Long-Term Energy Plan

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In June, 2011, the ECO released volume 1 of its 2010 Annual Report on the progress of activities in Ontario to reduce or make more efficient use of electricity, natural gas, propane, oil and transportation fuels. Click here for more information on this report, including videos and communications materials.



Contents

What is the Long-Term Energy Plan?

Ontario’s Long-Term Energy Plan, Building our Clean Energy Future,[1] is a document that was issued by the government in November 2010 to help Ontarians understand the long-term development of Ontario’s electricity system. It sets out, at a fairly high level of detail, the investment plans for the power system over the next 20 years. A summary of the highlights of the Long- Term Energy Plan (LTEP or the “Plan”) are described below.

Changes in Demand and the Supply Mix over the LTEP Planning Period

Electricity demand is forecast to steadily recover from current reduced levels brought about by the global financial crisis of 2008. Demand is forecast to be relatively flat this decade reflecting conservation actions, structural change in Ontario’s industrial base and shifts in commercial energy use. The Plan assumes a medium-growth scenario forecasting a 15 per cent increase in demand between 2010 and 2030. Some 146 terawatt-hours (TWh) of electricity are projected to be consumed in 2015, and the LTEP states sufficient flexibility will be created to accommodate higher growth. By 2030, electricity consumption will grow to 165 TWh.[2]

Conservation, which currently accounts for 5 per cent of total “installed capacity” and 4 per cent of total electricity “generated,” will triple by 2030.
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[3]

Ontario’s coal-fired plants are targeted to cease burning coal by the end of 2014. By 2013, the Atikokan generating station will be converted to operate on biomass and two units at the Thunder Bay plant will change over to natural gas. Natural gas generation capacity will be maintained at roughly current levels over the LTEP’s planning period, although its share of total installed capacity will decline as other supply sources grow. The amount of electricity that gas-fired plants supply to Ontario will decline over the long term, and natural gas will contribute about one-third less of total generation in 2030 than it currently provides. [4], [5]

The LTEP maintains nuclear power’s contribution to total generation at roughly the current level – it will provide 45 to 50 per cent of Ontario’s supply between now and 2030. Nuclear will make up about one-quarter of Ontario’s total installed generating capacity in 2030, and supply roughly one-half of all electricity generated in that year – some 10,000 megawatts (MW) of nuclear capacity will be refurbished over the next 10 to 15 years and 2,000 MW of new reactors will be added at the Darlington Nuclear Generating Station.

Electricity generated from renewable sources other than hydroelectric power (i.e., wind, solar and bio-energy), and the amount of generation installed, will grow significantly. Starting from current low levels, the amount of renewable electricity supplied will grow six-fold, and installed capacity more than quadruple by 2030. Hydroelectric power (also a renewable source) will grow slightly from current amounts of capacity and generation.[6]


In terms of the electricity delivery infrastructure, the LTEP indicates that Ontario’s transmission and distribution system will be modernized. It promotes building the smart grid as a central tenet of Ontario’s electricity future (see section 7). Actions to date have consisted of installing smart meters. The Plan, however, does mention a short list of other actions that are becoming standard items in most jurisdictions pursuing grid modernization, namely: two-way information technologies and real time information to facilitate conservation; utility operations and smart technology to increase the reliability of distributed generation; smart buildings; and, electric vehicle charging.

The Long-Term Energy Plan and the Integrated Power System Plan

The LTEP is closely tied to the Integrated Power System Plan (IPSP),[7] and it is worth clarifying the development of these two plans to minimize confusion between them. The IPSP – the 20-year plan for designing Ontario’s electricity system – is a document that is required by law to be produced by the OPA and updated every three years.[8] The OPA must follow any directives issued by the Minister of Energy that provide policy guidance (known as Supply Mix Directives). The IPSP must be approved by the OEB.

The original or first IPSP was developed by the OPA and submitted to the OEB for approval in 2007. It responded to a Supply Mix Directive issued by the Minister in 2006, directing the OPA to produce the IPSP. The first iteration of the IPSP (IPSP-2007, now referred to as IPSP I by the OPA) contained targets for electricity conservation and the installation of renewable generation capacity, as well as the amounts of conventional generation needed. In 2007, the government did not issue a long-term energy plan.[9]

Consultation on Ontario’s Future Electricity System
The Minister of Energy announced, on September 20, 2010, that the government would update[10] its long-term energy plan and would consult on the choices for development of the province’s electricity system. The public was asked to comment on nine broad questions, which were posted on the ministry’s website.[11] Consultations with energy stakeholders and agencies were also undertaken by ministry officials. There was a wide range of opinion expressed on the questions posed in the 2,500 comments, 33 written submissions and 39 stakeholder consultation sessions. Since the Long-Term Energy Plan (LTEP) is closely integrated with the Integrated Power System Plan (IPSP), the ECO will review this input in a future report as part of a review of the updated IPSP that is expected to be delivered in late 2011.
Following the gathering of feedback, on November 23, 2010, the LTEP was released and a draft Supply Mix Directive was posted as a proposal notice for public comment on the Environmental Registry.[12] The government signalled that, once finalized, the directive would be issued to the Ontario Power Authority (OPA) which would consult to update the existing IPSP.[13] The ministry received 379 comments on the proposal posting. At the time of writing this report, the ministry had not posted a decision notice on the Environmental Registry related to the Supply Mix Directive, and it is unknown how these comments were considered.
Despite the fact that no decision was posted on the Environmental Registry, the finalized Supply Mix Directive was issued to

the OPA on February 17, 2011. It replaces previous Supply Mix Directives issued in June 2006 and September 2008. There is no substantive difference between the draft and final Supply Mix Directives.[14]


