Ontario’s plan to provide families and industries with reliable, clean, and low-cost power has been posted on Ontario’s own website, citing what their plans are for now and the future in the current landscape of power fluctuations and pricing. Our article below will help outline the why, how, and what the timeline will look like, taking key points from the ‘road map’ and making it a comprehensive and easy-to-read guide.
Why is Ontario implementing an energy system road map?
The reason that Ontario is creating these new plans, ‘Powering Ontario’s Growth’ as it is called – is aptly named because it focuses on Ontario’s growing population and electrical grid usage, currently and in the future. The government has a plan to build 1.5 million new homes as the province’s population is expected to grow by two million people by the end of this current decade.
Ontario is also quickly becoming a leader in building electric vehicles and batteries with historic investments from Stellantis in Windsor, to Volkswagen in St. Thomas. Working with steel industries to end coal use and electrify operations as well to support more ‘green steel’ in Hamilton and Sault Ste. Marie, also adds to the electricity use that will need to be supported in the automotive sector.
For the first time since 2005, Ontario’s electricity demand is rising and the Minister, in his statement, said that they understand that they need to support this type of growth and ensure the continued availability of reliable, affordable, and clean energy. The government is on track to acquire the resources they need this decade to power economic growth and increasing electrification, with many major projects and procurements already announced – including Canada’s first grid-scale small modular nuclear reactor (SMR), which is a $342 million expansion of energy efficiency programs and the largest energy storage procurement in Canada’s history.
How could this impact Ontarians and electricity rates?
The Ontario government says that this will help Ontarians currently and in the future, as they’re confident that continuing to build the clean energy advantage, will provide reliable and affordable electricity that will keep costs down for everyone provincially. To ensure the province’s continued success in providing electricity relief for residents and businesses while making the needed investments into the system, the government is remaining focused on keeping it affordable as the demand grows, without any surprise price hikes or rate increases.
Their approach to ensure affordability is based on leveraging the existing resources on the system today. Currently hydroelectric and nuclear provide the lowest-cost power to Ontario’s electrical grid, with wind and solar costs being higher and reflecting the over-market priced contracts signed between 2004 and 2016. Ontario has recently procured clean storage resources that will help these renewable energy resources provide capacity, addressing their intermittency due to weather dependency, while also helping the province better integrate future renewable assets to support the province’s growing electricity needs.
Families will benefit from the Comprehensive Electricity Plan, the Ontario Electricity Rebate, and other more targeted programs that support the provinces more vulnerable. The CEP (Comprehensive Electricity Plan) is lowering electricity commodity costs for all electricity consumers by funding the above-market costs of the approximately 33,000 existing renewable energy contracts, signed between 2004 and 2016.
- The OER (Ontario Electricity Rebate) was introduced in 2018 and provides electricity rate relief to eligible customers including households, farms, long-term care homes, and small businesses. November 1st, 2022, the OER is providing an 11.7 percent rebate on electricity bills. The OER is adjusted every November following the Ontario Energy Board’s annual electricity rate setting to help provide consumers with affordable and predictable electricity bills, without any large jumps or unexpected fees.
The CEP and OER are automatically applied to all consumers’ bills, meaning that consumers don’t have to do anything or call to ensure they’re getting the best prices – the OER and CEP reduce average residential bills by about 23 percent, in 2023 so far already.
- The OESP (Ontario Electricity Support Program) provides a fixed monthly credit directly on qualified low-income customers’ electricity bills. Credit amounts range from $35 to $113 and those are based on the household income and size, as well as energy intensity criteria. This credit will also further reduce electricity bills for lower-income households that require the help.
- Another helpful program is the EAP (Energy Affordability Program) which offers electricity savings measures that can help eligible low-income households further manage their energy usage and lower electricity bills up to an additional $750 per year, at no cost to the customers.
In 2023, Ontario raised the income eligibility thresholds by $11,715 for a four-person household and by $8,285 for a couple, helping thousands of Ontario families reduce energy use and save money. Customers who have already been receiving these benefits from a list of energy bill support and social assistance programs automatically qualify.
