New technologies are transforming the way we produce and use electricity. The IESO is at the forefront of this change, driving and guiding the electricity sector’s evolution. See how Ontario’s power system is transforming.
After years of having surplus electricity, Ontario is entering a period of growing needs and provincial demand is expected to increase by an average of two per cent annually over the next two decades. To ensure Ontario's future energy needs are met, the IESO secures new electricity supply in the short, medium and long term.
Major Factors Impacting Ontario’s Electricity Supply
The three primary factors impacting Ontario's future supply and demand are:
Decommissioning: Power plants have a finite lifespan and the Pickering nuclear generating station is scheduled to come out of service by 2025.
Refurbishments: Renovations and improvements are currently underway for several power plants in Ontario, reducing their ability to produce electricity while the work is taking place.
Increased Demand: The switch to electric transportation and production processes as well as economic growth in the agricultural greenhouse and electric vehicle manufacturing sectors are increasing Ontario’s overall electricity demand.
Aligning New Supply with System Needs
The IESO works with our electricity sector partners to address future supply challenges in a timely, cost-effective and flexible way. One approach involves securing competitive contracts with electricity suppliers, recognizing that:
A one-size-fits-all approach is not sufficient to reliably and cost-effectively meet Ontario’s needs
Different electricity resources contribute to the electricity system in different ways
Different electricity resources have different risks, requirements and development timelines
Competitive Procurement
The IESO’s Resource Adequacy Framework sets out a competitive strategy for securing new resources in the short, medium and long term, while balancing the risks faced by ratepayers and suppliers.
Short-Term (Capacity Auction): With a short forward period (less than 12 months in advance), the Capacity Auction offers great flexibility to adapt to changing system needs at the lowest cost to electricity customers.
Medium-Term (3-5 Years): Medium-term procurements provide certainty that Ontario will have a supply of electricity sufficient to meet future demands, while also helping the IESO make adjustments for changes in its forecasts.
Long-Term (20+): Long-term commitments are considered when current or future needs cannot be met in the short or medium term. In these circumstances, contracts with longer terms provide certainty for suppliers as they make significant investments in new assets or major upgrades to existing assets.
