On November 23, 2010, the McGuinty government released its
Long-Term Energy Plan and draft Supply Mix Directive. Once approved
by Cabinet, the draft directive will be issued to the Ontario Power
Authority (OPA) and sets the goals to be achieved through the
OPA's long-term energy plan (known as the Integrated Power
System Plan or IPSP).
By way of background, the OPA is responsible for developing the
IPSP and an appropriate procurement process for managing
Ontario's electricity supply, capacity and demand in accordance
with the approved IPSP. In August, 2007, the OPA submitted a
20-year IPSP to the Ontario Energy Board for approval, but the
process was suspended in September, 2008 by a Minister of
Energy's directive that the OPA consider, among other matters,
the amount and diversity of renewable energy sources in
Ontario's supply mix. The OPA was also directed to undertake an
enhanced Aboriginal consultation process. The Minister's
directive stated that the revised IPSP would be provided to the
Ontario Energy Board by mid 2009. However, the introduction and
implementation of Ontario's Green Energy Act
significantly delayed the IPSP process and, in September, 2010, the
McGuinty government announced that it was preparing a long-term
energy plan and revised supply mix directive.
The Plan and Directive include the following key goals:
Nuclear - Nuclear power will continue to be
relied upon for baseload generation and maintained at approximately
50 percent of Ontario's supply mix (or 12,000 MW). By 2025,
10,000 MW of existing nuclear capacity is to be refurbished and
modernized at Darlington and Bruce. Two new nuclear units are to be
procured at Darlington to generate an additional 2,000 MW. The
government indicated that this is subject to a cost-effective deal
being reached with Atomic Energy of Canada Limited.
Coal Free - Coal-fired plants will cease to
burn coal by the end of 2014. Atikokan will be converted to biomass
by 2013 and Thunder Bay will be converted to natural gas by 2014.
Plans for the remaining coal units at Nanticoke and Lambton remain
unclear. Natural gas will continue to play a strategic role by
complementing intermittent supply and ensuring that adequate
capacity is available as the nuclear units are modernized. A
natural gas plant is planned for Kitchener-Waterloo-Cambridge
bringing total capacity of natural gas generation, with Thunder
Bay, to 8,400 MW.
Renewables: Hydroelectric - Hydroelectric
generation will account for approximately 20 to 25 percent of
Ontario's supply mix. Hydroelectric power currently makes up
about 90 percent of Ontario's total renewable energy supply
(8,100 MW). By 2018, hydroelectric capacity is to reach 9,000 MW.
Large-scale hydro projects, usually in remote locations, are not
considered economically feasible due to high capital and
construction costs. However, cost-effective Northern options will
continue to be studied.
Other Renewables - Renewables, excluding
hydroelectric, will account for approximately 10 to 15 percent of
Ontario's supply mix by 2018. Wind, solar and bio-energy will
continue to be developed under Ontario's Feed-in Tariff Program
("FIT") with up to 10,700 MW in capacity to be available
by 2018. In particular, wind generation is anticipated to grow to
approximately 10 percent of Ontario's supply mix. FIT prices
will be reviewed in 2011 with the expectation that price incentives
will be decreased for any new FIT contracts (as has been the
experience in other jurisdictions such as Germany, France and
Transmission - Perhaps the most anticipated
portion of the draft directive is the enhancement and expansion of
transmission facilities to accommodate a growing mix of renewable
sources. However, the proposal likely falls short of expectations.
An investment of approximately $2 billion is planned over the next
seven years, focusing on five priority transmission projects. In
addition to the Bruce-to-Milton line, these projects will enable
approximately 4,000 MW of additional renewable energy.
Comments on the draft Supply Mix Directive may be submitted
until January 7, 2011. The OPA's revised IPSP is expected to be
submitted to the Ontario Energy Board by mid 2011. The Ontario
Energy Board's review of the IPSP is expected to be completed
sometime in 2012.
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