Targets of the Long-Term Energy Plan

Table 1 shows several targets contained in both the LTEP and Supply Mix Directive that now govern conservation and compares these targets to those in the IPSP-2007. The LTEP advances the approach to conservation targets contained in the IPSP-2007 by adding electricity consumption reduction targets in TWh. Previously, the government had set only peak demand reduction targets in MW,[15] and the IPSP-2007 contained no consumption targets. The LTEP also contains more interim targets than did the IPSP-2007.

Table 1: Conservation Targets
IPSP-2007 LTEP
Year Peak Demand Reduction Target (MW) Peak Demand Reduction Target (MW) Electricity Consumption Reduction Target (TWh)
2010 2,700 Not Applicable Not Applicable
2015 No Interim Target 4,550 13
2020 No Interim Target 5,840 21
2025 6,300 6,700 25
2030 Not Applicable 7,100 28
Source: Government of Ontario, Ontario’s Long-Term Energy Plan, Building Our Clean Energy Future

The LTEP also contains revised targets for installation of renewable generation capacity; these are shown in Table 2. The LTEP establishes a renewable generation target of 10,700 MW to be achieved by 2018. This includes renewables other than hydroelectric generation (i.e., wind, solar and bio-energy). Renewable targets that were contained in the IPSP-2007, which included hydroelectric generation, are also shown for reference but are no longer valid. As Table 2 shows, the new renewables target is more aggressive and reflects the large uptake of the Feed-in Tariff (FIT) program.

Table 2: Renewables Capacity Targets
Year IPSP-2007* LTEP
2010 10,400 MW Refers to all renewables including hydroelectric. Adds 2,700 MW to the existing 2003 capacity of 7,700 MW. Not Applicable
2018 Not Applicable 10,700 MW Refers only to 10,700 MW of wind, solar and bio-energy. Hydroelectric generation is counted separately, i.e., 9,000 MW hydro target – 19,700 MW in total.
2025 15,700 MW Not Applicable
Note: *Unlike the LTEP target, the IPSP-2007 targets included hydroelectric generation.[16]
Source: Government of Ontario, Ontario’s Long-Term Energy Plan, Building Our Clean Energy Future.

The New Framework for Conservation and Renewable Generation

LTEP Targets

Figure 1 shows several targets that previously governed electricity as well as new targets that have been put in place. The targets apply to different periods and are measured in different ways. The key target amounts established by the LTEP and set out in the Supply Mix Directive are shown in the green portion on the right of the diagram. All of these targets are annual savings targets that refer to the amount to be saved in the target year (i.e., 2015, 2020, 2025, and 2030) relative to a baseline year of 2005.

Progress towards meeting the LTEP targets is measured by counting the cumulative amounts of conservation savings that have persisted (are still delivering savings) from 2005 to the target year. The targets are based on an updated forecast of conservation potential that was originally completed for the IPSP-2007. The Supply Mix Directive instructs the OPA to exceed and accelerate achievement of the targets, if feasible and cost-effective.

These targets will be incorporated as the targets contained in the IPSP-2011. The LTEP states that 50 per cent of the 2030 conservation target will be achieved in the commercial sector, 30 per cent in the residential sector, and 20 per cent will come from the industrial sector. According to the Ministry of Energy, this allocation of the 2030 target is based on an OPA analysis conducted for the IPSP-2007, and should only be considered a rough estimate based on the potential for further savings in each sector.[17]

Electricity Conservation Targets – LTEP, CDM Directive and IPSP.jpg
Figure 1: Electricity Conservation Targets – LTEP, CDM Directive and IPSP
Source: Government of Ontario, Ontario’s Long-Term Energy Plan, Building Our Clean Energy Future.

CDM Directive Targets

Shown in the orange area of Figure 1 are another set of conservation targets established on March 31, 2010, before the LTEP was issued. These targets were set out in a directive from the Minister of Energy to the OEB known as the “CDM Directive”. On November 12, 2010, the Board issued a decision and order that allocated each LDC a share of the total province-wide target contained in the CDM Directive. Achievement of these targets is a condition of LDC licences.[18] Actions taken to meet the CDM Directive targets, depending on the persistence of the actions, are included in the contribution toward meeting the LTEP targets and will be incorporated by government when verifying progress on the LTEP targets.

