We see substantial…

We see substantial opportunity for Ontario to expand its clean electricity system through the addition of more wind, solar, run-of-river hydro, and energy storage than is envisioned in the Pathways to Decarbonization study. Multiple research studies have found that it is not necessary to rely on natural gas to the extent proposed in the study. We encourage further modelling to understand the full potential contribution of renewable resources to a clean, reliable, and affordable Ontario grid.

1. The IESO’s Pathways Study recommends streamlining regulatory, approval and permitting processes, citing that it can take five to 10 years to site new clean generation and transmission infrastructure. What are your thoughts on the appropriate regulatory requirements to achieve accelerated infrastructure buildout? Do you have specific ideas on how to streamline these processes?

We support streamlining regulatory, approval and permitting processes for new renewable energy generation, storage, and transmission infrastructure. These processes need to be efficient so that Ontario is not delayed in meeting its decarbonization goals and to incentivize private investment in the necessary build-out. A key part of streamlining processes is ensuring there is policy alignment and capacity across provincial government agencies with regulatory responsibilities relevant to predevelopment, environmental assessment and permitting for these types of projects.

Streamlining processes must be balanced with providing timeframes for appropriate engagement to obtain local support. Ontario has experienced a rapid build-out of generation that led to public backlash and delayed further activity for years.

Any streamlined processes must align with the United Nations Declaration on the Rights of Indigenous Peoples and the role of free, prior, and informed consent.

Specific to battery energy storage systems (BESS), when those are co-located with an existing renewable energy generation facility, they require an amendment to that facility’s renewable energy approval (REA). This can be a high risk and technically challenging process. We recommend that BESS be subject to the standard Environmental Compliance Approval (ECA) and registry through the Air Emissions Environmental Activity and Sector Registry (AE EASR) regardless of whether they are stand-alone or co-located with existing assets.

We support changes proposed by the Ministry of Environment, Conservation and Parks (MECP, ERO 019-4219) to move electricity transmission projects to a streamlined, rather than comprehensive, Environmental Assessment (EA) process and to improve timelines for comprehensive EAs. We recommend that wind and solar generation facilities are also particularly suitable for a streamlined or class EA process as their environmental impacts are well-known, limited, and manageable.

2. The IESO’s Pathways Study recommends beginning work on planning and siting for new resources like new long-lived energy storage (e.g., pumped storage), nuclear generation and waterpower facilities.
What are your expectations for early engagement and public or Indigenous consultations regarding the planning and siting of new generation and storage facilities?

Early engagement and education are critical to obtain public support for new generation and storage facilities. We caution the IESO against strict requirements for formal municipal support too early in the process of project development, as this can overwhelm municipalities with proposals that will not end up moving forward.

Any consultations must align with the United Nations Declaration on the Rights of Indigenous Peoples and the role of free, prior, and informed consent.

3. The IESO’s Pathways Study shows that natural gas-fired generation will need to continue to play an important role in the system for reliability in the short to medium term. The IESO’s assessment shows that most of the projected Ontario demand in 2035 can be met with the build out of non-emitting sources, but some natural gas will still be required to address local needs and provide the services necessary to operate the system reliably. Do you believe additional investment in clean energy resources should be made in the short term to reduce the energy production of natural gas plants, even if this will increase costs to the electricity system and ratepayers? What are your expectations for the total cost of energy to customers (i.e., electricity and other fuels) as a result of electrification and fuel switching?

We challenge the conclusion of the Pathways study that continued investment in natural gas-fired generation is necessary. Multiple in-depth studies have found that there are viable and cost-effective alternatives. These include Ontario’s Distributed Energy Resources (DER) Potential Study prepared by Dunsky Energy + Climate Advisors and Scenarios for a Net-Zero Electricity System in Ontario prepared by Power Advisory.

Regarding total energy costs, research conducted by the Canadian Climate Institute found that, on average, energy costs for Canadians will decline around 12 per cent by 2050 under a transition from fossil fuels to clean electricity. According to the International Energy Agency, a net zero pathway not only lowers energy bills, but also protects households from global energy price shocks, reducing energy costs by 40 per cent during such times relative to the status quo.

In contrast, maintaining and bringing on new fossil fuel-fired generation will lead to substantial rising costs for Ontario’s ratepayers and taxpayers. The Pathways study assumes that the price on carbon will rise to $245/tonne in 2035 and increase with the rate of inflation thereafter. However, this past month the Canadian Government has already raised the social cost of carbon (a metric used to quantify the economic damage caused by each tonne of GHG emissions) to $261 per tonne. Assuming that the carbon price will not increase substantially after 2035 – or even before then – is a significant risk.

It is also critical to note that the cost of transitioning to a net-zero grid cannot be compared to a zero-cost scenario. According to Canada’s Parliamentary Budget Office, the effects of climate change knocked almost 1% ($20 billion) off Canada’s GDP in 2021. These impacts are only expected to worsen under our current path. There will be costs whichever path is taken, but Ontario can minimize cost impacts by continuing to build out the grid and meet future capacity needs with cost-effective renewable electricity and storage solutions.

4. The IESO’s Pathways Study highlights emerging investment needs in new electricity infrastructure due to increasing electricity demand over the outlook of the study. The IESO pathway assessment illustrates a system designed to meet projected demand peaks almost three times the size of today by 2050, at an estimated capital cost of $375 billion to $425 billion, in addition to the current system and committed procurements. Please see supporting materials for illustrative charts on capacity factor and cost by resource type. Are you concerned with potential cost impacts associated with the investments needed? Do you have any specific ideas on how to reduce costs of new clean electricity infrastructure?

