Purchasing a Property with a Solar Facility 101 Guide

An Introduction to Solar Installations

Applications for new microFIT projects have not been accepted since December 31, 2017. The information on this site only applies to the issues that need to be taken into account when advising clients on the potential purchase or sale of a property with an existing microFIT facility.

Purchasing a property with a solar photovoltaic (PV) generating facility (solar facility) can be a great opportunity to reap the benefits of solar energy. At the same time, it is important to understand all of the factors and considerations before making a real estate purchase involving a solar facility. This web resource is a starting point only, intended to help you understand some of the considerations that should to be taken into account if you are thinking of purchasing real estate with a solar facility on it. 

Important Disclaimer

This webpage is not designed to, and does not contain all the information about microFIT facilities that you may need as a potential purchaser of property with a solar facility on it.  We strongly recommend that you seek advice, as needed, from your real estate agent, lawyer or other advisors to understand all of the implications of a microFIT facility being located upon a property of interest to you.  Further, this webpage is not intended to and shall not be construed as providing legal, technical or business advice, and IESO disclaims any and all liability for any costs, losses, claims or expenses that you (or any other visitor to this webpage) may suffer or incur as a result of you relying on the information set out herein.  By continuing to access this webpage, you agree to be bound by the foregoing disclaimer of liability.

IESO and the microFIT program

1. What is the microFIT Program?
The microFIT Program supports the development of small or “micro” renewable electricity generation projects (≤10 kilowatts (kW)), such as solar panel installations.

Today, over 30,000 microFIT contract holders connect their microFIT facilities to a local utility (known as a local distribution company) to inject electricity generated by their microFIT facility into Ontario’s electricity grid in return for which they receive a guaranteed price per kilowatt-hour injected over a 20-year term for solar projects.
 

2. What is the role of the IESO in administering the program?
The Independent Electricity System Operator (IESO) is responsible for ensuring the reliability of the province’s electricity grid, administering Ontario’s electricity markets and leading long-term electricity supply planning, procurement and energy-efficiency efforts – all to provide businesses, communities and consumers with the power they count on to meet their needs.

The Ontario Power Authority (OPA) was responsible for implementing the microFIT program when it began in 2009. However, the OPA was merged with the IESO in 2015, and the IESO has been responsible for administering the microFIT Program ever since*.

As part of this role, the IESO:

  • Oversees contract–holder compliance with the terms of their microFIT contract;
  • Assesses contract assignment requests to ensure they meet any applicable eligibility criteria; and
  • Manages all existing microFIT contracts for the duration of the agreements.

The IESO does not:

  • Charge a fee to assess or process a request to assign a microFIT contract;
  • Pre-approve microFIT assignments or contractual amendments;
  • Solicit door-to-door for its programs, and does not authorize third parties to issue approvals or act on its behalf;
  • Endorse third parties offering services in relation to microFIT projects; or
  • Participate in or know about commercial arrangements between microFIT participants and third parties.

*This is the reason that contract versions 1 and 2 may refer to the OPA rather than the IESO.
 

3. What do the version numbers on microFIT contracts mean and why do they matter?
From its launch in 2009, until its closure to new applications on December 31, 2017, the microFIT Program included 17 different versions of the microFIT contract in three subsets:

  • Versions 1.3 and 1.4
  • Versions 1.5 and 1.6
  • Versions 2.x, 3.x and 4.x

Knowing the version of the microFIT contract will help you understand the respective rights and obligations of the contract holder and the IESO. For the purposes of this Guide, the most significant difference between the versions is between versions 1.3 and 1.4, which do not have an eligible participant schedule, and all other versions (v.1.5 and higher), which do have an eligible participant schedule.

Assigning a microFIT Contract

At a glance: when a property with a microFIT facility on it is bought, sold or transferred, it is often necessary for the contract for the electricity from that facility to also be transferred.  This is referred to as “an assignment” of the contract.  microFIT contracts are not automatically assigned when a property is sold but must instead be assigned through the IESO-administered microFIT contract assignment process. If the contract holder’s version of the contract includes an eligible participant schedule (version 1.5 and higher) and the contract is not assigned at the time the property is sold, the contract holder will be in breach of the contract, and the contract may be terminated.

By contrast, for versions 1.3 and 1.4 of the microFIT contract, which do not contain an eligible participant schedule, there is no requirement for the contract-holder to be the same as the owner of the property.  And regardless of who the contract-holder is (i.e. whether it is the current property owner or a third party), for these versions of the contract, the contract-holder may not intend to assign the microFIT contract to the purchaser upon a change of ownership of the property, or at any other time during its term.  Thus, where a v. 1.3 or 1.4 contract is in place, it is important for the potential purchaser to find out (i) who the microFIT contract-holder is; and (ii) the terms under which the microFIT facility is located on the property.  If it is important to you as the purchaser or potential purchaser, you may also wish to find out whether the contract-holder intends to or is willing to assign the contract to you, and if so under what terms.  Once these answers are known, you can determine if any steps that are specific to that property will be required vis-à-vis the microFIT facility.  

What is a microFIT contract assignment?
A contract assignment is the transfer of a microFIT contract – and the associated rights and obligations – from a current contract holder(s) to a different individual or entity, in this case meaning you as purchaser.  As with all contract-related activity and transactions, contract assignments are managed through a contract holders’ “My microFIT Home Page” at https://mymicrofit.powerauthority.on.ca/login.php.

When is a contract assigned?
For versions 1.5 and higher of the microFIT contract, which do include an eligible participant schedule, the contract must be assigned when:

  • Ownership of the property where a microFIT facility is located changes to another individual(s)  or legal entity; 
  • An individual or other legal entity is added to or removed from title to the property on which the microFIT facility is located; or
  • The current contract-holder is no longer an eligible participant (e.g. as a result of death), requiring the contract to be assigned to another eligible participant (individual or entity).

How is a microFIT contract assigned?
The current contract holder and prospective contract holder (i.e. you as purchaser) must follow the IESO’s automated contract assignment process through your respective My microFIT Home Pages. If an eligible participant schedule is applicable (i.e. contract v.1.5 or higher), you as the prospective contract holder must meet the criteria listed in that schedule before the IESO can approve the request.

To learn more, view our contract assignment videos and read the instructions for the applicable contract version.

In order to complete the transfer, both the assignor (current contract holder) and you as the assignee (future contract-holder) need to be directly involved in the process. While third parties can assist contract holders, only the assignor and assignee can make the personal representations, consents and declarations required at the time of the assignment.

Quick Guide/Checklist

The following are a few questions that you may wish to consider asking initially if you are thinking of purchasing a property with a solar facility on it.  These questions do not constitute an exhaustive checklist, but are instead intended only to help start a conversation with the goal of understanding the various implications of the facility being on the property. 

  1. Is the solar facility owned by the current property owner or is there a lease under which a third party was allowed to locate the facility at the property?
  2. Is the solar facility subject to a microFIT contract? (If not, much of the information on this webpage will not be applicable, but it will still be important as purchaser to understand the status of that solar facility.)
  3. Are there maintenance or service agreements associated with the solar facility?
  4. What is the size of the solar system, and what is the average generation? 
  5. If the solar facility is a rooftop installation, what is the condition of the roof?
  6. Have you been provided the relevant manuals, certificates and other documentation related to the solar facility?