A report by Ontario's Independent Electricity System Operator concluded that creating a net-zero grid by mid-century would nearly triple annual costs to roughly $60-billion, compared to $20-billion today.Nathan Denette/The Canadian Press
An emissions-free electrical grid in Ontario – one that could support mass adoption of electric cars and heat pumps – would cost three times more each year than what the province pays today, the body that co-ordinates the province’s electricity system said Thursday.
In a report responding to questions from Minister of Energy Todd Smith concerning the future of Ontario’s grid, the Independent Electricity System Operator (IESO) concluded that accomplishing a net-zero grid by mid-century would require approximately $400-billion in new infrastructure, not to mention lots of land. The annual costs would be roughly $60-billion, as compared to $20-billion today. The amount of electricity produced would double, displacing use of gasoline, natural gas and other fossil fuels.
“Achieving a net-zero economy powered by an emissions-free electricity system will involve a massive investment in new infrastructure and increased cost,” the report concluded.
“It will be vital that this transition is managed prudently so that costs do not discourage electrification, negatively affect the economy, or place an undue burden on people with low incomes.”
The IESO said Ontario could impose a moratorium on new natural gas plants beginning in 2027. But the province would have to acquire new non-emitting generation capacity including small modular reactors and solar farms, increase its efforts around energy efficiency and spend up to $2.1-billion in new transmission infrastructure – all of which would lead to higher electricity bills.
The organization has already announced plans to procure up to 1,500 megawatts of gas-fired capacity to come online in the next few years.
“Natural gas does provide flexibility,” IESO vice-president Chuck Farmer told reporters during a briefing. “It is available when temperatures are high and demands are particularly high, or in extremely cold weather, or when we have other issues on the fleet that require us to ramp something up very quickly.”
The IESO’s vision for continuing reliance on natural gas conflicts with that of the federal government, which has proposed completely decarbonizing Canada’s electricity system by 2035. For the purposes of its analysis, the IESO assumed that in 2035, Ontario would still have 7,840 megawatts of gas-fired capacity, down from today’s 10,000 megawatts.
Its findings also rebuke research from some independent bodies which assert that Ontario can and should achieve the federal target.
One such report was released late last month by Power Advisory, a consultancy, and commissioned by The Atmospheric Fund. It concluded that Ontario’s plan to expand natural-gas generation would increase grid emissions by 260 per cent by 2040. Moreover, it found that a mix of solar and wind generation, coupled with storage and energy efficiency initiatives, would be more affordable and could keep rates on par with what Ontarians pay today. Existing gas plants would be used only sparingly.
Bryan Purcell, vice-president of policy and programs at TAF, said new gas plants might have short lives.
“Based on the current federal regulations, those may be required to shut down in 2035, which would be potentially eight years after they were constructed,” he said. “The IESO is promising that ratepayers and taxpayers will absorb the cost if it comes to pass.”
Carolyn Kim, senior director for communities and decarbonization for the Pembina Institute, said in a statement that the IESO had underestimated how reliable clean generating assets can be, and overestimated the competitiveness of natural gas.
The IESO, however, assumes gas plants will continue operating until they’re 25 years old – and that existing gas plants must continue to operate, in part because new transmission infrastructure cannot be completed by 2035 in Toronto and York region.
The IESO also doubled down on nuclear reactors, the traditional workhorses of Ontario’s grid. To achieve net zero by 2050, Ontario must build an additional 17,800 megawatts of nuclear generation capacity, it estimated. That’s equivalent to approximately 60 small modular reactors of the kind Ontario Power Generation proposes to build at its Darlington nuclear power station by 2028 – the only new reactor currently planned in the province. If that happened, Ontario’s reactor fleet would be three times larger by mid-century than it is today.
Ontario is scrambling to acquire new generation capacity to fill a looming shortfall. In its latest annual assessment of grid reliability across the continent released Tuesday, the North American Electric Reliability Corporation (NERC) identified Ontario as one of a handful of high-risk jurisdictions that could soon suffer shortfalls in electricity supply even during normal conditions. The NERC forecasts a shortfall of 1,700 megawatts in Ontario for 2025 and 2026.
“In Ontario, there’s not enough firm capacity in their future years beginning in 2025,” Mark Olson, NERC’s senior engineer of reliability assessments, told reporters during a briefing. Firm capacity refers energy that is guaranteed for delivery under a contract.
“Largely, it’s derived from nuclear work that is planned, and also planned retirements” of generating plants.
But natural gas does contribute to Ontario’s energy security. According to the NERC, Ontario gets its gas from neighbouring jurisdictions through mainlines and distribution utilities. Many of its natural gas-fired plants are close to a major underground natural gas facility operated by Enbridge known as the Gas Dawn Hub, which reduces the risk of gas becoming unavailable during extreme cold conditions.
“Supply to Ontario’s natural gas fleet is robust and supported by significant firm supply and transportation contracts,” NERC’s report noted.