Northland Power Inc. (NPI)…

Northland Power Inc. (NPI) appreciates the opportunity to comment on the findings of the Pathways to Decarbonization (“P2D“) study, and in particular, the IESO’s “no-regret” recommendations.

NPI supports the IESO and Ministry of Energy’s efforts to develop a pathway to net-zero emissions in the electricity sector. This aligns with growing demands from the private sector for clean electricity supply and would support Ontario’s continued competitive advantage as a place to invest and grow. As outlined in the P2D report, achieving this goal will require significant collaboration across government, regulatory, and industry stakeholders. The “no-regret” recommendations in the report serve as useful starting point for those discussions.

To reach net-zero emissions in Ontario, the sector will require over $400 billion in new investment, including for the development and construction of significant new non-emitting supply. Specifically, the P2D report estimates that Ontario will require an additional 3,400 MW of solar and 900 MW of wind capacity on top of currently planned procurements. To date, the government has yet to confirm its commitment to procuring the necessary resources to meet these decarbonization targets. This confirmation will kickstart the long lead-time development activities required to ensure projects are delivered on time and with strong community support.

NPI supports the P2D report’s recommendation to continue with regularly scheduled IESO procurements as a means of creating investor certainty. That said, no current IESO procurement design (E-LT1, LT1, etc.) fits the needs of non-emitting generation projects, particularly those of wind and solar. NPI would encourage Ontario to set minimum renewable energy targets as soon as practicable, empowering the IESO to start developing procurement mechanisms that fit the needs of non-emitting generation projects (both new and repowered). At a time when many North American jurisdictions are accelerating their decarbonization efforts, an early start, paired with a clear long-term direction, will provide investors with the comfort needed to invest in Ontario.

NPI is encouraged to see the report recognize the contribution low-carbon fuels can make towards decarbonizing the electricity grid. While there is certainly a role for these fuels in electricity, they may be of higher value in harder to decarbonize industries with a heavier reliance on dirtier fossil fuels. As such, policy in the electricity sector should support the development of low-carbon fuels, even if their end-uses extend beyond electricity. This is particularly true for low-carbon hydrogen produced via electrolyser, which requires access to green electrons at a reasonable and steady price. To foster the development of electrolysers and the green hydrogen economy, Ontario should strive to provide price certainty on green electrons. On the electricity side, this could include changes to rate design (including alternatives to the current Global Adjustment allocation) and transmission cost recovery. On the environmental attribute side, NPI is encouraged by the development of the Clean Energy Credit market and early-stage discussions that contemplate potential corporate PPAs. In order to provide developers of hydrogen projects with sufficient cost certainty to invest in these long-term projects, the IESO – who holds the vast majority of credits – needs to be mandated to enter into long-term contracts for the sale of credits.

In its 2022 Annual Acquisition Report (Figure 2), the IESO identified that 50% of all 2029 adequacy risk periods will persist for greater than 8 hours, with 25% extending beyond 16 hours. This strongly highlights the need to invest in long-duration storage projects, a need that will becomes more pressing as additional intermittent wind and solar generation gets added to the grid. To meet that need, pumped hydro remains the most proven long-duration storage technology available at scale. A number of these projects – including NPI’s Marmora Pumped Storage Project – are in the advanced stages of development, available to meet Ontario’s long-duration storage needs in the 2030s and beyond. Government support for these projects would serve as a much-needed catalyst to advance pumped hydro proposals through the IESO’s Unsolicited Proposal framework.

Regards,
Brandon Kelly
Senior Manager, Regulatory & Market Affairs