The 2020 APO includes two scenarios reflecting the range of possibilities, depending on how the economy recovers – a faster-recovery scenario, where demand is expected to reach pre-pandemic levels in 2022, and a slower-recovery, where demand is expected to reach pre-pandemic levels by the end of 2024. Here are some key facts about the 2020 APO:
1. Electricity demand is expected to increase beyond previous forecasts in the longer term.
In the near term, the pandemic and the resulting economic slowdown will result in lower demand. In the longer term, with additional growth in the agricultural sector, an increase in residential consumption and steady growth in the industrial sector, demand will rebound and eventually outpace the 2019 forecast.
Seasonal Peak Demand
*In the Annual Planning Outlook, the faster-recovery scenario is referred to as Scenario 1 and the slower-recovery is referred to as Scenario 2.
2. The resource outlook changes through the next 20 years, due to nuclear retirements and refurbishments and expiring generation contracts.
In the mid 2020s, the scheduled retirement of Pickering Nuclear Generating Station will reduce Ontario’s installed nuclear capacity by 3.1 GW. By the end of the outlook, a total of 8.4 GW of nuclear capacity would have been refurbished and over 21 GW of existing contracts/commitments would have reached expiry.
Installed Capacity by Contract/Commitment Type
3. Short-term needs are being met by capacity auctions.
Annual capacity auctions are providing a cost-effective platform for various types of resources to compete to provide capacity in the short term. In cases where there is not yet sufficient competition and a resource is critical to ensuring reliability, the IESO will look at interim measures and be guided by its resource adequacy framework.
Summer Capacity Surplus/Deficit, without Continued Availability of Existing Resources
4. A capacity gap emerging mid-decade will require new options.
The IESO is continuing discussions with stakeholders to provide more clarity about capacity needs and how they will be met. Efforts are also underway to enable a broader range of resources to participate, which will facilitate innovation and drive down costs through increased competition.
Options Available to Meet Summer Needs
5. In addition to province-wide capacity needs, some emerging capacity needs are location-specific.
Transmission upgrades will help reduce location-specific capacity needs, including in southwest Ontario where capacity needs are increasing due to strong agricultural growth. Participating in regional planning engagements will help stakeholders understand and contribute to discussions on new and emerging needs across the province, and help them explore solutions that reflect community preferences and goals.
Summer Capacity Needs, including Locational Requirements
A lot has happened since the IESO released the 2019 Annual Planning Outlook (APO), a long-term forecast of Ontario’s electricity system needs, including a global COVID-19 pandemic that could take years for economies around the world to recover from. The impact to Ontario’s economy, and changes to consumer behaviour as work-from-home practices continue and business shifts online, will have a corresponding impact on future electricity demand.