HRAI Comments for ERO 019…

HRAI Comments for ERO 019-9285: Integrated Energy Resource Plan Consultation

The comments below are submitted on behalf of the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI). HRAI is Canada’s national non-profit trade association for the heating, ventilation, air conditioning and refrigeration (HVACR) industry, representing over 1,150 member companies across the country. Our members include manufacturers, wholesalers and contractors who collectively employ tens of thousands of skilled trade professionals across the country and contribute more than $12B annually to the Canadian economy.

HRAI’s comments are limited to the consultation questions that are directly relevant to our membership and where the association and its members have something meaningful to offer.

Overarching Question: What policy options and actions should the government consider in the integrated energy resource plan to achieve Ontario’s vision for meeting growing energy needs, keeping energy affordable and reliable, ensuring customer choice and positioning us to be an energy superpower?

HRAI RESPONSE

HRAI-Canada’s members offer goods and services related to the heating and cooling and ventilation needs of homes and buildings across the country, as well as a host of other applications of refrigeration technologies. As such, the association does not favour one fuel choice over others, and generally advocates for choice in the marketplace.

In response to government policy that aims to reduce or eliminate carbon emissions from homes and buildings, however, the industry has a range of solutions to offer that can aid in the transition to a low carbon economy. The fact that HVACR technologies like heat pumps, smart controls, VRF and more can reduce energy use, save money, enhance occupant comfort and health and reduce carbon emissions is now quite well known. What is less well-known is that some of the technologies on offer can also contribute in a meaningful way to managing the electricity grid.

At a high level, HRAI urges the Government of Ontario to consider in its energy resource planning the strategic benefits of investing in specific end-use technologies that create favourable impacts on the energy system. Effective management of the energy delivery system in Ontario does not end at the meter. Supporting specific end-use technologies on the demand side should be seen as a logical extension of supply side management.

Technical support for these assertions can be provided by HRAI and allied industry groups on demand, if and as needed, but to help make the point, we attach in the Supporting Links section below this submission several reports that quantify the energy system benefits that flow from mass deployment of ground source heat pumps. Similar analyses can be provided in support of newer technologies like Phase Change Material (PCM) thermal storage systems that can aid in on-site energy management to reduce strain on the grid. The larger point is that energy system planning should include consideration of measures to encourage deployment of “grid-friendly” technologies of this nature.

HRAI therefore supports policies and programs that encourage market uptake of energy-saving technologies (conservation programs) and encourages planners and policy makers to also incentivize end-users to select technologies like ground source heat pumps, thermal storage systems and smart controls that can aid in reducing or eliminating demand peaks that would otherwise be expected to occur because of heating system electrification. In some cases, these investments deliver significant avoided cost savings on the supply side. For example, according to the Dunsky 2020 study on The Economic Value of Ground Source Heat Pumps for Building Sector Decarbonization, the avoided costs in electricity infrastructure investment amount to $40,000 for each ground source heat pump installed in a home.

Planning for Growth

QUESTION -- Building on the recommendations of the EETP’s final report, what actions should be prioritized to enhance planning across natural gas, electricity, and other fuels?

HRAI supports the recommendations of the Electrification and Energy Transition Panel in general, but has the following comments relative to some of its specific recommendations:

PLANNING FOR ELECTRIFICATION AND THE ENRGY TRANSITION

HRAI supports recommendations 1-9 and underlines the importance of several themes:

1. The importance of setting firm targets and communicating new policies and programs to affected industries well in advance of their introduction and implementation. The HVACR industry, which is directly affected by these policies, needs significant lead times for the supply channel to adapt to changing marketplace conditions. (Recommendations 1, 5, 6)

2. The importance of harmonizing clean energy goals, standards and policies with other provinces and other countries, especially the US. The HVACR industry, which is directly affected by these policies, operates at the continental scale and brings helpful economies of scale when policies are coordinated across jurisdictional boundaries. (Recommendation 3)

3. The importance of creating a comprehensive framework for local energy planning and decision making. It is currently very challenging for industries affected by climate policies and programs to deal with the myriad initiatives put forward by municipal governments. The Government of Ontario should take a stronger role in setting direction for the province on these matters. (Recommendation 7)

4. Governments should act on independent, evidence-based analysis of energy pathway scenarios and these should be advised by real-world inputs from industry sectors, like HVACR, that have technical and economic data to bring to the table. (Recommendation 9)

GOVERNANCE AND ACCOUNTABILITY

The EETP report notes the importance of including safety regulators and technical standards organizations in the energy planning and energy sector regulation. HRAI supports this direction and urges the government to include delegated authorities such as the Technical Standards and Safety Authority (TSSA) and the Electrical Safety Authority (ESA) in discussions around implementation of new technical solutions. Examples of emerging technical safety concerns include hydrogen and renewable natural gas (RNG) in the natural gas system, concerns about stranded natural gas distribution assets (e.g. gas meters) in homes that convert to full electric heating solutions, and electricity capacity constraints at the building level where full electrification is occurring.