Although conservation savings achieved for the CDM Directive’s target can be counted toward achievement of the targets contained in the LTEP, progress on meeting the targets contained in the CDM Directive will also be measured separately from the LTEP targets on a stand-alone basis. The ECO notes two concerns with the stand-alone measurement. First, it is not clear how peak demand is defined for the peak reduction target. Second, the methodology for measuring the consumption target appears to be different from the way that LTEP consumption targets are measured. Clarity of definitions and measurement methodology is needed as there are several ways to interpret these.

The LTEP sets both the peak reduction and consumption targets as, respectively, a MW and TWh amount achieved within each target year measured from the 2005 baseline.

In the CDM Directive, the peak reduction target amount will be measured in the same way that the LTEP counts savings – as a MW amount achieved in 2014, at the end of the four-year period of 2011-14. It is not clear to the ECO how peak is defined.[19]

The consumption target contained in the CDM Directive will be measured as the TWh amount of reduced electricity consumption accumulated over the four-year period, 2011-14. This could be interpreted to mean counting the TWh amount saved in 2014 that results from programs implemented from 2011 to 2014. Alternatively, it could mean counting any amounts saved at any time (in 2011, 2012, 2013 and 2014) during the four-year period. The first interpretation is a more aggressive and demanding way to set the target. The second interpretation would be an easier target amount to achieve, and is a less demanding way to set the target.

The ECO recommends that the Ministry of Energy clarify how the peak demand and consumption targets contained in the Long-Term Energy Plan and Conservation and Demand Management Directive are measured.

Pre-LTEP Targets

Figure 1 also shows (in the blue shaded area of the diagram) previous demand reduction targets for 2007 and 2010 that were, respectively, set by the government or contained in the 2006 Supply Mix Directive and incorporated into the IPSP-2007. Verified savings achieved for these pre-LTEP targets (the 2007 and 2010 targets) will also be incorporated for measuring progress to meet the LTEP targets. These pre-LTEP targets were measured from a baseline year of 2005. As Table 1 shows, the new peak demand reduction targets are slightly more aggressive: 6,700 MW versus 6,300 MW, when comparing the only target year (2025) common between the LTEP and IPSP-2007.

Renewable Generation Targets

Figure 2 shows several targets that previously governed and currently apply for adding renewable generation capacity. The target now governing acquisition of renewables is the LTEP target of 10,700 MW (shown in red). The other targets (shown in gold) are superseded. It is important to note that the targets are not comparable because they are not symmetrical. Neither the type of renewable generation nor the amount of existing versus new renewable capacity included in each target is similar.

Ontario’s acquisition of renewable generation capacity is now governed by the FIT. The procurement amounts of generation sought and achieved by previous tenders and programs are shown in the diagram below the timeline.

width="50%" Figure 2: Renewable Generation Targets and Procurement Source: Government of Ontario, Ontario’s Long-Term Energy Plan, Building Our Clean Energy Future; OPA, Integrated Power System Plan; OPA, A Progress Report on Electricity Supply – Second Quarter 2010.

ECO Comment

General Comments

The LTEP is a far-reaching document, and the ECO commends the government for re-starting the IPSP process, as well as seeking public input on the LTEP’s draft Supply Mix Directive through the Environmental Registry. The ECO’s comments address the conservation and renewable generation features of the Plan, and do not focus on conventional generation or the load forecast that underpins the Plan, important as these are. The ECO comments on the LTEP from two perspectives: the LTEP as a system planning document for resource acquisition, and as a socio-economic policy with environmental impacts. Before discussing these aspects, a generic comment is necessary as it touches on the overall credibility of the Plan. In the course of requesting information for this report, the ECO generally found the Ministry of Energy unwilling or unable to provide detailed explanations of elements of the Plan, particularly information underlying or supporting data presented in the LTEP.[20] The ECO questions the degree to which numbers related to conservation investment, ratepayer benefits from conservation, and claimed electricity savings were rigorously validated by the ministry. The ministry indicated that the LTEP was based on OPAsupplied data but did not provide source documents. Similarly, information sought on price forecasts in the Plan was deemed confidential by the ministry and not supplied to the ECO. Some supply mix information – generation and conservation capacity – was provided after much delay, but there was insufficient time to analyze the data. Consequently, the ECO cannot comment on the accuracy of elements of the Plan or the validity of its propositions. This is an important limitation because the Supply Mix Directive is closely aligned with the LTEP, and the directive provides specific guidance for creating the IPSP. The IPSP-2011 must present these data so the assumptions can be scrutinized. Because of this limitation, the ECO tempers any statements of approval with this caveat.

The LTEP as an Integrated Resource Planning Document

Considering the LTEP as an operational plan – a technical guide for power system planning and program design – three aspects of the Plan are praiseworthy: (1) an expanded approach to setting conservation targets that includes both consumption and demand targets; (2) its explicit treatment of conservation as a supply resource; and (3) the impact of consumption targets in aligning CDM policy, planning, and programs. These three aspects are discussed in greater detail below.

