The IESO Continues Work Toward a Decarbonized Electricity Grid with a Trio of Reports
December 15, 2022
Findings include that a moratorium on new natural gas generation is possible beginning in 2027 if new non-emitting supply and conservation programs are ready when needed.
Toronto, ON - Ontario is in a strong position to decarbonize its rapidly growing electricity grid, with a moratorium on new natural gas generation being feasible starting in 2027, provided new storage, nuclear, renewables and expanded conservation efforts are ready. This conclusion comes from a new report requested by the Minister of Energy and produced by Ontario’s Independent Electricity System Operator (IESO), one of three reports released today that focus on the transformation of Ontario’s electricity system.
The simultaneous release of the IESO’s Annual Planning Outlook, Conservation and Demand Management Framework Mid-Term Review, and Pathways to Decarbonization, highlights the progress being made to prepare Ontario’s electricity system for the future as well as the work needed to address the challenges ahead.
“With one of the cleanest electricity grids in North America, Ontario has a real advantage in enabling the decarbonization of the broader economy,” said Lesley Gallinger, President and CEO of the IESO. “The process of fully eliminating emissions from the grid itself, however, will be a significant and complex undertaking. Through our ongoing commitment to work with a wide range of partners to assess risks and overcome challenges, we believe it is possible to achieve an orderly transition toward a decarbonized electricity system that remains reliable, affordable and sustainable.”
Future Ready
The Pathways to Decarbonization report, undertaken at the request of the Minister of Energy, finds that Ontario could begin moving toward a decarbonized grid starting with a moratorium on new gas generation beginning in 2027, as long as sufficient non-emitting supply were to be in place to meet growing electricity demand. By 2035, the system could be less reliant on the natural gas fleet, lowering emissions by 60 per cent below the IESO’s original forecasts.
The report also finds that attaining a decarbonized electricity sector by 2050, alongside aggressive electrification targets, would require a system more than double the size it is today at an estimated cost of around $400 billion. These costs could be offset by lower overall energy costs as consumers reduce their reliance on fossil fuels and through energy efficiency.
The IESO has identified a number of “no regret” actions that could be taken as the province moves towards decarbonization. These actions include: continuing competitive efforts to acquire non-emitting supply; expanding energy-efficiency programming post-2024; beginning planning and siting work for nuclear, storage, hydro and transmission projects that require long-lead times to develop; galvanizing collaboration amongst stakeholders; and continuing support for low-carbon fuels such as hydrogen.
Preparing for Now
Two other IESO reports released today demonstrate the work already underway to prepare Ontario’s electricity system for the future:
- The 2022 Annual Planning Outlook forecasts electricity demand will increase almost two per cent annually over the next two decades, driven by economic growth and electrification. The report reaffirms the IESO’s efforts to secure new supply and helps set the stage for additional procurements that could integrate more non-emitting supply into the grid.
- The 2021-2024 Conservation and Demand Management Framework Mid-Term Review presents a plan for future energy and demand savings, including new programming, to help meet emerging system needs in 2025 and beyond. Energy-efficiency initiatives offer Ontarians value as a clean, reliable, flexible and cost-effective resource that ensures reliability on the grid and addresses customer needs.
Together, these reports build on the IESO’s ongoing efforts to make the plans and investments today that will help prepare for Ontario’s electricity system of the future.
Quotes
“The IESO’s Pathways to Decarbonization report is a great first step in exploring ways to decarbonize the electricity grid. As municipal governments experience climate change impacts first-hand, we know the important role that clean energy plays. We look forward to being involved in future consultations as this work progresses.”
- Colin Best, President, Association of Municipalities of Ontario (AMO)
“We commend the IESO for taking a first step to outline the magnitude and potential implications of the energy transition for Ontario’s electricity system. The OEA is very supportive of the IESO’s and government’s efforts to begin a detailed analysis of potential pathways to a zero-emissions electricity system, and more broadly, for a zero-emissions energy system to meet our societal emissions reduction goals.”