Energy efficiency upgrades and types of support available are based on factors including home heating systems, location, and an assessment of energy needs. Some free measures include energy-efficient refrigerators, window air conditioners, additional attic or basement insulation, smart thermostats and weatherstripping around doors and windows. Since 2018, the IESO’s Energy Affordability Program and the previous Home Assistance Program have helped more than 47,000 households across Ontario to create more energy-efficient homes and lowered their electricity bills – with more to come. The EAP and Enbridge’s Home Winterization Program (natural gas efficiency) are now delivered through a one-window approach, improving customer experience, and making it much easier for income-qualified consumers to receive free energy-efficient measures and products that will help lower both electricity and natural gas bills.
- The RRRP (Rural or Remote Rate Protection Program) is a $60.50 monthly credit for eligible customers of Hydro One’s R2 (low density) rate class. RRRP also provides support to customers of Hydro One Remote Communities Inc, Algona Power, and three First-Nation-owned distributors on the James Bay coast. It helps lower electricity bills for those living in rural and remote areas outside of the cities where the cost of electricity and service is higher.
- The DRP (Distribution Rate Protection Program) caps base distribution charges for eligible residential customers of eight prescribed Local Distribution Companies serving lower-density parts of the province. This program helps to lower electricity bills for those who have a higher-than-average electricity distribution cost due to their geography.
- The FNDC (First Nations Delivery Credit) provides immediate relief on delivery charges for on-reserve First Nation residential customers through the First Nation Delivery Credit Program. FNDC funding, which was $28 million in 2021, provides a 100-percent credit to cover the electricity delivery charge on the bills of on-reserve First Nation residential customers of licensed distributors.
- In May 2023, the province provided a third choice to customers with the introduction of the Ultra-Low Overnight electricity price plan that gives families and small businesses that use more electricity overnight more ways to save, as the province has excess electricity during the overnight hours.
- Consumer Choice is allowing customers to have more control over their energy bills. Users can choose a billing structure that best suits their lifestyle and individual electricity use. In November 2020, the provincial government introduced Customer Choice, giving residential and small business customers who pay Time of Use (TOU) pricing under the regulated price plan (RPP) the choice to switch to tiered pricing.
What does the timeline look like?
While the Ontario government is moving forward on many fronts to secure the electricity the province needs for the rest of this decade, additional action is necessary to meet the expected long-term demands between 2030 and 2050.
They forecast that the need for electricity system capacity in Ontario, under one potential scenario, more than double from 42,000 MW today to 88, 000 MW in 2050. Over this time up to 20,000 MW in capacity may be needed just to replace generation that will come to the end of its life or be phased out. Some forms of generation like natural gas generation of intermittent renewables can be built relatively quickly, large infrastructure can provide baseload power such as hydroelectric, and nuclear facilities, and the transmission to get it to population and economic centers can take 10 to 15 years to build alone.
The government is acting now to develop new generation capacity including assessing site potential for the first large-scale nuclear build since 1993, expanding the province’s SMR program, and advancing long-duration storage projects so that these facilities are ready when they are needed without needing to scramble after the fact. In keeping with its forward-thinking approach to energy planning, the Ontario government asked the IESO to deliver its critical reports to inform the next steps. These reports and input from Ontarians have formed the basis for the additional actions the Ontario government is taking to meet the province’s needs in the longer term.
In October 2021, the Minister of Energy asked the IESO to develop a Pathways to Decarbonization report. Released in December 2022, the report recommends “no regrets” actions that could easily be taken today to develop needed electricity resources with long lead times.
- Accelerating current efforts to acquire new non-emitting supply, including implementing recent conservation and demand management directives.
- Beginning the planning, siting and environmental assessment work needed for new nuclear, long-duration storages and hydroelectricity facilities, as well as transmission infrastructure to allow for faster implementation.
- Investing in emerging technologies like low-carbon fuels. Further work will be needed to determine if they can replace at scale some of the flexibility that natural gas currently provides the system.
- Galvanizing collaboration among stakeholders and Indigenous communities.
- Ensuring that regulatory, approval, and permitting processes are ready to manage future investment at scale.
- Establishing an open, transparent, and traceable process to measure progress and demonstrate the results of decisions and actions taken along the way.
