Ontario’s clean grid strategy, released this week, has the “all-of-the-above” vibe to it

The province is doubling down on its nuclear power prowess, keeping natural gas in play and eyeing more hydro even as it plugs in more solar and wind into the grid.

There’s a lot to like in the provincial government’s plan to meet rising long-term electricity needs. The plan to invest more in nuclear will add certainty that Ontario’s electricity grid would facilitate Net Zero goals by 2050. But its reliance on natural gas in the near term could threaten short-term climate targets.

Ontario’s “Plan For A Clean Energy Future” signals the government’s recognition that the province’s economic growth depends on more clean electricity: a greener grid would help the province attract billions of dollars in transition energy investments such as electric vehicle supply chains, decarbonizing industries, energy storage, and critical minerals.
But the plan falls somewhat short in putting much of the focus on the 2040s. The province’s decision to maintain natural gas-fired power in the energy mix could set up a potential political dust-up with the federal government, which is poised to finalize its Clean Electricity Regulations.

Our key take-aways from Ontario’s clean energy plan:

Demand Surge

By 2050, Ontario’s electricity capacity—how much power the province can produce at one time—is expected to more than double to 88,000 megawatts. The province will also have to replace power generation capacity of 20,000 megawatts over the next three decades. Coupled with rising population over the next few decades, Ontario will be challenged to power the grid without raising its emissions.

The province is also attracting unprecedented investments in electric vehicle battery manufacturing, clean steelmaking and other sectors, partly as a function of subsidies, which would strain capacity. Five major investments in the new energy economy alone will increase industrial demand by 21% once online.

Nuclear Renaissance

Ontario is going big on new nuclear reactors to meet that demand. Plans to make Bruce Power Generating Station the world’s biggest nuclear site with a 4,800-megawatt expansion, announced last week, were augmented to add three innovative small modular reactors to one announced at the Darlington nuclear site in 2021.

Stand-by Source
It’s what the province calls its “insurance policy.” Natural gas will continue to play a role as the Darlington and Bruce sites undergo refurbishment over the next decade (at its peak four nuclear units representing 9% of Ontario’s capacity will be offline). To that end, the province is in search of 1,500 MW of new gas generation capacity (growth of about 15%, if met). But that could upset the province’s plans to cut emissions: a recent Independent Electricity System Operator (IESO) estimate foresees nearly tripling electricity sector emissions by 2030 as gas plants stand-in for nuclear power generation in the short-term.

While some gas will be needed to meet rising peaks as hot days become more frequent, there are other options that could be explored as we noted in our recent report, Power Shift, How Ontario Can Cut Its $450-Billion Electricity Bill.

Facilitating Renewablese
The province is procuring electricity storage, which is critical if it’s to deploy more cost-effective wind and solar power. It’s current procurement of 2,500 MW of clean energy storage is the largest battery procurement in Canada’s history. The Oneida Energy Storage Facility and Marmora Hydroelectric Pumped Storage Project are also positive developments.

But as the province’s grid integrates more renewables, a buildout of transmission lines will be critical to plug in power from remote sites. The province has not yet outlined a strategy to address that looming transmission challenge.

What’s Missing

The province has the long-term plan mostly right in our view: nuclear and hydro firming up a lot of new renewables, with some questions around peaking power from gas with carbon capture or hydrogen. Efforts to expand hydropower capacity and exploring promising low-carbon technologies such as renewable natural gas and renewable diesel will also ensure the province remains a clean-tech hub.

But a lack of near-term focus on key infrastructure is concerning. Transmission will be critical to integrate renewables, investments to facilitate electrification of households by local distribution companies will be needed to ensure the grid can handle EVs and heat pumps, and smarter technology can help facilitate more limited natural gas peaking in the near and medium term.

The plan takes some good first steps in facilitating a more flexible electricity system, by allowing consumers to access their utility data via Green Button, an energy efficiency tracking program, and considering more use of distributed energy (like rooftop solar) or energy conservation.

Ontario’s long-term nuclear investment will secure a visible path to 2050 climate goals. But the province will need to move quickly and make costs more visible to consumers if it’s to avoid major investments in emitting infrastructure over the next few years.

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