Posted: Tuesday, June 29, 2010
Comment closing date: Monday, July 19, 2010.

The MEI and the OPA was seeking comments on a proposal for possible changes to the Domestic Content Grid – Wind Power Projects > 10 kW, Exhibit D. Please see FIT Contract Exhibits.

These possible changes are:

1. Table 1 – Grid Cell No. 4 “Hub and hub casing”, where an alternative activity is proposed for hub assembly.
2. Table 1 – Grid Cell No. 19 – a new activity for manufacturing nacelle components that are not listed in Grid Cells 1 to 15.

These possible changes would only be offered to proponents having a domestic content requirement of 50 percent.

These changes will provide added flexibility to wind project developers to meet their domestic content requirements of 50 percent.

In particular, the MEI and the OPA were seeking comments on:

 - Cost and labour hour data of:

o manufacturing the hub
o hub pre-assembly
o hub assembly
o total turbine costs including construction and consulting but excluding sub-station costs
o total project (including sub-station costs)

- Which components, if any, are assembled to the hub in Ontario presently, other than blades, drive shaft and nacelle?

- If the MEI and the OPA proceeded with the possible change to Grid Cell No. 4, which components in the hub should be considered sub-assemblies which may be imported into Ontario? The interpretation would look similar to the one for solar inverters larger than 10 kW. Please see Table of final interpretations.

- If the MEI and the OPA proceeded with the possible addition of Grid Cell No. 19, what Qualifying Percentage would be attainable presently?

- For the possible Designated Activity 19, as with all other designated activities, the OPA shall use its best efforts and endeavour to provide clarity to equipment suppliers in a timely manner regarding the interpretation of the proposed Designated Activity prior to those suppliers initiating investment in Ontario.

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DRAFT INTERPRETATION

Domestic Content Grid – Wind Power Projects > 10 kW

Table 1 – Grid Cell No. 4a
[2%] Hub and hub casing, where the hub has been entirely machined in Ontario, i.e., without any pre-machining performed outside Ontario other than peeling/roughing of the part for quality control purposes when it left the smelter or forge,

The maximum qualifying percentage a Supplier can claim from the combined Designated Activities listed in items 2, 4a and 4b is 5%.

Table 1 – Grid Cell No. 4b
[3%] Hub assembly where all components required to be mounted to the hub are assembled in Ontario, and, any testing of the assembled hub occurs in Ontario.

The maximum qualifying percentage a Supplier can claim from the combined Designated Activities listed in items 2, 4a and 4b is 5%.

Table 1 – Grid Cell No. 19 Supply chain, manufacturer, or assembly activities of Other Nacelle Parts.

The Qualifying Percentage for this Designated Activity shall be calculated as follows:

The “Allowed Value of Other Nacelle Parts” multiplied by 1% per $X/MW divided by the total capacity of the turbine(s) in the project. The result of this calculation must be rounded down to the nearest 1%.

• The value of $X/MW would be determined through confidential submissions received during this posting.

The maximum Qualifying Percentage for this Designated Activity is 10%.

“Allowed Value of Other Nacelle Parts” means the sum of the Allowed Value for each “Other Nacelle Part”.

The Allowed Value for each “Other Nacelle Part” means the value determined by the OPA in its sole and absolute discretion on a case-by-case basis, being either the Value Added in Ontario from an Other Nacelle Part or the Cost of an Other Nacelle Part. The OPA shall choose the appropriate measure in its sole discretion if the OPA has determined that substantive transformation to the Other Nacelle Part has occurred in Ontario.

“Other Nacelle Part” shall mean a nacelle component that is formed, shaped, machined, fabricated, manufactured or assembled in Ontario that does not form part of the description of Designated Activities 1 through 18 inclusive or their interpretations and whose forming, shaping, machining, fabrication, manufacturing or assembly does not qualify for Designated Activities 1 to 18 inclusive. For clarity, components of Designated Activities 1 through 15 and sub-assemblies of Designated Activities 1 through 12 and 15 may not count as an “Other Nacelle Part”.

The “Value Added in Ontario from an “Other Nacelle Part” means that the value of materials and labour on an “Other Nacelle Part” in Ontario. It excludes the value of materials and labour performed outside Ontario.

“Cost of an Other Nacelle Part” means the cost of the Other Nacelle Part as reported in internal accounting documents for the purpose of calculating the total cost of the project.