First, it is commendable that it (and the Supply Mix and CDM directives) reflects an expanded approach to setting conservation targets that includes both consumption and demand targets. Our Annual Energy Conservation Progress Report – 2009 (Volume One) recommended such targets. In the ECO’s view, it is self-evident that consumption-based targets are worthwhile because all supply technologies have negative environmental impacts, and conservation reduces the amount of new generation that would otherwise be built.

Consumption-based targets, like peak reduction targets, offer system planning benefits since both types of targets discipline the growth of generating capacity. The former reduces the need for baseload[21] and intermediate generators, and the latter reduces the need to add peaking generation. Forecasting demand with precision is difficult, and planners face the risk of overbuilding the electricity system. As an example, the IPSP-2007 proposed building 1,400 to 3,400 MW of additional new nuclear capacity and three additional natural gas plants.[22] Three years later, the LTEP has scaled this back to two new nuclear units (about 2,000 MW) and one gas-fired station because of lower than expected demand growth.[23]

Consumption targets, by reducing the need for new baseload plants and moderating the growth of the overall generation capacity, help keep the margin of error as low as possible. If excess capacity does develop, since the amount of generation built has been kept to a minimum and the size of the electricity system is smaller, the economic and environmental impacts of excess capacity will be less severe. Consumption targets offer additional environmental and economic benefits beyond what peak targets alone provide, since they reduce demand over the entire year, not only during periods of peak use.

The second praiseworthy aspect of the LTEP is its explicit treatment of conservation as a supply resource; tables and graphs in the LTEP show demand targets as “installed capacity.”[24] The Plan states that conservation is the most cost-effective and calls it the first and best resource. This is a welcome addition that explicitly signals the philosophy underpinning electricity policy. The ECO questions, however, why the ministry did not extend this thinking to formally endorse a loading order. [25] Since the Supply Mix Directive instructs that targets should be accelerated or exceeded if possible, and the IPSP-2007 identified a “priority order” in which resources are planned (similar to planning proceeding on the basis of a loading order), clearer direction seems fitting. It should have been provided by embedding the principle of a loading order as a formal guiding principle in the Supply Mix Directive so that it is again used in the IPSP-2011.

A third positive feature of setting consumption targets is that it better aligns policy, planning and programs. The objectives and design of most CDM programs offered in Ontario are now reflected in the electricity plan. With the exception of industrial and residential demand response programs, all of Ontario’s CDM programs are aimed at reducing consumption or improving efficiency; such programs target kilowatt-hour (kWh) savings. Putting consumption targets in place provides clarification of the government’s priorities to LDC and OPA program managers, and ensures that the OPA and LDCs are encouraged to support these programs, instead of devoting resources largely to demand response programs.

The LTEP as a Policy Document

In the ECO’s view, the LTEP does more than serve as the blueprint for the planning and design of the province’s electricity infrastructure over the next two decades. In the ECO’s opinion, the Plan is an important socio-economic policy statement that integrates energy, environmental and economic priorities. The Plan’s proposals for more conservation, renewable energy and the smart grid are commendable. The Plan’s major fault is that it is not an energy plan; rather, it is an electricity plan.

The Plan’s foreword makes it clear that the LTEP serves a broader policy purpose closely tied to the Green Energy and Green Economy Act, 2009 (GEGEA). The Plan links electricity infrastructure to an industrial strategy based on sunrise industries that manufacture clean energy technology. The LTEP also uses electricity planning to address climate change. It continues the environmental policy to decarbonize generation and shift Ontario away from coal-fired power, which has been deemed a sunset industry. It embraces the building of a smart grid. In doing so, the Plan promotes transformative technologies, that is, technologies used in innovative ways to create new business models and transform the electricity market. For example, it will accelerate utilities’ evolution from wires companies simply delivering electrons to providers of energy services such as conservation and distributed generation.

The Plan also candidly acknowledges that prices will rise over 20 years because of capital investment in new infrastructure. The Plan attempted to engage Ontarians in a discussion of the need for higher electricity prices. Regrettably the government continued the policy approach of past decades: the only solution to higher electricity prices is lower electricity prices. By introducing rebates and tax credits to offset price increases, the government made little attempt to use the LTEP to frame the issue of rising prices as an opportunity to conserve, nor did it address the detrimental effect that rebates and other actions to shelter consumers from price signals have on load growth. Information should have been provided to help Ontarians understand that price subsidies work against conservation and some methods of lowering prices are better than others in maintaining conservation.

As a social policy document, the LTEP could have been improved by directly explaining the trade-offs that result from choosing between generation and conservation options and the trade-offs among generation options. The ministry’s on-line consultation did provide a limited comparison of generation types, but not enough detailed information to understand the difficult choices raised by supply options. The Plan essentially evades these issues and missed an opportunity to use the LTEP to reach consensus. It should have devoted more effort to explaining that all supply options have negative environmental consequences and offer economic opportunities. It should have explained that public opposition – dissatisfaction with higher prices that reflect the true cost of power and local resistance to siting any type of generation – has frequently hindered reform of Ontario’s electricity system. The Plan should have provided a tool for collective learning and acceptance of difficult choices by setting out a simple side-by-side comparison of the key trade-offs related to:

  • Cost – compared on a common basis to allow equivalent comparisons between supply resources, including conservation;[26]
  • Environmental impacts – description of unaccounted costs that are not included in the price of electricity (e.g., carbon and other emissions, waste management, plant decommissioning and site remediation, liability), and how these could be monetized;
  • Technical constraints – operational limitations like transmission availability and grid operations;
  • Public acceptance barriers – aesthetics, noise, health effects and safety; and,
  • Economic development – the net potential jobs and spin-offs in traditional and strategic emerging industries.

