Ontario cautiously gets back into the green electricity game

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Ontario is ready to take a tentative step back toward wind and solar power, after an ill-fated initial foray led the province to eschew those energy sources.

The Independent Electricity System Operator (IESO), which manages the province’s grid, is planning to announce this week that it is launching consultations for a new procurement process for non-emitting electricity. Although that could also include new hydro and biomass generation, wind and solar are expected to be major components.

In an interview, Chuck Farmer, IESO vice-president of planning, conservation and resource adequacy, said the aim will be to start seeking bids in 2024, and for those projects to come online by 2029.

Mr. Farmer did not specify how much new power the agency intends to purchase, saying targets will be laid out in its annual planning outlook in February. But speculation around the power sector, based partly on previous provincial projections of energy needs, puts it in the ballpark of 1,500 megawatts.

That would be around 3 per cent or 4 per cent of Ontario’s current generation capacity – a significant if relatively modest contribution to the province’s efforts to meet electricity demand that’s expected to at least double in the coming decades.

But the symbolic impact of the planned investment may be greater than that, given the province’s recent history. And it could have a much bigger impact on the future shape of Ontario’s grid than the numbers suggest, by paving the way for further renewables build-out if this round overcomes myriad political and structural obstacles, including local opposition to projects and strained transmission capacity.

“My view of the non-emitting procurements is that we don’t need one, we need to move into a steady rotation of them,” Mr. Farmer said. “And that will send a signal to developers that they should start to really to look at their opportunities in Ontario.”

The willingness to procure any new wind or solar power at all marks a significant shift for Ontario’s Progressive Conservative government, which must provide directives to the IESO for procurements to proceed.

Premier Doug Ford came to office while riding a backlash against the Green Energy Act – an effort by the previous Liberal government to rapidly build a renewables sector by paying premium prices for new generation – and cancelled hundreds of renewables contracts that he inherited.

Mr. Ford said then that he would get rid of every wind turbine already constructed in Ontario if he could, and his government has since built its grid planning around other options, included nuclear power and natural gas.

However, circumstances have changed since Mr. Ford took office in 2018 – beyond Ontario no longer having an energy surplus, as it did then.

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Industries that the province has been courting, including electric-vehicle and battery manufacturing, have been emphasizing that non-emitting electricity is a draw. The proposed federal Clean Electricity Regulations are affecting the attractiveness of long-term investments in emitting sources such as unabated natural gas, which would have to start being phased out in 2035.

Internationally, wind and solar energy has become cheaper than other power sources, and federal clean-energy investment tax credits should lower domestic prices further. And a recent investment by the province in adding significant battery-storage capacity to the grid should help alleviate concerns about their intermittency (that is, only working when the wind is blowing or the sun is shining).

The question now is whether new renewables projects can be built in a way that’s steadier and more replicable than last time.

It should help that, unlike previously, the IESO intends to run a competitive procurement process in which project proponents compete to offer the lowest cost.

But the process’s success will also hinge on whether energy-planning policies implemented by Mr. Ford’s government, as part of the Green Energy Act fallout, succeed in getting public buy-in or make it too difficult to get new developments off the ground.

That particularly applies to new requirements for community approvals.

One of the greatest sources of unhappiness with the previous government’s strategy (alongside the perception that green power was behind rising bills for ratepayers) was that local governments were given little say. So the province has put in place a requirement that new generation projects require supportive resolutions from municipal councils.

That should help avoid projects proving controversial once they’ve been contracted. But early indications are that it also stops a lot of projects being built. The energy-storage procurement, for instance, has been dotted with accounts of councils opposing or pulling support from proposals after pushback from residents.

Municipal veto power could be a particular challenge in parts of Southwestern Ontario, which is one of the most fertile regions of the province for wind and solar. It was also home to some of the biggest Green Energy Act controversies, which may have poisoned the well.

Another challenge that’s especially pronounced in that region – and in Northern Ontario, which also has strong resource potential – is transmission capacity.

Existing transmission lines are maxed out in some corners of the province – the Windsor-Essex area, which urgently needs new power supply, is one commonly cited example – meaning new ones are required to be able to connect new generation to the grid.

Mr. Farmer said that the IESO is currently trying to advance multiple new lines. But transmission projects can be as contentious among nearby residents as new generation sites, and can take longer to get done. So there will be imperatives to find ways to expedite them, and to try to award renewables contracts for sites near where transmission capacity is likely to be available soonest.

That plays into a sense, among sectoral leaders, that merely setting new renewables targets doesn’t position the build-out for success.

“Most critically what’s needed is long-term system planning,” said Northland Power chief executive Mike Crawley, referring to aligning new generation with transmission capacity, balancing supply with demand that fluctuates and varies by region, and other policy considerations.

Relatedly, even while generally happy about the province’s new openness to wind and solar, advocates for those technologies are hoping that Mr. Ford’s government will actively make the case publicly about where they fit into the broader long-term picture.

“All stakeholders would benefit greatly from the province providing clear and complete information that puts local development into a provincial context, and explains how new renewable-energy projects will benefit their communities as well as Ontario as a whole,” said Leonard Kula, a vice-president with the Canadian Renewable Energy Association.

As of now, it’s unclear how robustly Mr. Ford’s government is interested in telling that story.

A significant chunk of the PC caucus represents rural ridings where resentment toward the Green Energy Act was strongest, and where opposing it was an article of faith.

Some of those MPPs (including Energy Minister Todd Smith) have since recognized some role for wind and solar projects, effectively taking the position that the problem last time was the process. But there are others for whom suspicion of the technologies themselves lingers.

The fact that the procurement is set to go forward anyway is a cause for cautious excitement within a green-energy sector that has long been waiting for its next opportunity in Canada’s biggest electricity market.

It seems to suggest that the upside of wind and solar power has become so great that even skeptics are compelled to see some role for it.

But a lot is hanging on this procurement going smoothly enough to allow more such pragmatism to take hold, and further rounds to go forward.