In October the Ontario Government released what they are calling their vision for the energy (really electricity) future. No new initiatives were announced but this is a good summary of general policy trends and recent announcements.
https://www.ontario.ca/page/ontarios-affordable-energy-future-pressing-case-more-power
The following is my summary of the highlights:
Increased Demand
The IESO and most prognosticators are forecasting a huge growth in electricity demand due to electrification and data centre power needs. A 75% increase by 2050 is the figure quoted. Preparing for this now, with the danger of overspending, is better politically than not preparing and risking being short of power. This report is primarily about how this will be achieved without the cost of power skyrocketing.
Subsidies to Continue
The report highlighted the existing Ontario Electricity Rebate (OER) and Comprehensive Electricity Plan (CEP). We can expect these to continue with their annual cost of $6-7 billion a year. The CEP makes sense as it offsets the costs of the Green Energy Act. The OER is just a subsidy paid for by tax revenue.
Nuclear Power
Nuclear power represents the best path for meeting this demand. Ontario does not have a competitive environment to be relying on solar and wind. With nuclear, Ontario has the experience, expertise and talented workforce to be competitive. With the small modular reactors, a new build at Bruce Power and refurbishments at Darlington, Pickering and Bruce, Ontario is relying on nuclear power to meet its growth needs.
Hydroelectric
The current hydroelectric generation will be maintained and refurbished; but there is little opportunity for growth.
Renewable Energy
Investments in renewable energy will continue but they will be limited and will all be sourced through competitive procurements. I believe there are opportunities with solar and wind that are being missed due to regulatory constraints. Wind and solar will not provide the growth in electricity needed but they can be used to provide cheaper electricity at the right times. The current ban on community solar is an example.
Energy Efficiency
The new name for the old Conservation and Demand Management (CDM) programs. These will be expanded. The achievements of these programs have usually been overstated but remain beneficial.
Transmission
New investments have been approved particularly in Southwest Ontario and up around the Ring of Fire. I expect these investments to continue as growth shows up constraints in the system. There is recognition that the current processes for new transmission and for customers to connect to the transmission grid are too slow and cumbersome. Hopefully, this will result in some changes.
Natural Gas
Natural gas will continue to be a source of electricity. This is appropriate. The report highlights the need for natural gas to manage changes in demand while nuclear and hydroelectric handle the baseload. The danger is that the declining price of natural gas makes its marginal costs quite low so that it becomes attractive to use as baseload energy to keep rates low. This could put to the test the Governments boasts about how clean its electricity system is.
Electrification and Energy Transition Panel
This report was released in February 2024. It was referred to in passing. I suspect it will be largely ignored except where it suits the Government’s needs. Not a loss.
Electrification of Transport and Heating
The Government recognizes that if Ontario and Canada are to meet the carbon reduction goals, much of the current energy used for transportation and heating will need to become electric. This will only happen if consumers voluntarily make these choices. The new terminology is Beneficial Electrification and plans for subsidies to help this happen are being developed.
Municipal Energy Planning
The report recognizes the benefit of this and integrating these with the regional planning by the IESO. The Niagara Region has started work on an energy plan for all of Niagara. Much of local energy planning is largely superfluous but it can become a venue for real decision-making when needed.
IESO and OEB
Better information for business and quicker decision-making by both the IESO and OEB are mentioned. Hopefully, some action is taken on this.
Carbon Tax
The Government is strongly opposed to the carbon tax but does not offer any real alternatives. No mention of the rebates households are currently receiving.
Electric Vehicles
The vision calls for supporting EV adoption and supporting the growth of the EV charging infrastructure. The government has put and continues to put significant efforts into developing an EV infrastructure.
Local Distribution Company – LDCs
Unfortunately, the report promotes further consolidation of LDCs. This despite the clear evidence that the smaller LDCs are more efficient, provide better service and have lower rates. I continue to believe that this is driven not by the mentioned efficiencies, which are not real, but by the desire of the government to have only a handful of LDCs to manage. This is how bureaucracies like to work and why they allowed Enbridge and Union Gas to combine creating one gas company serving almost the entire province.
Affordability Programs
Programs like the OESP will continue.