In hindsight, considering the policy developments of 2011, the lack of guidance to electricity agencies, LDCs and the OEB on their mutual objective was a shortcoming of the LTEP. The Plan should have included a statement to counsel these organizations that their actions should reflect the common policy direction to achieve conservation. These organizations have a critical impact on determining the scope and pace of conservation, and the Plan should have set out the government’s expectations of its agencies, distributors and the regulator.[27], [28]

Finally, the LTEP is an energy plan in name only. It discusses only electricity and essentially is an electricity plan. Primary energy sources such as natural gas, uranium and biomass are considered only in terms of providing thermal energy for electrical generation.<Natural gas conservation receives a single mention in relation to a program being designed for low-income households</ref> Discussion of renewable energy sources is similarly restricted to generation applications. Solar thermal and geothermal energy have other uses including space conditioning, domestic hot water and industrial processes (see Appendix A).

The Supply Mix Directive defines conservation to include geothermal heating and cooling and solar heating but, as befits an electricity plan, the definition applies only to load reduction from these technologies and not their ability to reduce the use of hydrocarbon energy sources. Similarly, the directive instructs the OPA to consider storage – its contribution to grid reliability, meeting peak demand, and providing customer and system benefits – but it restricts consideration to electrical storage to reduce power demand and does not include thermal storage to reduce the use of hydrocarbons.

The consumption and conservation of oil, petroleum product transportation fuels, and propane receive not a single mention in the LTEP. A much needed policy discussion of applications for district energy, electrification of transportation, and the effect of cap-and-trade legislation on energy use is not included. These are serious shortcomings that should be addressed.

A plan is needed that would lay out a multi-fuel strategy linked to the inter-related activities of governments, electric and gas utilities, non-governmental organizations and businesses.[29] Some jurisdictions, such as California, integrate government and utility actions on multiple fuels to produce a multi-year energy action plan.[30] The need for a multi-fuel energy strategy is particularly important to guide policy for energy end uses that could be supplied by more than one fuel source. The LTEP encourages fuel switching for heating buildings away from electricity to natural gas, while the government’s GHG reduction targets encourage fuel switching in the opposite direction.[31]

A starting point for producing a true energy plan, as recommended in the ECO’s Annual Energy Conservation Progress Report – 2009 (Volume One), is to produce a comprehensive multi-fuel energy conservation strategy.

The ECO recommends that the Ministry of Energy build upon the work completed in the Long-Term Energy Plan and produce a comprehensive multi-fuel energy plan.


References

  1. ↑ Government of Ontario, Ontario’s Long-Term Energy Plan: Building Our Clean Energy Future (Toronto, Queen’s Printer for Ontario, 2010).
  2. ↑ Government of Ontario, Ontario’s Long-Term Energy Plan: Building Our Clean Energy Future (Toronto, Queen’s Printer for Ontario, 2010), 15,19, figures 4 and 5.

    Somewhat confusingly, the text of the LTEP states that 165 TWh of generation will be supplied in 2030 while Figure 5 puts generation at 198 TWh. Even netting out the 14 per cent conservation amount in Figure 5 would mean about 170 TWh generated in 2030. The difference may be due to about 5 TWh of power generated in Ontario but exported and not consumed in the province.
  3. ↑ The LTEP considers conservation as megawatts of installed capacity – a supply resource reported on the same footing as generation (energy analysts refer to these as “negawatts”). Conservation capacity is not “netted out” of total capacity (including conservation) before calculating installed resources. In 2010, installed conservation capacity is reported as 1,837 MW or 5 per cent of total capacity and it will nearly triple by 2030 to 7,156 MW or some 15 per cent of capacity. Similarly in calculating electricity amounts generated by fuel type, terawatt-hours of conservation are also not netted out. In 2010, conservation provided nearly 6 TWh or 4 per cent of supply and this will grow to about 28 TWh or almost 14 per cent of supply in 2030
  4. ↑ Ontario Ministry of Energy, e-mail to ECO, April 15, 2011.
  5. ↑ There is installed natural gas capacity associated with Non-Utility Generator (NUG) contracts provided by generators since the 1990s. During this decade, many of the contracts will expire and the OPA will decide if their generation is still needed and whether new contracts will be signed with NUGs.
  6. ↑ Ontario Ministry of Energy, e-mail to ECO, April 15, 2011.

