Ontario could cut projected climate emissions 85% by 2035 and reduce its use of carbon-heavy, gas-fired power plants to less than 3% of power production if its grid met rising electricity demand with energy efficiency, solar, wind, and energy storage, according to an analysis released last week by The Atmospheric Fund (TAF).
In two study scenarios for 2035 [pdf] that rely on ambitious energy conservation measures, compared to a third one that doesn’t, the province saves up to C$9.5 billion on wholesale electricity costs compared to a plan where new wind and solar installations are replaced with gas. That’s after factoring in the cost of efficiency measures that save 23 terawatt-hours of electricity per year.
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“We have the once-in-a-generation opportunity to build an electricity system that expands Ontario’s clean electricity advantage and meets the needs of both urban and rural communities,” TAF CEO Julia Langer said in a release. “A modernized and decarbonized grid would remove barriers and expand opportunities for businesses, communities, and municipalities that want to reach their climate targets and develop their own energy projects.”
The report by the Concord, MA- and Toronto-based Power Advisory consultancy coincides with the Ontario government’s plans to build new gas-fired power plants to meet an expected electricity shortage. It arrives just a couple of weeks before the province’s Independent Electricity System Operator (IESO) is due to release its own Pathways to Decarbonization study.
Power Advisory Managing Director Jason Chee-Aloy chairs the board of the Canadian Renewable Energy Association and serves on the IESO’s Technical Panel.
The research “comes at a pivotal time as the province begins its procurement that would add new fossil fuel generation to address growing electricity needs,” TAF writes. “The province’s plan to meet growing electricity demand with natural gas generation is projected to increase grid emissions by 260% by 2040. Such a move would ensure grid reliability, but would cost Ontarians more and undermine the benefits of electrification.”
The modelling “shows 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,” the release adds. The study paints a picture in which “existing gas plants would be limited to ensuring grid reliability, with total output well below today’s levels.”
Power Advisory says its report “adopts many of the modelling assumptions” in the upcoming IESO study, but factors in “significant new investments in conservation and demand management,” driven in large part by a carbon price pegged at C$185 per tonne in 2035. It envisions a bigger role for demand response from electric vehicles, smart appliances, and industry to account for variable renewables like wind and solar, and places no ceiling on the annual growth of those technologies.
“Arbitrary limits on the amount of annual installed generation capacity can severely influence modelling results and lead to flawed conclusions,” the report cautions. “Decarbonizing Ontario’s electricity supply will require difficult trade-offs to be made by policy-makers and the public,” and “setting limits in the analysis restricts understanding of the potential trade-offs and options.”
Power Advisory says the three scenarios are meant to capture “how different technologies and resource options interact on a pathway to net-zero,” with early investment in efficiency and demand-side management potentially setting the stage for new hydro dams, nuclear plants, and larger “transmission-enabled renewables” projects over a longer time span. Across the three scenarios:
• One of them assumes aggressive energy conservation measures totalling 23 TWh, one factors in refurbishment of the Pickering nuclear station and construction of small modular reactors to produce 2.4 gigawatts of electricity, and one combines both;
• All three call for two gigawatts of new electricity imports from Quebec;
• All three include maximum cost-effective use of wind, solar, storage, and demand response.
“All three of our scenarios assume that natural gas capacity continues to operate in 2035 for reliability,” the consultants write. “Our working definition in this study of a viable pathway to net-zero is one in which fossil fuels make up less than 3% of all generation by 2035,” with the remaining emissions addressed “through emerging but not yet viable fossil fuel alternatives or financial instruments reflecting the cost of carbon offsets.”
In September, 2022, fossil gas supplied 28% of the 38 gigawatts on the Ontario grid.
The modelling shows Ontario paying $31.5 billion for wholesale electricity in 2035 if no new energy conservation measures are introduced and the province builds gas plants rather than new wind and solar capacity. That price tag falls to $24.3 billion with renewables replacing gas, $22.7 billion with efficiency measures but no new nuclear, and $22 billion with both. Adding the energy efficiency measures and quickly deploying small-scale solar reduces emissions by six million tonnes per year in 2030 compared to the no-efficiency scenario.
The report adds that the power system will pay a higher cost per megawatt-hour of electricity with conservation measures added, but will save money overall by reducing consumption. It also contains a word of caution about projecting the future prices of different electricity options.
“The cost of any large nuclear project is highly uncertain, and the risk of cost overruns would almost certainly be borne by Ontario ratepayers or taxpayers,” the consultants write. “Wind, solar, and storage can be installed incrementally by private developers at more predictable prices. However, wind and solar may require more investment in transmission with higher land impacts than a nuclear generator.”
