December 16, 2016   …

December 16, 2016

 

Ontario’s Long Term Energy Plan

 

http://www.energy.gov.on.ca/en/ltep/

 

Ministry of Energy

 

Government of Ontario

 

Submission to EBR posting 012-8840, Planning Ontario’s Energy Future

 

Innergex Renewable Inc. (Innergex) is pleased to submit feedback in response to EBR posting 012-8840, Planning Ontario’s Energy Future for consideration in the Long Term Energy Plan (LTEP) review. Innergex applauds the Government of Ontario for its leadership on renewable energy procurement and the achievements that have been made with respect to integrating over 4000 MW of wind and solar into the bulk transmission system. Furthermore, through the Large Renewable Procurement I (LRP I), the Ontario Government and the Independent Electricity System Operator (IESO) demonstrated that the cost of procuring renewable energy through a competitive process is comparable, if not less than, fossil fuel forms of energy generation.

 

Innergex is a leading Canadian independent renewable power producer. Active since 1990, the company develops, owns, and operates run-of-river hydroelectric facilities, wind farms, and solar photovoltaic farms and carries out its operations in British Columbia, Quebec, Ontario, Idaho (USA) and France with an aggregate gross installed capacity of 1,359 MW. Furthermore, Innergex has four projects with First Nations equity partners, and over 40 contractual agreements with First Nations on our other Canadian projects.

 

At Innergex, we are very proud of our commitment to produce renewable energy exclusively.  We have come to know that sustainable development isn’t just about what we do, but also about how we do it. Our success has been founded on developing good projects, which for us means projects that are accepted by the local community, respectful of the environment, and economically viable both for us and the electric utilities we service – in other words, projects that strike a balance between social, environmental, and economic considerations.  Over the years, our management has applied these principles of sustainability in building the Company, based on our long-term mindset.

 

Innergex is proud to be a part of the Ontario electricity market through our currently operating facilities, as well as the partnerships we have developed to be prepared for future development opportunities. However, there are a few challenges and barriers that we would like addressed through the LTEP review.

 

.

 

1.Supporting Ontario’s climate objectives

 

The Climate Change Action Plan (CCAP) is a policy document that can only be successfully implemented if integrated within the policy development in other Ontario Ministries, including the Ministry of Energy. CCAP recognizes the opportunity to support electrification of key parts of our economy. Electrification can drive demand for electricity and other regulation services and Ontario should have a plan to meet these needs with renewable energy generation. This will require careful consideration of the impact that the CCAP will have on the electricity system and for the Ontario government to have a well-timed plan that will bring renewable resources online accordingly through the LTEP and technical documents such as the Ontario Planning Outlook (OPO). Furthermore, supply mix decisions that could result in increased use of Ontario’s natural gas generation fleet have the potential to greatly impact the achievement of GHG reduction targets.

 

2.Enabling Indigenous and Northern economic development

 

Participation in renewable energy projects have been proven across the country to unlock unprecedented economic development opportunities for First Nation communities. Ontario has the opportunity, through the LTEP, to both achieve the objectives of the CCAP and enable these economic development opportunities to help First Nation communities achieve economic independence.

 

Several opportunities exist in Ontario through infrastructure investment and renewable energy development in Indigenous communities. Not only can strategic transmission investment and renewable energy development present economic opportunities in Northern Ontario, climate change goals can be met through the elimination of reliance on diesel generation in remote communities, environmental and human health threats related to diesel generation can be solved and the cost of electricity can be reduced in the North.

 

The Ontario Government has recognized the economic opportunity that ownership of renewable energy can present for Indigenous communities. Many communities in Northern Ontario have identified renewable resources and developed partnerships, with companies like Innergex, with the intention of tapping into this opportunity. However, the lack of grid capacity and grid connection has prevented many communities from being able to pursue their business plans. Not only are the remote communities in Ontario not able to avail this economic potential, they also live with the adverse environmental and health challenges that come with a reliance on diesel generation. The IESO has prepared a connection plan for transmission development in the remote parts of Ontario and Innergex supports the implementation of that plan, as well as the continued development of the priority lines in Northern Ontario identified in the previous LTEP.

 

3.System, market and regulatory adaptation to changing energy landscape

 

Innergex recognizes the investments that have been made over the past several years to upgrade Ontario’s aging transmission system and encourages the continued momentum in order to strategically reinforce the existing transmission system and prepare the distribution system to adapt to the shifts in demand and types of use that will take place due to the dynamic forces that are changing how electricity consumers interact electricity and by the direction set out in the CCAP. This includes strategically increasing capacity on existing transmission lines and supporting Local Distribution Companies to reinforce the distribution system accordingly.