    The specific amounts are as follows. Coal currently accounts for 12 per cent or 4,484 MW of installed capacity producing over 13 TWh or 8 per cent of total generation in 2010. Installed natural gas generation capacity is currently 9,424 MW or 25 per cent of total capacity. In 2030, gas-fired capacity will be 9,153 MW and it will account for 19 per cent of the 2030 total capacity. In 2010, gas-fired generators supplied nearly 23 TWh or about 15 per cent of generation. Gas-fired generation will decline and it will contribute only about 15 TWh or seven per cent of total generation in 2030. Nuclear power currently represents 31 per cent of capacity with 11,446 MW installed. It supplied 52 per cent or nearly 82 TWh of power generated in 2010. Nuclear will provide about 45 per cent of supply (some 90 TWh) in 2030. An installed capacity of 12,052 MW (25 per cent of total capacity) will be needed to provide this amount of power.

    Electricity generated from renewable sources (wind, solar and bio-energy) accounted for 1,657 MW or 5 per cent of total installed capacity in 2010 and supplied nearly 4 TWh or 2 per cent of total generation. By 2030, this will grow to nearly 10,700 MW comprising 22 per cent of total capacity. Some 26 TWh or 13 per cent of total generation will be provided by renewables (other than hydro). Hydroelectric power will grow slightly from the current 8,127 MW (22 per cent of total installed capacity) which provided 39 TWh or 19 per cent of generation. By 2030, an installed capacity of 9,024 MW (19 per cent of total capacity) will provide over 40 TWh or 20 per cent of total generation. Conservation, at 1,837 MW, currently accounts for 5 per cent of ‘installed capacity.” It will nearly triple by 2030 to 7,156 MW or 15 per cent of capacity. In 2010, conservation provided nearly 6 TWh or 4 per cent of supply and this will grow to about 28 TWh or almost 14 per cent of supply in 2030.
  7. ↑ Ontario Power Authority, Integrated Power System Plan, version 080904, August 29, 2008 http://www.powerauthority.on.ca/integrated-power-system-plan/bipsp (accessed April 1, 2011).
  8. ↑ Ontario Regulation 424/04, Integrated Power System Plan http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_040424_e.htm]
  9. ↑ Ontario Ministry of Energy, “McGuinty Government Seeking Citizens’ Views On Electricity Supply Mix,” News Release, February 2, 2006. http://news.ontario.ca/archive/en/2006/02/02/McGuinty-Government-Seeking-Citizens039-Views-On-Electricity-Supply-Mix.html

    In February 2006, the Ministry of Energy held 12 town hall meetings across Ontario and invited the public to comment on its web site on the future supply mix of Ontario’s electricity sector prior to development of the IPSP. The planning documents underlying this consultation were based on the Supply Mix Advice Report, drafted by the OPA, which presented options for the future development of the electricity system. http://www.powerauthority.on.ca/integrated-powersystem-plan/supply-mix-advice
  10. ↑ Ontario Ministry of Energy, “McGuinty Government Invites Feedback from Ontarians,” News Release, September 20, 2010. http://news.ontario.ca/mei/en/2010/09/ontario-to-update-long-term-energy-plan.html Ontario Ministry of Energy, “Seeking Ontarians’ Views on Our Energy Future,” News Release, September 20, 2010.

    http://news.ontario.ca/mei/en/2010/09/seekingontarians-views-on-our-energy-future.html Although news releases used the term “update”, strictly speaking there was no previous long-term energy plan to update. News releases confused the matter as they stated that the first version of the long-term plan dated from 2006. There was no LTEP issued in 2006 but there was an Integrated Power System Plan (IPSP) that was requested by the Minister of Energy in June 2006. Also, news releases described the LTEP as an updated IPSP and referred to targets contained in the 2007 IPSP as achievements made under the LTEP.
  11. ↑ The questions were: (1) After several years of stable rates, electricity prices for Ontarians are increasing now due to investments in infrastructure and new generation. How should increased costs to Ontarians be weighed against other goals in power system planning like modernizing infrastructure, building new generation and increasing renewable energy production while phasing out dirty coal generation? (2) How do you think the electricity demands of families and businesses will change over the next 20 years in Ontario? (3) What role should renewable forms of energy like hydro, solar, wind and biomass play in Ontario’s future supply mix? (4) What type of generation should replace dirty coal in Ontario’s supply mix? (5) What role should natural gas play in Ontario’s future energy supply? (6) What role should nuclear power play in Ontario’s future supply mix? (7) What is the appropriate and cost effective level of investment in transmission and distribution – the infrastructure that carries power from stations and delivers it to our homes and businesses – to target in our future power grid? How should we balance the needs of cost effectiveness with ensuring appropriate build-out? (8) Are Conservation and Demand Management (CDM) programs, that provide tools to help manage bills and avoid new system costs, important to Ontario’s energy future? Are there ways to enhance them? (9) What key elements do you think should be considered to ensure that Ontario’s energy system remains reliable, sustainable, clean and cost-effective for our children and grandchildren?
  12. ↑ Environmental Registry posting # 011-1701.
  13. ↑ Minister of Energy Brad Duguid, Directive to the Ontario Power Authority, February 17, 2011. http://www.powerauthority.on.ca/sites/default/files/new_files/IPSP%20directive%2020110217.pdf (accessed April 15, 2011).