It is now widely recognized that renewable resources are the most affordable option for new electricity generation. A report by Power Advisory, Scenarios for a Net-Zero Electricity System in Ontario, found that it is more affordable to meet rising electricity demand through a mix of energy efficiency, solar, wind and storage, than it is to ramp up natural gas. Independent research commissioned by Clean Energy Canada found that in Ontario, wind can now produce electricity at lower costs than natural-gas-fired power, and wind and solar with battery storage are also cost-competitive. Neither of these studies took into account the Canadian Government’s proposed 30% Investment Tax Credit for renewable electricity generation, which will continue to make renewable resources the most cost-effective option.

The supporting materials referenced in this posting provide cost by resource type data that does not align with our current expectations. Ontario may have paid prices in this range for wind and solar a decade ago, but this does not reflect current price ranges. We recommend that further independent study be undertaken in Ontario to obtain more accurate estimates of these figures and understand the true potential cost of the transition to net-zero.

We also note that, like other systems across North America, much of Ontario’s transmission system is old and in need of investment regardless of the transition to a net-zero grid. The cost of these investments should not be placed solely on renewable build-out. New transmission is needed to meet growing demands from electrification and economic growth, and characterization of the actual cost of transmission investment needed for renewables needs to be fair.

5. The IESO’s Pathways Study recommends that for a zero-emissions grid by 2050, investment and innovation in hydrogen (or other low-carbon fuels) capacity could be required to replace the flexibility that natural gas currently provides the electricity system. Do you have any comments or concerns regarding the development and adoption of hydrogen or other low-carbon fuels for use in electricity generation? What are your thoughts on balancing the need for investments in these emerging technologies and potential cost increases for electricity consumers?

Clean electrification—substituting fossil fuels with clean electricity—has consistently been identified as offering the most affordable, reliable, and efficient way to decarbonize the economy. Green hydrogen, which is produced using only clean electricity and water, offers a solution for activities that are more challenging to electrify, such as heavy-duty transportation and industrial processes. We caution against over-reliance on a role for hydrogen in electricity generation when affordable alternatives, such as renewable electricity paired with storage, are already available.

6. The IESO’s Pathways Study recommends greater investment in new non-emitting supply, including energy efficiency programs. Following the end of the current 2021-2024 energy efficiency framework how could energy efficiency programs be enhanced to help meet electricity system needs and how should this programming be targeted to better address changing system needs as Ontario’s demand forecast and electrification levels grow?

We support measures to enhance energy efficiency, such as time-of-use rates that reduce peak demand from EV charging.

7. The IESO’s Pathways Study includes a scenario for over 650 MW of new large hydroelectric capacity to meet system needs in 2050. A recently released assessment estimates that there may be potential to develop 3,000 to 4,000 megawatts of new hydroelectric generation capacity in northern Ontario and 1,000 megawatts in southern Ontario. What are your thoughts on the potential for development of new hydroelectric generation in Ontario by private-, Indigenous- and government-owned developers?
While the capital costs for hydroelectric generation may be higher than nuclear, wind, solar, and natural gas, do you support investing in large scale hydroelectric assets that may operate for over a hundred years?

Run-of-river hydroelectric facilities play a unique role in Ontario’s electricity system and broader society. In addition to clean electricity, these facilities provide substantial benefits to the province, including water management and long-term revenues for Indigenous and rural communities. In many cases the development of these facilities has been led by Indigenous communities as a source of own-source revenues where alternative options for economic development may be limited. Critically, these are ongoing revenues that the community can rely on and re-invest in their communities as they see fit as opposed to the uncertainty of government supports.

We see substantial potential for the development of new hydroelectric generation in Ontario. Ontario’s heritage hydroelectric fleet moderates electricity prices today and the planned and predictable addition of new hydro (expansions, upgrades, retrofits and greenfield) will have the same effect for decades to come. Investment in Ontario hydroelectricity stays in communities, regions, and the province. An estimated 75% of investment in new hydro and ninety percent 90% of investment in sustaining existing assets remains in Ontario. In these ways, run-of-river hydro generates benefits for Ontario’s taxpayers as well as ratepayers.

8. The IESO’s Pathways Study suggest that significant transmission capacity will be needed to help balance intermittent sources of electricity (e.g., wind and solar) and to ensure cost-effective supply can be delivered to meet growing demands from electrification and economic growth. Transmission will also be required to balance intermittent supply with dispatchable supply (such as natural gas and energy storage) and meet demand in regions with retiring assets. What steps should be taken to ensure that transmission corridors can be preserved and lines can be built as quickly and cost effectively as possible?

We support transmission build-out to connect diverse renewable generation resources to the grid and support reliability. MECP’s proposed amendments to EA requirements for transmission lines will help enable this infrastructure to be built quickly and cost-effectively.

9. Do you have any additional feedback on the IESO’s “no-regret” recommendations?

We support the no-regret recommendations to:
- Accelerate current efforts to acquire new non-emitting supply.
- Begin the planning, siting and environmental assessment work needed for new long-duration storage and hydroelectric facilities, as well as transmission infrastructure, to allow for faster implementation. However, small modular reactors are an emerging technology and have not been proven to be cost-effective.
- Invest in low-carbon fuels such as green hydrogen, without drawing focus away from efforts to procure proven renewable energy and storage resources.
- Galvanize collaboration amongst stakeholders and Indigenous communities.
- Ensure that regulatory, approval and permitting processes are ready to manage future investment at scale.
- Establish an open, transparent and traceable process to measure progress and demonstrate the results of decisions and actions taken along the way.