In February 2023, the government launched a 90-day public consultation on IESO’s Pathways to Decarbonization report, focusing on their immediate recommendations. Through the public consultation, the government received 271 submissions that had a wide range of themes and topics, including support for the nuclear expansion and northern hydroelectric development, expressing caution regarding ratepayer costs, and as well as support for more indigenous-led projects and participation. The Ontario government is acting now to advance projects in line with these recommendations to ensure the province is prepared to support future economic development, investment, and job creation, all through a reliable, clean, and affordable electricity system.
With Ontario proceeding with its plan to procure 4,000 MW of a new electricity supply, there will still be a need for additional generation in the 2030’s as the electricity demand is expected to grow at about two percent each year. To ensure that the province can move quickly to procure those resources when required, the government is directing the IESO to begin planning for an additional round of energy procurements. Previous procurements have focused on the capacity to meet peak electricity demand at any time, including non-emitting energy technologies such as wind, solar, hydroelectric, and biogas.
The province is committed to bringing other levels of government to the table and making them partners in meeting the province’s growing energy needs to the benefit of ratepayers. Consistent with the procurements currently underway, community support resolutions from municipal councils will be required for any newly built electricity projects. Early engagements and meaningful consultations with Indigenous leaders and communities will also be critical to successfully developing new energy supply opportunities. Indigenous participation and support for proposed energy projects will continue to be a key feature of future procurement initiatives in Ontario’s energy sector.
IESO will report back to the government with the intent of launching this next round of procurements will be in 2025/26.
Nuclear power, which currently accounts for more than half of Ontario’s electricity supply, was critical in Ontario’s efforts to phase out coal power generation and remains critical in Ontario’s path to electrification and meeting its clean energy goals. In addition to a proven safety record and ability to deliver a clean, reliable supply of the baseload electricity required by homes, businesses, and industry, nuclear power has significant economic benefits.
Ontario’s three nuclear plants at Bruce, Darlington, and Pickering directly employ close to 12,000 highly skilled workers, generate billions of dollars in economic activity and attract new jobs and investment to the province. Overall speaking, Ontario’s nuclear industry in Canada also contributes around $17 billion per year to the national economy. New nuclear projects could also play a growing role in meeting peak demand. Batteries and other forms of energy storage charged with zero emissions electricity from these facilities could discharge energy when needed, eventually eliminating the need for natural gas generation. According to the International Energy Agency’s pathway to global net zero emissions by 2050, nuclear power globally will need to double between 2020 and 2050.
The government of Canada has introduced three programs which directly can help Ontario reduce the costs of new electricity generation and protect ratepayers. To date, the Smart Renewables and Electrification Pathways programs have provided one grid-scale energy project grant funding and the Canada Infrastructure Bank has provided preferential financing to three grid-scale energy projects. Ontario hopes to work with Ottawa to ensure it receives its fair share of funding through both initiatives. Lastly, the introduction of the Federal government’s Clean Technology and Clean Electricity Investment Tax Credits should both help lower the overall cost of new generating assets in Ontario for the next decade and help to address the competitive challenges posed by the U.S. Inflation Reduction Act.
Distribution System Innovation – and how it helps consumers down the road
Ontario’s electricity grid, until recently, has been constructed to provide one-way flows of electricity generated at large power plants and transmitted lengthy distances to places where electricity is used. Large generators like nuclear and hydroelectric facilities at the bulk system level will continue to play an essential role in serving as the province’s electricity system backbone, new tools emerging including DERs (distributed energy resources), at the local level are changing the way families, businesses, and communities meet their energy needs.
DERs can increase the complexity of distribution planning, they also promise a broad range of benefits to consumers – from greater customer choice, improved system resilience and flexibility, to cost avoidance and large capital deferrals. The important role these innovative technologies and business models will play in clean energy in the future will benefit consumers down the line sooner rather than later. The Ontario government made ‘facilitation of innovation in the electricity sector’ a new guiding objective for the OEB (Ontario Energy Board). OEB’s 2022 system-wide electricity supply mix data indicates that roughly five percent of Ontario’s total annual generation comes from embedded DERs that send electricity to the grid and are quantifiable by LDCs and the IESO.
As more customers adopt BTM technologies (rooftop solar, etc.) to save money and help take control of their electricity bills, much of the innovation will happen at the local distribution level. This all requires the province’s 59 local distribution companies to modernize operations to keep pace with and enable customer connections and further enable customer choice.