Ontario is in a stable supply situation after years of investment in new generation. There are enough existing and available resources to meet our needs for the next decade. This puts us in a position to focus on increasing the cost-effectiveness of the electricity system by introducing more competition and stimulating innovation.
New commitments for existing and available resources will be needed starting in 2023 as generation contracts expire and nuclear refurbishments get underway. Capacity auctions will provide a platform for these resources to compete to meet Ontario electricity needs at lowest cost. Energy efficiency can also be a cost-effective way to address targeted system needs.
1. Ontario’s stable supply situation continues
Ontario has 40.5 gigawatts (GW) of installed capacity comprising a diverse mix of resources, while summer and winter effective capacities are 28.0 GW and 29.6 GW after taking into account the weather’s impact on output, fuel availability and outages.
2. After years of decline, demand is increasing
Electricity demand is expected to increase slowly and steadily due primarily to electrification of transportation, a booming agricultural sector, and modest growth in the residential and commercial sectors.
3. Existing and available resources will meet electricity needs for the next decade
A capacity need emerges in 2023, initially limited to several hours of the year, as existing generation contracts expire and nuclear refurbishments are underway. Ontario has enough existing and available resources to meet this need over the next decade. Capacity auctions can meet this need, while energy efficiency and a proposed Pickering extension would help reduce it.
4. Over the long-term, additional market-based approaches will be required
As demand continues to grow, more contracts expire, and Pickering retires, additional market-based approaches will be needed. New resources that require large capital commitments and long development timelines, such as large hydroelectric facilities, require different solutions.
5. Surplus baseload generation (SBG) will decrease significantly
Most SBG is expected to be managed through electricity exports under both the reference and energy efficiency cases, bringing in revenue that will offset costs for Ontario consumers.
6. Ontario’s clean electricity system can help reduce province-wide emissions
Ontario has one of the cleanest electricity systems in North America, and as such, can play a role in reducing province-wide emissions. Switching from higher-emission fuels to low-carbon electricity will provide a net benefit to the province, even though emissions from the electricity sector will increase as gas-fired generation ramps up to meet demand. There is also an opportunity to reduce emissions further through energy efficiency.