Comments on EBR Registry Number 011-9490 Making Choices: Reviewing Ontario’s Long-Term Energy Plan

September 16, 2013

Julie Green
Senior Policy Advisor
Ministry of Energy
Regulatory Affairs and Strategic Policy
Strategic Policy Branch
880 Bay Street
2nd floor
Toronto Ontario
M7A 2C1

 

Re: EBR Registry Number 011-9490 Making Choices: Reviewing Ontario’s Long-Term Energy Plan

Dear Ms. Green,

I am writing to you regarding the Ministry of Energy EBR Posting Number 011-9490 – “Reviewing Ontario’s Long-Term Energy Plan (LTEP).”

I welcome the review of the plan, particularly given that many key assumptions that underlay the 2010 plan have proven to be incorrect. These outcomes are particularly apparent with respect to the future direction of electricity demand in the province, and the likely costs of major electricity supply options, including nuclear, natural gas and renewable energy sources.

Unfortunately, in reviewing the discussion paper and attending one of the consultative round tables, I am concerned that the province appears to be continuing to follow the same basic planning approach which underlay the 2007 Integrated Power System Plan (IPSP) and 2010 LTEP. In light of the high level of uncertainty about many key factors related to the future direction of electricity demand, supply and conservation in Ontario, the province needs to review its approach to system planning in a fundamental way, and move towards a much more adaptive, flexible and resilient planning model. Among other things, such an approach would suggest a stronger emphasis on Conservation and Demand Management (CDM) and on supply technologies that have relatively short (i.e. <5 years) planning and construction timelines, facility lifecycles of moderate length (15-20 years), are available in multiple sizes and scales, and which have, on a lifecycle basis, strong environmental performance and minimal geopolitical and catastrophic event risks. These concepts where more fully developed in the attached paper, of which I was a co-author, on electricity planning in Ontario, published in the International Journal Energy Policy. [1][1] The Sustainable Energy Initiative intends to further refine these concepts, and to undertake comparative analyses of the approach to electricity system planning being pursued in other leading jurisdictions (e.g. California, British Columbia, and Germany) in the near future.

Assessing Ontario’s current situation

The discussion paper highlights the high level of uncertainty around the future direction of electricity demand in Ontario. However, recent projections, including those from the Independent Electricity System Operator (IESO) tend towards the lower end of the range of forecasts presented in the discussion paper, suggesting flat or even mildly negative demand growth for the foreseeable future. There is increasing recognition that the post 2005 decline in electricity demand is not merely a cyclical phenomena resulting from the 2008 economic downturn. Rather it is a result of improving energy productivity as a result of CDM efforts and, probably most importantly, structural change in the province’s economy. The move from energy intense manufacturing and resources processing activities towards service and knowledge based activities is particularly important in this regard. [2][2] In the result, electricity demand has continued to decline despite a moderate recovery in the rate of growth in provincial Gross Domestic Product (GDP). [3][3] The “low” demand scenario presented in the paper likely represents the most realistic projection of future demand and should be the basis on which any plan is developed. Consideration also has to be given to the likelihood of one or more cyclical economic downturns over the life of the proposed plan. Such events would further reduce projected demand.

The discussion paper also makes it apparent that Ontario has committed to and built substantial gas-fired generating resources over the past decade. However, the discussion paper assumes relatively low levels of utilization (~40%) of these resources. This is in part intended to allow for temporary higher levels of utilization while nuclear facilities are refurbished.

The province has made substantial commitments (7100MW) to the development of renewable resources since the adoption of the Green Energy and Green Economy Act, 2009. However, the lack of fully developed strategies around the role of smart grid technologies in the integration of intermittent renewable energy technologies into the electricity system and the near total absence of strategies for the development of grid-scale energy storage resources for the same purpose implies considerable risk that these resources may be underutilized or even ‘stranded.’ This may result in the province needing to make greater use of higher impact supply resources than is necessary.