    Minister of Energy Brad Duguid, Letter of Direction to the Ontario Energy Board, February 17, 2011. http:// www.ontarioenergyboard.ca/OEB/_Documents/ Documents/Direction_to_the_OEB_20110217_IPSP.pdf (accessed April 15, 2011).

    The finalized Supply Mix Directive was transmitted to the OPA on February 17, 2011. It replaced the Supply Mix Directives issued in June 2006 and September 2008, and directed the OPA to prepare an Integrated Power System Plan pursuant to the goals set out in the Supply Mix Directive.

    A letter of direction was also issued by the government to the Ontario Energy Board advising that it is anticipated that the OPA would deliver the Integrated Power System Plan later in 2011, and the Board must carry out the review no later than 12 months after the date that the OPA submits the plan to the Board.
  14. ↑ Minister of Energy Brad Duguid, Directive to the Ontario Power Authority, February 17, 2011. http://www.powerauthority.on.ca/sites/default/files/new_files/IPSP%20directive%2020110217.pdf (accessed April 15, 2011). The Supply Mix Directive states that it replaces the previous two directives. Clarification was added to the final Supply Mix Directive in the section directing that new transmission capacity be built in several regions of the province. It was specified that the OPA should recommend the scope and timing of new transmission investment.
  15. ↑ One megawatt equals 1,000 kilowatts and 1 terawatt-hour equals 1 billion kilowatt-hours.
  16. ↑ Ontario Power Authority, Integrated Power System Plan, version 080904, August 29, 2008, Exhibit D, Tab 5, Schedule 1. http://www.powerauthority.on.ca/sites/default/files/page/7764_D-5-1_updated_2008-09-04_v2.pdf (accessed April 15, 2011).
  17. ↑ Ontario Ministry of Energy, e-mail message to ECO staff, March 11, 2011. No source document was provided by the Ministry of Energy.
  18. ↑ Minister of Energy and Infrastructure Brad Duguid, Directive to the Ontario Energy Board, March 31, 2010. http://www.ontarioenergyboard.ca/OEB/_Documents/GEGEA%20Implementation%20and%20Readiness/minister_directive_20100423.pdf (accessed April 27,2011). The targets were established for the period January 1, 2011-December 31, 2014.
  19. ↑ Minister of Energy and Infrastructure Brad Duguid, Directive to the Ontario Energy Board, March 31, 2010. http://www.ontarioenergyboard.ca/OEB/_Documents/GEGEA%20Implementation%20and%20Readiness/minister_directive_20100423.pdf (accessed April 27, 2011).

    Section 2(a) of the CDM Directive simply states the target as 1,330 MW of provincial peak demand. Section 6(g) states that LDCs should use the OPA’s EM&V protocol when verifying their program savings. The OPA’s Protocol appears to define peak demand to include winter and summer peaks. Other definitions of peak are used for CDM programs or in regulations (e.g., industrial demand response programs and critical peak pricing for consumers with demand greater than 5 MW). For example, peak could be defined as the all-time highest hour in 2014, or as an average of a certain number of the highest hours in 2014).
  20. ↑ The ministry was unable to provide detailed supporting documentation in response to information requests made by the ECO, claiming that they were not the custodian of the information requested. As a result, several of the claimed quantities remain obscure. For example, the LTEP claims that the conservation targets will save ratepayers $27 billion over 20 years based on a $12 billion investment, that the $3 billion invested in conservation programs over the next five years will result in avoided supply costs of $10 billion, that over 1,700 MW of conservation savings have been achieved to date.
  21. ↑ Baseload generation refers to generating stations that are operated to the greatest extent possible and run all the time because they are expensive or technically complex to shut down for short periods. Baseload generators provide some or all of the minimum load of a system and produce electricity at an essentially constant rate running continuously, maximizing system efficiency and minimizing system operating costs. An example of a baseload generator is a nuclear plant.

    Both types of targets provide planning discipline. Peak demand targets, as the name implies, help avoid building new peaking stations, typically gas-fired plants. Consumption-based targets are directed more toward reducing the need for additional baseload and intermediate generating stations.

    Recently, Ontario has experienced periods of surplus baseload generation. This is mainly a result of two drivers: reduced demand resulting from the financial crisis of 2008 and to a lesser extent, recently added renewable capacity like wind and solar generators that supply electricity whenever their output is available and are not dispatched by the IESO.

    Conservation has not been a significant contributor to surplus baseload conditions because Ontario’s programs to date have been demand response programs that target peak load, not baseload.

    Excess baseload results in inefficient prices, but importantly for system planning, reduces flexibility needed for operating Ontario’s fleet of generators. Flexibility will be important as the renewable capacity set out in the LTEP comes on stream and the IESO develops rules to require that renewable generators be dispatchable. (When generators are dispatchable, this means that they can be turned on or off in a matter of minutes upon demand by the IESO in contrast to base.
  22. ↑ Ontario Power Authority , Integrated Power System Plan, version 080904, August 29, 2008, 3, 18, Exhibit D, Tab 6, Schedule 1. http://www.powerauthority.on.ca/sites/default/files/page/7764_D-5-1_updated_2008-09-04_v2.pdf (accessed April 15, 2011).