- Vince Brescia, President and CEO, Ontario Energy Association (OEA)
“Electricity will be key to meeting our Net Zero objectives. This work, together with other pathways studies, will be an important contributor to anticipating the challenges ahead, and an opportunity for government to lay out broad, longer term objectives and guiding principles for an integrated, long term energy planning effort that maintains Ontario’s clean energy advantage, manages future growth, and supports decarbonization affordably and reliably.”
- David Butters, President and CEO, Association of Power Producers of Ontario (APPrO)
“CanREA recognizes this report will lead to a broader discussion on options to decarbonize the Ontario grid. Our members stand ready to invest in building the infrastructure that will power the energy transition in this province.”
- Brandy Giannetta, Vice-President, Policy and Government Affairs, Canadian Renewable Energy Association (CanREA)
“We appreciate the contributions the IESO continues to make to the decarbonization discussion, including through its Pathways to Decarbonization report. A successful energy transition will require a coordinated effort from the entire sector to deliver the safe and reliable electricity we need to sustainably power communities and businesses across the province.”
- Anthony Haines, President and CEO, Toronto Hydro
“This report clearly illustrates the scope and magnitude of work necessary to grow and decarbonize the electricity system to support electrification and a thriving economy. A mix of generation technologies is consistent with OPG’s ‘all-hands-on-deck’ approach to meeting growing energy needs, and we look forward to advancing much-needed new generation in partnership with Indigenous communities.”
- Ken Hartwick, President and CEO, Ontario Power Generation (OPG)
“The IESO’s Pathways to Decarbonization report is a strong start to the conversation about what the path to achieving Net Zero in Ontario will look like. We look forward to further discussion and exploring in more detail the critical role energy storage will play.”
- Justin W. Rangooni, Executive Director, Energy Storage Canada
“The Pathways to Decarbonization report highlights exciting opportunities to support customers and invest in transmission, distributed energy resources and energy efficiency. Investing in infrastructure and innovation, while maintaining affordability and reliability for customers, is critical to enabling Ontario's energy transition. The study underscores the importance of preparing today for tomorrow's needs.”
- William (Bill) Sheffield, Interim President and CEO, Hydro One
Quick Facts
- With more than 90 per cent of supply coming from non-emitting sources in 2021, Ontario’s energy advantage will help drive broad emissions reductions as other sectors of the economy decarbonize.
- Ontario’s electricity system comprises about three per cent of economy-wide emissions.
- The Government of Ontario directed the IESO to undertake competitive procurements that target up to 2,500 MW of storage – the largest planned procurement of clean energy storage in Canada’s history – and up to 1,500 MW of natural gas generation to be in-service between 2025-2027 to meet near-term needs.
- While current conservation and demand programs are tapping into all existing energy-efficiency opportunities in the province, there remains significant opportunity for additional investments in energy-efficiency programs post-2024 to reduce demand by as much as 1,850 MW in 2033.
- In October 2022, the Government of Ontario increased funding for the province’s energy-efficiency programs by $342 million, bringing the total investment to more than $1 billion over the current four-year electricity conservation framework.
About the Independent Electricity System Operator (IESO):
The IESO operates Ontario’s power grid 24 hours a day, 365 days a year, ensuring Ontarians receive a reliable and cost-effective source of power when and where they need it. It works with sector partners and engages with communities across Ontario to plan and prepare for the province’s electricity needs now and into the future.
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Backgrounders and copies of the three reports can be downloaded from the IESO website:
- Pathways to Decarbonization
- 2022 Annual Planning Outlook
- 2021-2024 Conservation and Demand Management Framework Mid-Term Review
A-roll interviews with IESO President and CEO Lesley Gallinger and Chuck Farmer, Vice President of Planning, Conservation and Resource Adequacy, along with B-roll of the IESO Control Centre are available on request.
IESO Media Contact:
416-506-2823
media@ieso.ca