pace with the growing demand using renewable energy.

Both Old Crow and the Kluane First Nation have broken ground, he said.

The policy lets the two utilities enter into power purchase agreements with independent power producers.

• Standing offer agreement – This is directed at the territory-wide grid, and Watson Lake. It establishes how much producers will be paid for supplying energy to the grid.

On the grid, they will be paid a base rate of 15.8 cents per kilowatt hour, with an annual escalator of 2.5 per cent to account for the increase in the consumer price index.

In Watson Lake, an off-grid community supplied by ATCO’s diesel plant, they’ll be paid a base rate of 22.7 cents per kwh.

The Haeckel Hill proposal by the private company Northern Energy Capital falls into the standing offer agreement, for instance.

Northern Energy has been waiting for the policy to determine the viability of its proposal, which has already been approved by the assessment board and the Yukon government.

Under the standing offer agreement, the maximum amount of power that can be generated by one producer is limited two megawatts.

• Unsolicited proposal – Proposals such as the Old Crow solar farm and Kluane’s wind project are classified as unsolicited proposals.

The unsolicited proposals apply to the off-grid communities, with the exception of Watson Lake. Negotiations are necessary to establish the price to be paid based on the displacement of diesel fuel required to power the generating plants.

The cost of flying diesel fuel into Old Crow is substantially higher than the cost of diesel in Whitehorse.

Therefore, the cost of flying in the fuel, and everything else associated with ATCO’s cost to generate power for the community, is factored into the base rate for the unsolicited proposal. There is no maximum limit on how much unsolicited proposals can generate.

• Call for power – The process is driven by the two utilities – ATCO and Yukon Energy. If and when the utilities decide there is an impending shortage of generating capacity on the horizon, they can put out a call for power, which would be a competitive process.

There is no size limit under the call for power, though the utilities would have to seek approval from the utilities board for projects arising out of the call for power process. There is currently no call for power planned.

Under all three categories, the project proponent would be responsible for all costs associated with its proposal.

That includes the cost of all of its equipment, and any costs associated with connecting to the grid or the off-grid community, including any cost incurred by the two utilities to accommodate the connection.

Connection standards have been developed. Independent producers would also be responsible for all costs of operating and maintaining their systems.

Yukon Energy president Andrew Hall explained the policy works because it does not require the utilities to incur any costs, and does not result in any lost revenue for the utilities.

It’s a matter of ATCO or Yukon Energy buying the power from the independent producers that it would normally generate and then selling it back to the customers, just like they do now, he explained.