    A range of capacity was established because the amount of new nuclear needed was affected by decisions on which existing nuclear plants would be refurbished. Two planning scenarios were developed to cover the range of expected new baseload. The nuclear build was to begin in 2018.
  23. ↑ Government of Ontario, Ontario’s Long-Term Energy Plan, Building Our Clean Energy Future (Toronto, Queen’s Printer for Ontario: 2010), 24).
  24. ↑ Government of Ontario, Ontario’s Long-Term Energy Plan, Building Our Clean Energy Future (Toronto, Queen’s Printer for Ontario: 2010), 18, figure 4.

    The LTEP could have better communicated this aspect of conservation as a “capacity resource”: the role it plays in avoiding the need to build additional generation and transmission. There are frequent references to conservation savings being the equivalent to powering a city of a certain size or removing a number of homes from the grid or vehicles from the road. For example, the LTEP’s 2030 conservation target of 7,100 MW and 28 TWh is described as the equivalent of taking 2.4 million homes off the grid. The point would be better and more directly made by advising Ontarians that this will mean Ontario can avoid building say 8 new nuclear reactors.
  25. ↑ A “loading order” formally establishes that a jurisdiction, in planning to meet its energy needs, will invest first in energy efficiency and demand-side resources, followed by renewable resources, and only then in clean conventional electricity supply.
  26. ↑ For example, the Plan commits Ontario to two new nuclear units and states nuclear power must be provided at a fair price. In discussing a process to procure two new nuclear plants at Darlington undertaken in 2008, the Plan states that the bid price received exceeded the Province’s target price. No information on the price to build new nuclear is provided in the LTEP so that the price of new nuclear build can be compared against other forms of generation, particularly renewable generation which opponents claim is a premium priced supply option. Although there is a directional shift to renewable generation, constraints on building new transmission may significantly limit construction of all the renewable generation proposed in the Plan. Growth of the nuclear industry has stalled in the past two decades in no small part because of high capital costs for construction of new units and refurbishment of existing units.
  27. ↑ To date, in considering applications by LDCs for Board- Approved CDM programs, the OEB has signalled that it requires all elements of the program – design, delivery and evaluation – to be thoroughly detailed prior to granting approval. The Board will approve a program in its totality and not piecemeal. This may slow the introduction of programs into the market and result in missed targets. A recent OEB decision on natural gas DSM indicates that the Board strongly values ratepayer impacts when balancing its mandate to promote conservation and approve prudent rates.
  28. ↑ Robert Warren, Ian Mondrow, George Vegh and Jan Carr, “Where is the Regulatory System Headed,” Ippso Facto, August 2010: 12.

    George Vegh, Glenn Zacher and Patrick Duffy, “The Changing Face of Regulation,” Ippso Facto, January 2009: 8.

    The commentaries provide a thought provoking discussion of the role of the OEB and government in this matter. An example of actions that have affected the scope and pace of CDM is provided by negotiations between the OPA and LDCs on master contracts and schedules for new OPA-Contracted Province-Wide CDM programs (to begin January 1, 2011) and are still not complete at the time of writing this report.
  29. ↑ The Plan should have provided a detailed discussion of specific elements like minimum efficiency standards for appliances, building codes and ratings, official municipal plans, district energy, carbon pricing. Brief mention is made of one specific regulation to require the public sector (MUSH – municipalities, universities, schools and hospitals) to produce conservation plans. There is a promise of support to homeowners for energy audits and a cursory statement that conservation targets will be met through codes, standards, programs and time-of-use rates.
  30. ↑ A formal collaborative effort of government, energy agencies, regulators and utilities articulates a single, unified approach to electricity and gas use describing a common implementation plan to meet policy goals. California’s planning approach recently integrated transportation energy use, research and development needs and statutory commitments on climate change like cap-and-trade policy, and is considering the need to integrate local government decisions on planning, infrastructure and approvals given to developers. There are parallels to Ontario’s regulatory framework that uses directives and the IPSP. The implementation plan integrates the California Governor’s Executive Orders, the Public Utilities Commission and Energy Commission proceedings, and legislative direction. Some of the areas for coordination and integration are minimum energy performance standards, consumer appliance purchases, energy efficiency and demand response programs, consumer investment in distributed energy, such as solar thermal and photovoltaic systems, and building codes.
  31. ↑ A similar point could be made concerning electric cars. A literal reading of the Supply Mix Directive would suggest that an initiative designed to reduce purchases of electric cars would be a worthwhile conservation measure to fund, as it would reduce total electricity consumption. Yet it is unlikely that this is actually the government’s preference, given its other actions to promote electric cars.


Citing This Article:
Environmental Commissioner of Ontario. 2010. Annual Energy Conservation Progress Report, 2010 (Volume One): Managing a Complex Energy System. Toronto, ON : Environmental Commissioner of Ontario. pp. 11-20

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