CONSUMER, CITIZEN AND COMMUNITY PERSPECTIVES

HRAI wholeheartedly supports the recommendation to “explore mechanisms to support broad adoption of fuel switching, decarbonization and supportive technologies.” The EETP panel suggests that “any mechanisms adopted by the government should be rigorously analyzed for cost-effectiveness and must transparently consider both costs and benefits to individual customers and to the overall system, for example peak electricity demand impacts.”

In support of this principle, HRAI recommends that end use technologies be similarly evaluated not solely considering their costs and benefits to the end user, but also in light of their contributions to the management of the electric power system in Ontario.

QUESTION -- The government’s priority is to ensure Ontario has the energy resources it needs to support growth. Are there opportunities to enhance the province’s approach to procuring electricity generation supply to better serve this priority?

HRAI would only comment on this point that the province should always follow a policy of procuring energy efficiency as the “first fuel” – i.e. support through incentives and other measures all cost-effective reductions in demand that can be found.

HRAI also recommends that Ontario should explore the creation of an independent energy efficiency agency (as has been done in other provinces) that would have first claim on ratepayer dollars (natural gas and electricity) for any energy efficiency measures that are cost-effective, before any ratepayer funds are spent on new capacity development on the supply side.

QUESTION -- What actions should government consider to promote greater access to electricity and accelerate grid-connections that will support economic growth, connecting new homes, and electrifying transportation and heating?

Again, consideration should always be given to the system-friendly aspects of geothermal heat pump systems as a means of electrifying the heating of homes, especially in new communities, where homes are built to a standard that lends itself well to all-electric heating (due to tight and well-insulated building envelopes) and where the installation of geothermal loops is highly cost effective.
A program of financial supports for new communities to go wholly to geothermal heat pumps would be highly cost-effective -- if evaluated in light of the benefits to the grid.

QUESTION -- What policy guidance should the government provide to the Ontario Energy Board (OEB) with respect to the long-term role of natural gas in Ontario’s economy and opportunities for low-carbon alternatives in the gas system?

HRAI supports and encourages ongoing research into the introduction of renewable natural gas (RNG) into the natural gas system, but notes that this innovation will primarily assist in the reduction of carbon emissions within the existing gas system and should not be used as a rationale for extending natural gas into new territories.

Similarly, research and development on the introduction of hydrogen into the natural gas system should be explored and rolled out when and if it becomes a viable option. The province should not, however, delay or defer electrification policies on the expectation that hydrogen will at some time in the future provide a means for significantly reduce carbon emissions in the gas system. There is simply too much uncertainty about the role of hydrogen to bet the future of Ontario’s energy needs on this technology.

QUESTION -- What further steps should the government take to enable households and businesses to manage and make informed decisions about their energy use?

HRAI strongly supports an active role for the provincial government in educating consumers about their energy use options. In the highly competitive HVACR industry, vendors often struggle to overcome the low awareness (and pre-existing biases) of their customers. This is less of a problem in the commercial HVACR marketplace, where purchasers are generally more informed and savvier about their investment decisions. But in the residential market, many end users lack the awareness and technical knowledge to make decisions that are in their own long-term best interests. Some vendors take advantage of this lack of awareness. Consumer education programs funded by ratepayers and focused on unbiased, objective data about the relative performance and features of different technology options would almost certainly see a return on the investment in the form of energy bill savings and carbon reductions.

One tool that the province should consider introducing is home energy labelling for homes, possibly even as a pre-condition for the purchase and sale of existing homes. While previous versions of this idea (e.g. the proposed Home Energy Rating and Disclosure or HERD, program) met with resistance in some quarters, it seems evident that there is much to be gained in terms of informed decision making, especially at that critical window of opportunity to make strategic investments in improving home performance.

QUESTION -- What actions should government consider that would empower customers to install innovative technologies to generate or store energy on-site to reduce costs and improve resiliency?

HRAI recommends that, in addition to playing a role in improving the energy literacy of the marketplace through consumer education, the provincial government should (directly or through its agencies) provide financial incentives to encourage the uptake of specific technologies that facilitate energy savings and improve building resiliency, especially where those same technologies create benefits for the grid through reduction of peak load. These technologies include well known technologies like on-site solar power generation and battery storage, but also ground source heat pumps (which reduce or eliminate peak demands during extreme heat and extreme cold periods) and thermal storage (using phase change material) GSHPs, smart controls and other innovative technologies that enable on-site energy generation, storage and management.

QUESTION -- What further actions could the government take to maintain an affordable energy system for Ontarians throughout the energy transition?

As noted above, the HVACR industry has a variety of technology options that can and should be deployed in the interests of facilitating a smooth transition to a low carbon economy. Many of these technologies will aid in reducing energy bills and carbon impact for those Ontarians that choose them, but some also aid in the reduction of electricity system costs required to meet peak load needs, and therefore their deployment creates a benefit to all Ontarians.