ARTICLE
27 September 2016

IESO LTEP Planning Process Gets Underway

GW
Gowling WLG

Contributor

Gowling WLG is an international law firm built on the belief that the best way to serve clients is to be in tune with their world, aligned with their opportunity and ambitious for their success. Our 1,400+ legal professionals and support teams apply in-depth sector expertise to understand and support our clients’ businesses.
The Ontario Planning Outlook is a technical report which provides a brief review of the last ten years (2005-2015) and a 20-year outlook (2016-2035) for Ontario's electricity system.
Canada Energy and Natural Resources

On Sept. 1, 2016 the Independent Electricity System Operator ("IESO") released its Ontario Planning Outlook ("OPO"). The OPO is a technical report which provides a brief review of the last ten years (2005-2015) and a 20-year outlook (2016-2035) for Ontario's electricity system. In the near term, the OPO focuses on ensuring that the province is able to complete initiatives currently underway, including those procurements required to meet the 2013 Long-Term Energy Plan ("LTEP") targets. In the long term, the OPO explores opportunities provided by different energy technologies and distributed energy resources.

The OPO provides the basic context for the Ministry of Energy's formal consultation process regarding the development of the LTEP, a process which will be of keen interest to energy consumers, generators, transmittors and distributors across the province.

Chains of History – The 10 Year Review

In its 10-year review, the OPO looks backward to highlight several improvements in Ontario's electricity sector made in the past ten years. Coal production has been entirely retired, as more than six gigawatts (GW) of capacity was shut down and replaced with more than 14 GW of renewable, natural gas, and nuclear resources. Non-fossil fuel sources now generate approximately 90 percent of the province's electricity.

The last decade has also seen significant change in terms of electricity generated within Ontario's distribution systems. While traditionally the electricity system has consisted of large, centralized generating stations which transmit in bulk to load centres, the IESO reports that we are now seeing an increasing amount of generation embedded within distribution systems. These embedded or distributed resources typically consist of renewable sources such as solar, wind, water, bioenergy, or combined heat and power. In 2005 the supply from such embedded sources was negligible, but as of 2015 embedded resources had grown to approximately 3.6 GW of installed capacity.

In addition, Ontario's electricity demand has declined approximately ten percent over the last ten years. The OPO accurately attributes this decline to conservation efforts, distributed energy resources, changes in the economy and pricing effects. The demand reduction, coupled with changes in our electricity generation mix and investments in conservation and transmission, has led to a reduction in greenhouse gas emissions of the electricity sector by more than 80 percent. That said, although Ontario's electricity system has an exceptionally low carbon footprint when compared with similar jurisdictions across North America, an increase in reliance on gas-fired generation would negatively impact greenhouse gas emissions quite substantially.

Making Predictions - 20-Year Outlook

The 20-year outlook forms the majority of the OPO and consists of forecasts for demand, conservation, supply, market and system operations, transmission and distribution, emissions, and electricity system cost.

In preparing the demand outlook portion of the report, the IESO considered a range for possible electricity demand - from 133 TWh to 197 TWh in 2035 (compared to 143 TWh in 2015). The result is four possible demand outlooks, one of which explores a decrease in demand, another which explores "flat" demand which will roughly match that of today, and two outlooks which explore an increase in demand. Increases in demand will likely be driven by electrification of certain uses and industries, such as space heating and transportation. The report notes that if predictions regarding electric vehicles ("EVs") are to be believed, in 2035 we may see as much as 8 TWh in additional demand from this industry.

Regarding the conservation outlook, all four demand scenarios account for the target conservations set by the 2013 LTEP of 8.7 TWh conserved by 2020 and 30 TWh conserved by 2032.

The IESO reports that in terms of supply, Ontario is well-poised to address any of the demand outlooks presented in the OPO. In particular, it notes that if planned resources come into service and existing resources continue to operate, the province's existing, committed, and directed resources would be sufficient to meet the flat demand outlook through to 2035. In order to serve higher levels of electricity demand growth, Ontario would require resources capable of serving demand that is between 20% and 40% higher than today's levels by 2035.

Market and systems operations will obviously become increasingly complex over the next 20 years as more variable renewable and distributed energy resources are introduced. The OPO indicates that the IESO is working on methods for maintaining efficient operations within an evolving power system and cites efforts like the Renewable Integration Initiative ("RII"), which introduced centralized forecasting of variable energy generation and the ability to dispatch variable generators.

Within the higher demand outlooks, investments in transmission may be required in order to accommodate new supply resources. In particular, much of Ontario's undeveloped renewable resource potential is located in more remote areas with limited transmission capability. The IESO reports that integrating these resources would require significant lead time – in some cases as much as 10 years.

Greenhouse gas emissions, meanwhile, are reportedly expected to continue to decline in the near future as more renewable energy generation is introduced. In the long term, the IESO projects that emissions will remain relatively flat, and any further decline will depend on the extent to which natural gas generation is displaced.

What Next?

As indicated previously (see The LTEP Tango with the CCAP motif) the LTEP process, which is now getting underway, will necessarily be impacted by the launch of Ontario's Climate Change Action Plan. Sector stakeholders interested in influencing the direction of the LTEP's development are encouraged to act quickly as the consultation process is expected to get underway over the next few weeks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More