Published in Policy Options, August 8, 2022.
Doug Ford’s Progressive Conservatives went into the 2018 Ontario election campaign promising, among other things, to fix the province’s ‘hydro mess.’
In practice fixing the hydro 'mess' turned out to be a lot more complicated than it sounded. In the end, the first Ford government did little other than double down on its Liberal processor’s mistakes and then added a few of its own. Those included the cancellation of a final tranche of planned renewable energy projects, at a cost of at least $230 million, the termination of the province’s relatively successful strategy for energy efficiency, and ending the last vestiges of any meaningful planning processes around the province’s electricity and energy futures.
The Liberal’s Fair Hydro Plan has effectively remained in place, and in some ways been expanded, artificially lowering hydro rates at an annual cost to the provincial treasury of $7 billion/yr. The refurbishments of the Bruce and Darlington nuclear plants, which were never subject to any meaningful public review in either economic or environmental terms have continued, embedding higher costs for decades to come.
A critical corollary to the nuclear refurbishment plan is a dramatic ramp-up of the role of the province’s existing natural gas-fired electricity plants to compensate for the lost output from the out-of-service nuclear units and meet anticipated growth in demand. By 2040 that strategy is projected to lead to a more than 600 percent increase in electricity-related GHG emissions relative to the province’s 2017 low.
Perhaps hoping to draw as little attention as possible to where things were going on the electricity file, the Ford government’s 2022 platform had very little new to say about any of this. The reality is that the situation is about to get substantially worse.
The province’s Independent Electricity System Operator (IESO) is now proposing a request for proposals for 2500MW of new electricity supplies. The request is stated to be technologically neutral. Although some storage technologies may be able to contribute, the requirements for new supply seem to strongly favour gas-fired generation. Environmental performance, be it in terms of greenhouse gas emissions, releases of smog precursors, or any other parameter, is completely excluded from consideration in the process. Demand-side options are ignored in the short term as well.
The Ford government’s unwillingness to consider different approaches to meeting the province’s electricity needs is particularly surprising given the range of alternatives available to it, even allowing for significant electrification of transportation, space heating and industry.
Assessments for the IESO itself have identified substantial and achievable potential for improvements in energy efficiency to meet all of the province’s projected future growth in electricity demand and then some. Unfortunately, Ontario’s relatively successful energy efficiency strategy was scrapped by the Ford government more than three years ago, and never replaced.
Quebec has made repeated overtures around expanding its relationship with Ontario around hydro exports. All have been met with silence from the west side of the Ottawa River.
Two new studies have highlighted a range of additional possibilities. The first, underway for the IESO, is focused on the potential contributions of what are broadly termed distributed energy resources (DERs) – things like rooftop solar systems, household and facility-level energy storage and even the use of parked electric vehicles as storage resources. DERs are widely regarded as representing the leading edge of electricity grid development.
In the Ontario study, it emerges that “under all scenarios there is sufficient cost-effective
DER potential to meet Ontario’s summer and winter additional capacity needs in 2032” (slide 16) - potentially removing the need for new gas-fired generation. At the same time, the development of DERs is hampered by an existing policy regime and market design that never contemplated the large-scale development of these types of resources. In the result only between 25 and 80 percent of the cost-effective potential is currently considered achievable.
The David Suzuki Foundation, for its part, recently published a study looking at options for a net-zero electricity grid for Canada by 2035. The study assumed the need to support the electrification of transportation, space heating and industry while avoiding new and high-impact and cost nuclear, fossil fuel, or large hydro projects. The study is in many ways technologically conservative, excluding a range of emerging options, including DERs, many demand-side measures, non-battery-based storage options such as ‘green’ hydrogen, and offshore wind.
The study incorporated province-by-province assessments, employing models that are in many ways more advanced than those used by provincial utilities and regulators. In Ontario’s case, a net-zero grid that phases out both fossil fuel and nuclear generation by mid-century emerges as a viable and economic option. Such a pathway relies on significant growth in the role of low-impact renewables, particularly wind and solar, energy storage and interconnections with other provinces.
Unfortunately, these possibilities around energy efficiency, the relationship with Quebec, DERs, and an expanded role for renewables seem to continue to fall on deaf ears in the province. This is despite the Minister of Energy’s pre-election direction to the IESO to explore options for a moratorium on the procurement of gas-fired generation and develop an achievable pathway to zero emissions in the electricity sector. The Premier himself made an apparent commitment to a 100 percent ‘clean’ energy system during the election debate.
As it stands, the province remains without any formal energy planning process within which to consider the range of options available to it. And Ontario’s direction, as the only province proposing major increases in greenhouse gas emissions from its electricity system, presents a major challenge to the federal government’s goal of a net-zero emission national electricity grid by 2035.
In the end, Ontario’s hydro ‘mess’ still needs a lot of fixing. The renewed Ford government has a wide range of options before it. But so far, it has given little indication of a willingness to change course from its current economically unsustainable and climate-unfriendly trajectory.