Submission to the Ontario…

Submission to the Ontario Integrated Energy Resource Plan Consultation
Environmental Registry of Ontario Notice: 019-9285
Submitted by: Antora Energy, Inc.
Date: December 13, 2024

Antora Background

Antora Energy is a U.S. manufacturer of thermal batteries for the industrial sector. Our product is designed to provide a clean alternative to industrial process heating, which consumes roughly half of industrial energy use and is responsible for a third of industrial emissions. Antora Energy is a member of Energy Storage Canada and actively engaged with multiple Canadian heavy industrial companies, manufacturers, campuses, and agricultural operations. Several of these are located in Ontario. The company is backed by leading investors, including Decarbonization Partners, Trust Ventures, Lowercarbon Capital, Breakthrough Energy Ventures, Emerson Collective, The Nature Conservancy, BHP Ventures, Grok Ventures, GS Futures, Overture VC, and a subsidiary of NextEra Energy Resources, LLC.

Our first generation of thermal batteries uses electricity to rapidly heat graphite blocks to temperatures above 1500°C. The heat stored within these blocks can be continuously dispatched to serve industrial thermal energy applications up to 300°C for multi-day periods. By integrating our batteries into the existing heat delivery systems of industrial plants, we can help our customers replace their use of fossil fuels with inexpensive, off-peak electricity. As an electrically charged thermal energy storage system, our product exists at the nexus of the electricity grid and the natural gas system, which supplies the major fuel for industrial process heat. We are encouraged to see the Ministry take an approach to energy planning that considers the interaction between these systems.

Recommendations for the Integrated Energy Resource Plan

Antora commends the Ministry on its endeavor to develop the province’s first economy-wide integrated resource plan for the energy sector. As identified in Ontario’s Affordable Energy Future, the Ontario energy system faces increased electricity demand from growing population and industry, new data center loads, and the need for alternatives to the federal carbon tax. To meet the Ministry’s goals of providing clean, affordable, and reliable electricity, Ontario must invest in energy storage technologies.

As the Ministry is aware, storage will help to match generation from the lowest cost electricity sources to fluctuating demand. It is important to recognize that energy storage can take multiple forms, and the benefits of storage are not limited to technologies that deliver electricity. Thermal energy storage should play an important role in Ontario's integrated resource plan alongside other storage types. Thermal energy storage has several advantages over chemical batteries like lithium-ion batteries for industrial users. The material used in thermal batteries is abundant and inexpensive compared to critical minerals like lithium and nickel. Additionally, the conversion of electrical energy to thermal energy is highly efficient, upwards of 95%. While converting this heat back to electricity is possible and economical in certain circumstances, industrial plants can utilize the thermal energy directly and supplant their fossil fuel demand with this low-emissions heat.

In 2023, Ontario consumed an average of 2.8 billion cubic feet of natural gas daily. Over half of this fuel was consumed in the industrial sector. Most of the natural gas used by industry is burned to produce heat for processes such as sanitization, chemical separation, and many others. As the obligations under Ontario’s Emissions Performance Standards (EPS) program ramp up for large emitters to $170/tonne by 2030, the cost of burning natural gas for thermal processes will increase, and industrial firms will seek alternatives from the electricity grid. Replacing just 10% of the industrial sector’s current natural gas usage (1.5 billion cubic feet per day) with electricity would add approximately 1.5 GW of new industrial load (13 TWh annually).

Antora encourages the Ministry to carefully consider the need to provide renewable electricity as an alternative to Ontario’s large industrial natural gas demand. Typical manufacturing processes use energy at high utilization rates, demanding heat or electricity 24 hours a day. Historically, this high baseload demand has been viewed as beneficial for the electricity grid, promoting high utilization of generating assets and reducing ramp up and ramp down costs. However, meeting the addition of multiple gigawatts of industrial load on top of Ontario’s current peak demand will require investment in new generation and transmission capacity. Thermal energy storage can mitigate, and largely eliminate, the need for additional investment to meet industrial thermal energy needs by shifting this new load into off-peak hours.

Grid expansion modeling research conducted at Princeton’s Zero-carbon Energy systems Research and Optimization Laboratory has shown that highly flexible loads like thermal energy storage can lower the cost of deploying intermittent renewables and baseload generation like nuclear and hydro. These flexible loads act as ‘demand sinks’ for otherwise curtailed or low-priced electricity produced during periods of low demand. This allows for the expansion of baseload generators which must operate at high capacity factors to cover their large upfront costs. It also adds value to hours of intermittent renewable generation that don’t coincide with peak demand. The result is a cleaner electricity grid that produces more electricity without increasing the cost of power.

