The Ontario Independent…

The Ontario Independent Electricity System Operator’s (IESO) 2022 Pathways to Decarbonization (P2D) report is only the second report by a Canadian electricity system operator that outlines scenarios for decarbonizing the electricity sector. The P2D report examines two scenarios: a moratorium on new gas generation facilities in Ontario, and the decarbonization of Ontario’s electricity system. As the electricity sector is central to economy-wide decarbonization, it is encouraging to see efforts to understand the opportunities and challenges in preparing the grid to be more efficient.

The Government of Ontario has made significant investments in electrifying transportation and heavy industry (through support for electric vehicle manufacturing, new ultra-low overnight electricity price plan, etc.). Building on these investments, Ontario is well positioned to ensure that the province continues to produce clean electricity from resources like hydro, wind, and solar energy to power those transformations. Similarly, as Ontario competes with other provinces and the U.S. to attract businesses, it can draw in greater investments by providing them net-zero grid emissions to help meet their environmental, sustainability and governance (ESG) goals.

The province must plan now for how to transform and modernize Ontario’s electricity system.

The Pathways to Decarbonization report is a good foundational step for long-term energy planning and to deliver affordable, reliable, and cost-effective clean electricity to Ontarians. The Pembina Institute offers in this summary and in the attached document comments and recommendations that the Ontario government and IESO may consider in order to understand how Ontario’s electricity sector can best support the province’s electrification efforts and energy transition, and take advantage of the economic opportunities available.

Recommendations in brief

1. Implement and add to the “no regret” actions in order to rapidly deploy non-emitting technologies

“No regret” actions should also include:
• strategies for securing the cheapest sources of electricity (wind and solar)
• strategies for expanding transmission interconnection

2. Explore options to reduce costs of new energy infrastructure
• The cost analysis should include cost reductions due to federal fiscal incentives and investments.
• The province should explore methods of direct corporate procurement of renewable energy, including sleeved power purchase agreements.

3. Develop additional decarbonization scenarios to align with a 2035 net-zero grid and take greater advantage of cheap clean energy solutions
• A comparative analysis should be undertaken of the IESO Pathways to Decarbonization modelling to that of other models to help identifying the reasons for discrepancies regarding achieving a net-zero grid by 2035, as well as the amount of gas capacity required for grid reliability.
• Additional scenarios should examine cost-efficient options for decarbonization:
o Include greater penetration of clean energy resources – especially wind, solar, storage, demand-side management, energy efficiency, and transmission interconnections.
o Consider a range of caps on energy resources, including a scenario where there is no cap.
o Further examine Distributed Energy Resources in detail.
o Clarify IESO’s assessment of operability of different technologies.
o Assess all emerging grid balancing technologies, not only hydrogen.
• Additional benefits analysis is necessary to ensure that net costs are examined.
o Benefits should include avoided infrastructure costs.
o Benefits should also include the wider impacts of energy transition (health, climate).
• The costs of the scenarios should be compared against baseline costs for the years 2035 and 2050, to help contextualize spending relative to business-as-usual.

Our full recommendations are included in the attached supporting document.