 

This is also a time of change for regulatory and market structures for Ontario’s electricity sector. While there are several complex considerations that need to be addressed over the coming years, an environment that can better enables bilateral contracting directly with end users, facilitates value added electricity exports, as well as consideration for fair conditions for renewable energy in the IESO Market Renewal Initiative will be key to a healthy renewable energy sector in Ontario into the future.

 

4.Clean electricity exports

 

Ontario is currently an exporter of electricity to the US, however it is happening primarily as a means of managing surplus energy and is not done in a manner that maximizes the benefit to the Ontario rate payer.  With the recent North American commitment to 50 percent renewable generation by 2050 there is an unprecedented opportunity for Ontario to leverage our renewable energy resources as an export product.  Ontario can support North America in its transition to 50 percent renewables (and beyond) while strengthening our economy by transforming renewable energy into our next great value added export product. Through the IESO Market Renewal Initiative, clean energy export should be enabled to allow the renewable energy industry to be able to avail this opportunity.

 

5.Cost of electricity

 

The rate payers and the Government of Ontario have felt the pressure and challenges of increasing electricity rates and it is an issues that must be addressed with understanding for the people who are struggling to pay their bills, but also sensitivity to how perceptions of the drivers of the cost increase are impacting the renewable energy industry. Renewable energy has only represented a small portion of the increase on Ontario’s residential electricity bill, but is receiving a disproportionate amount of attention as the leading cause. The misrepresented narrative that renewable energy is expensive has become embedded in Ontario and is having a negative impact on an industry that is heavily reliant on social acceptance to be able to develop and construct facilities. While the standard offer approach to renewable energy procurement resulted in higher costs PPAs, the LRP I demonstrated that renewable energy is cost competitive with other forms of energy generation. The LTEP should provide electricity price transparency and clarity to the Ontario rate payer, demonstrating all of the drivers and their proportionate contribution to increased rates in Ontario. Furthermore, it should provide information to rate payers on the ways in which future procurement of renewable energy can be done in ways that ensures cost competitive rates and future supply mix decisions should be based on a forward looking understanding of the cost of each technology and fuel type. The renewable energy industry is ready to partner with the Ontario government to deliver low-cost electricity to Ontarian’s, but we need to work together to clarify what is a widely misunderstood issue.

 

6.Principled and cost effective energy transition opportunities

 

Ontario’s supply mix is relatively clean due to the leadership that the Ontario Government took in eliminating coal from the system. Recognizing that the remaining fossil-fuel emitting resources have a role to play in the reliable supply of electricity in Ontario it is still important to consider the opportunity that Ontario has to further clean its grid as several facilities that make up the natural gas generation fleet reach the end of their PPAs in the coming years. According to the OPO, natural gas makes up 25% of the total available supply mix, but only 10% of electricity production. Therefore, as a fossil fuel emitting resource that will likely face increasing price volatility in the future, retiring these facilities when their PPAs expire represents an opportunity for Ontario to further clean its supply mix while insulating the rate payer from price volatility and supporting GHG emission reduction targets.

 

Decisions with respect to refurbishment and extending the life of the nuclear fleet should be considered in the same light and the most economic and environmentally responsible decisions should be made in order to further insulate the Ontario rate payer from increased electricity rates. While nuclear generation has historically served as a reliable foundation for Ontario’s base load power, there are considerable risks associated with extending the life of a nuclear facility and refurbishment. For example, there will likely be unanticipated supply gaps throughout the refurbishment process resulting in the need to cycle Ontario’s natural gas fleet more often, which can raise the spot market price for electricity and increase GHG emissions. Furthermore, the merits of extending the life of Pickering Nuclear Generating Station to 2022 / 2024 have changed over time as the capital and operating costs no longer present a cost savings to the rate payer. This is another opportunity to replace an aging facility with lower-cost, non-emitting resources.

 

Conclusion

 

With this LTEP, Ontario has the opportunity to build on the great work it has done to date with the coal phase-out, integration of large amounts of renewable energy generation in Ontario’s supply mix, demonstrating that competitive procurement can attract new renewable energy development at a low-cost and facilitating meaningful local and Indigenous participation in the energy sector . It is imperative that the LTEP is aligned with and supports the CCAP to ensure the electricity system can support and enhance the Province’s climate objectives. Furthermore, Ontario has the opportunity to leverage the LTEP to unlock broad economic opportunities for the Indigenous communities in the Province, especially those in Northern Ontario. Innergex looks forward to continuing to work with the Province to reach this success.

 

[Original Comment ID: 207186]