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Energy efficiency seen as cheapest way to meet Ontario capacity shortfalls

Geoff Burmeister, energy policy and regulatory expert at PA Consulting, comments on a Canadian sustainable energy report issued by York University. 

Read the full S&P article here

The article notes that Ontario's Independent Electricity System Operator has forecast a capacity shortfall as early as 2023, and a report issued Feb. 25 shows energy efficiency would be the cheapest way to address this issue. It would likely reduce wholesale power capacity and energy costs in the region.

York University's Sustainable Energy Initiative issued the report, "Unpacking the Climate Potential of Energy Efficiency: Effective and Resilient Governance for Energy Efficiency in Low-Carbon Sustainable Energy Transitions," as part of its Studies in Ontario Energy Policy Series.

The IESO's "Annual Planning Outlook," issued in January, states: "Assuming existing resources remain available, a capacity need of approximately 2,000 megawatts emerges in 2023 and grows slowly through 2040."

One factor exacerbating the shortfall is that two to four of Bruce Power LP's Bruce nuclear units and Ontario Power Generation Inc.'s Darlington nuclear units are likely to be out of service for refurbishment each summer through 2029, with "peak refurbishment" hitting the summer of 2023. The IESO's loads peak in summer, according to the outlook. Also the 3,100-MW Pickering nuclear plant is slated to shut down, with its first units coming offline in 2022 and all units out of service in 2024.

Existing and available resources, including demand response, imports, merchant generators, uprates, distributed energy resources "and, potentially, energy efficiency" can meet the province's needs through the mid-2020s, the outlook states.

Meanwhile, Ontario has had about 10,000 MW of "relatively lightly used gas-fired generation constructed since the mid-2000s," said Mark Winfield, a York University professor of environmental studies, co-chair of the Sustainable Energy Initiative, and the study's lead author.

Is an energy efficiency agency the right solution?

Geoff says: "Across most electricity markets, there is significant technical potential for incremental energy efficiency savings, but these savings often go unrealized due to a variety of market and policy barriers," Burmeister said in an email. "Consideration of energy efficiency is particularly appropriate given the uniqueness of the IESO's projected capacity shortfalls in Ontario, which grow significantly with the retirement of Pickering and the overlapping refurbishments of units at Bruce and Darlington, but then will likely be alleviated as refurbishments are successfully completed. Building significant new utility-scale generating capacity to meet a relatively short-lived capacity need may create stranded asset risk or saddle consumers with additional unnecessary costs."

However, Geoff disagreed with the report's proposal to establish a new provincial agency, Energy Efficiency Ontario, "with a mandate to develop a comprehensive, integrative energy efficiency strategy for the province."

He adds: Such an effort "may create unnecessary regulatory complexity when existing agencies have the ability and authority to develop these strategies. Furthermore, following year after year of steady increases in Global Adjustment charges, Ontario consumers are particularly sensitive to additional line items on their electricity bills."

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