In its integrated energy resource plan, we urge the Ministry to consider the benefits of industrial electrification through the use of thermal energy storage. We expect that when accounting for the flexible demand introduced by technologies like thermal energy storage, the Ministry will see lower costs associated with deployment of low-marginal cost generation resources like wind, nuclear, and hydro.

Use of Rate Design to Incentivize Thermal Energy Storage and Lower Energy Costs

Because thermal energy storage can provide access to lower cost energy, incentivizing the adoption of this technology is simply a matter of ensuring that industrial electricity customers see accurate price signals in the rates that they pay. The Independent Electricity System Operator (IESO) and Hydro One already employ several rate design features that are intended to appropriately allocate the costs of generating and transmitting electricity to its customers. These rates allow for lower energy costs and improve overall grid efficiency.

IESO allows customers participating in the Industrial Conservation Initiative to pay the Global Adjustment Charge according to their usage in the five highest demand hours annually. We believe that this is an excellent policy that appropriately assigns the costs associated with generation capacity and transmission investments.

Hydro One also offers rate incentives to customers who avoid using the grid during peak hours. Customers enrolled in interval-billing do not pay delivery charges on nighttime electricity use. This is a good approach to avoiding allocation of unnecessary costs to customers who do not use electricity during peak hours.

Industrial customers in the province pay the Hourly Ontario Energy Price (HOEP), which is reflective of the cost to produce electricity in the hour that the customer purchases it. We think that highly temporally granular pricing like HOEP is conducive to smart energy use and adoption of thermal energy storage. However, HOEP does not account for the location of electricity use. Where there are regions with large amounts of generation, transmission away from these areas can become congested when there is little local demand and that energy needs to be exported to areas of higher load. This can be especially true where there is high deployment of intermittent renewables. Incorporating a locational adjustment to HOEP would account for transmission constraints in the grid. It would encourage more efficient use of electricity, applying a stronger signal to conserve energy where resources are limited and allowing lower energy access where it is abundant.

Improved Interconnection Wait Times

Interconnection in IESO currently requires a 14-month, 6-stage process. This wait time can hamper project development and presents additional barriers for our potential customers. We recommend that the process of interconnection should be informed by whether the new load will employ behind-the-meter energy storage and would therefore avoid using the transmission system during peak hours. Given the low impact of the highly flexible loads introduced by energy storage projects, the connection process should be accelerated.

Encourage Investment in Tech-Neutral Energy Storage through Tax Credits

Encouraging the deployment of low-cost energy sources and making that energy available to industrial customers at accurate prices will be the most impactful method of providing low-cost alternatives to the federal carbon tax. However, the technologies that will unlock industrial electrification are nascent and early deployments will require significant capital. Government incentives like tax credits can ease the barriers for early adopters.

While chemical batteries like lithium ion have been included in the federal Clean Economy tax credits, thermal energy storage is currently not eligible. The inclusion of thermal energy storage in this credit regime is currently under consideration at the federal level. If the federal government declines to incorporate thermal energy storage into the investment tax credit, Ontario should consider a similar state-level investment credit. The benefits of incentivizing industrial customers to electrify their processes in a manner that avoids raising the costs for other ratepayers would be a sound investment for the province.

Conclusion

Antora Energy supports the Ministry’s initiative to develop an integrated energy resource plan that addresses Ontario’s growing energy demands and the transition to cleaner energy sources. By incorporating thermal energy storage into this plan, Ontario can enhance its energy storage capacity, provide federal carbon tax alternatives to heavy industry, and mitigate the need for new infrastructure investments. Our technology offers a cost-effective, efficient, and flexible solution to industrial energy demands, especially in sectors relying on high-temperature process heat. We encourage the Ministry to support policies that incentivize thermal energy storage through rate design, improved interconnection processes, and targeted investment tax credits. Such actions will help accelerate the decarbonization of Ontario’s industrial sector while maintaining affordable and reliable energy.

Sources:

1. US EPA. “Process Heat Basics.” https://www.energy.gov/eere/iedo/process-heat-basics. Accessed Dec 2024.

2. Ontario Ministry of Energy and Electrification. Ontario’s Affordable Energy Future: The Pressing Case for More Power. Oct 2024.

3. Canada Energy Regulator. “Provincial and Territorial Energy Profiles – Ontario.” https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-te…. Accessed Dec 2024.

4. Jagt, Sam van der, Neha Patankar, and Jesse D. Jenkins. “Understanding the Role and Design Space of Demand Sinks in Low-Carbon Power Systems.” Energy and Climate Change 5 (December 2024): 100132. https://doi.org/10.1016/j.egycc.2024.100132.