Finally it is important to note that the market and price for Quebec’s hydro-electricity exports to the United States has weakened substantially over the past few years. This is principally a result of the availability of low cost natural gas supplies in the United States as a result of the boom in ‘unconventional’ gas resources. [4][4] Concerns over the need for additional transmission corridors have also been a factor. [5][5] The situation offers Ontario important opportunities in terms of securing electricity supplies at potentially lower cost than the non-renewable (particularly nuclear) options available within Ontario. Quebec also has substantial hydro storage capacity, which could be employed to help balance the growing availability of intermittent renewable energy supplies in Ontario. The environmental costs associated with Quebec’s hydro capacity, although very substantial, are now largely sunk, and agreements are in place with aboriginal people in Northern Quebec regarding their development and use.

Recommended Path Forward

In light of these considerations I suggest that the province pursue the following course of action in the short term.

• · Continue Ontario’s renewed and expanded focus on CDM measures. CDM activities improve the province’s energy productivity and therefore competitiveness and improve the resilience, adaptive capacity and overall sustainability of the electricity system. The province’s strategy should follow the directions outlined in the Sustainable Energy Initiatives’ Studies in Ontario Electricity Policy Paper #4 Electricity Conservation Policy in Ontario: Assessing a System in Progress available at http://sei.info.yorku.ca/files/2013/03/electricity-conservation-policy-ontario.pdf and attached to this submission.

 

• · In light of the uncertainty over future electricity demand but strong likelihood that future demand will be towards the lower end of the range of forecasts presented in the discussion paper (i.e. flat or mildly negative) there should be:

 

o no commitments to new nuclear generating capacity;

o no further commitments to new natural gas-fired generating capacity beyond what is already contracted; and

o no commitments to nuclear refurbishment projects, including the proposed Darlington and Bruce B refurbishments at this time.

With respect to the refurbishments, the OPA’s own assessment suggests that there would be serious doubts about the rationale for at least one of these projects under a “low” demand scenario, even assuming continued modest levels of utilization of natural gas resources and no improvements in the performance of low-impact renewable energy technologies as a result of smart grid technologies and storage options. [6][6]

 

• · Demand beyond the “low” demand scenario should be dealt with through increased usage of committed natural-gas resources in the short term, and CDM and additional low-impact renewable resources (potentially including imports from Quebec), supported by appropriate storage resources, in the longer term. Long-term intensified use of natural gas or increased installed natural gas generation, other than in combined heat and power applications displacing or replacing existing fossil fuel-fired generating assets, are not acceptable due to the likely increases in releases of greenhouse gases, other air pollutants, the upstream impacts of natural gas supplies, particularly from ‘unconventional’ sources and potential long term price risks.

 

• · In addition to its CDM efforts, the province should focus its electricity resource development efforts on the development and utilization of ‘smart grid’ technologies and services to support the large scale integration of the intermittent renewable resources to which the province is committed. Storage resources should be developed for the same purpose. In addition to the development of resources within Ontario, this should include the pursuit of an agreement Quebec to utilize its hydro-electricity resources for this purpose, and the expansion of the transmission infrastructure needed to pursue the option.

 

In the longer term, in light of the enormous changes that have taken place in Ontario’s economy, society and environment and in available energy technologies over the past twenty years, the province needs to pursue a much more comprehensive and open review of the electricity system’s goals, structure and options than it is currently undertaking. A review of this nature has not been undertaken since the work of the Royal Commission on Electric Power Planning (a.k.a. the Porter Commission) , now more than thirty years ago. Such a review should again be undertaken by an entity outside of the existing institutional structure and without interests within it. In that way assumptions about the system’s role in the province’s society and economy, and the social, economic, environmental and technological context within which the system must operate can be examined and debated openly. Such a process offers the best hope for integrate the range of objectives now being sought through the province’s electricity system while advancing sustainability.

 

 

 

I would be pleased to respond to any questions that you may have regarding my views on these matters.

Yours sincerely,

 

 

Mark S. Winfield, Ph.D.

Associate Professor

Co-Chair, Sustainable Energy Initiative

Faculty of Environmental Studies

York University

Tel: 416-726-2100 Ext 20178

E-mail: marksw@yorku.ca

 

Cc:      The Hon. Bob Chiarelli, Minister of Energy

Vic Fedeli, MPP, PC, Energy Critic

Peter Tabuns, MPP, NDP Energy Critic

Gord Miller, Environmental Commissioner of Ontario