Ontario is pushing ahead with contracts to increase natural gas use and climate pollution in cities that have already declared their opposition to gas plant expansions, despite independent research showing how the province could clear its looming electricity shortfall with renewable energy and energy efficiency.
Last week, the province’s Independent Electricity System Operator (IESO) announced plans to procure 586 megawatts of new natural gas-fired power production by expanding the capacity [pdf] of existing gas plants in Toronto, Halton Hills, Brampton, and Thorold. The IESO said it would also contract for 739 MW of new storage capacity from seven projects [pdf], most of them involving partnerships with Indigenous communities, ranging in size from five to 300 MW.
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The release also promised new energy efficiency programs and hydrogen projects in the months ahead.
The announcement flies in the face of mounting local opposition to gas plant expansions, with resolutions from elected councils in 34 Ontario communities endorsing a gas power phaseout. Of the four locations on the IESO’s list, all but Thorold have gas phaseout motions on the books, and Brampton specifically opted for battery storage over more gas.
The grid operator’s hand is being guided, and its hands may have been tied, by a December 23, 2022 letter [pdf] from Energy Minister Todd Smith to IESO President and CEO Lesley Gallinger, stressing that “new-build energy projects” must only proceed with official local backing. “I have heard from multiple municipal councils and other stakeholders that they would like the IESO to be explicit that municipal council support is required for the approval of projects proposed on sites that are located within their boundaries,” Smith wrote. “Our government has been fully supportive of this stance.”
But that language only applies to new infrastructure—for this initial procurement, the seven battery projects—not to changes to existing installations, The Energy Mix has learned. So the procurement rules could end up disqualifying battery storage projects that would help stabilize the grid and open the door to more renewable energy capacity, while requiring only perfunctory community consultation for gas plant expansions that drive up climate pollution.
[Disclosure: The Energy Mix Publisher Mitchell Beer was previously a contract writer for the IESO.]
Toronto passed a gas plant resolution [pdf] authored by then-councillor, now Acting Mayor Jennifer McKelvie on March 10, 2021, then adopted a second resolution earlier this month to “oppose any new power generation proposal involving increased burning of fossil fuels, including natural gas.” It called on the province to “immediately invest in programs to deliver energy efficiency, demand management, and conservation to meet the capacity and energy needs that would have been fulfilled by expansion of electricity production through burning of fossil fuels.”
Against that backdrop, the IESO announcement “is specifically opposed to our TransformTO goals. It’s specifically contrary to our net-zero pledge. And it is specifically contrary to direct resolutions by council,” said Toronto Councillor Dianne Saxe, a former provincial environmental commissioner and leading environmental lawyer.
At a moment when “every tonne matters” in the fight to rein in climate change, the expanded use of Toronto’s Portlands gas plant “means much more climate pollution that we don’t want,” Saxe told The Mix. “It means much more air pollution that we don’t want. It means higher costs for electricity over the medium to longer term, which we don’t want. And it again shows that [Premier Doug Ford] pays no attention to the democratic will of the people of this city.”
The Ontario Clean Air Alliance estimates that the provincial plan will boost gas from 4% of the province’s electricity production in 2017 to 27% in 2043.
Toronto isn’t the only place where some local councillors are fed up with the province’s gas plans.
“I frankly do not believe any reassurances offered by this government,” said Jane Fogal, a town councillor in Halton Hills, where an already-controversial gas plant is scheduled for a capacity increase. “We were told they wouldn’t touch the Greenbelt, and now they’re carving it up. We have been told we will be made whole for the loss of development charge revenue. We have seen nothing from that.”
So for local elected officials, “the only recourse I can see is to explain to our residents what’s happening with all these issues, in the hope they will understand the damage being done and express disappointment and anger to their MPP,” she added in an email. “The [Members of Provincial Parliament] are the point of leverage. If enough MPPs feel the heat, then collectively they may be able to rein in the premier.”
An ‘Embarrassing Gas Problem’
Critical analysis of Ontario’s “embarrassing gas problem” dates back years and hit a peak in 2021, around the time community groups were mobilizing in favour of McKelvie’s council motion in Toronto. Now, analysis by Environmental Defence Canada points to the gas plants in Toronto, Halton Hills, and Brampton as their communities’ biggest sources of climate pollution. The Halton Hills Gas Plant, Toronto’s Portlands plant, and Brampton’s Goreways facility place second, fourth, and fifth on the list of greenhouse gas emitters in the Greater Toronto Area, and they’re all major sources of nitrous oxide, a climate super-pollutant that is 300 times more potent than carbon dioxide and is also a human health hazard.
The IESO’s December, 2022 Annual Planning Outlook did not calculate increases in utilization or emissions for individual power plants. But it did look at how often the grid would turn to gas as the “marginal resource”—the last source of electricity or demand reduction required to meet demand. “This marginal resource is an indicator of the potential GHG impact of increasing demand, considering it is expected that gas resources will continue to be the marginal resource more often in the future,” the annual outlook states.
A data table [xlsx] accompanying the report shows the percentage of the time that gas is the “marginal resource” increasing from 24% in 2023 to 54% in 2024, 81% in 2027, 89% in 2033, and 99% in 2037, then holding at 99 or 100% through 2043. “The escalating trend continues quickly prior to 2028 as demand grows and other [power generating stations] come out of service, as natural gas facilities will increasingly be the marginal resource,” the report states. “If the future supply mix varies from the assumed existing supply mix, the emission levels and annual average emission rates could be lower.”
An Environmental Defence flyer [pdf] has emissions from Toronto’s Portlands plant increasing from 439,475 to 1.65 million tonnes per year between 2018 and 2040 if the province uses it at 90% capacity rather than the previous 24%.
Guarantees for Gas
Although the gas plants drew the most attention in the days after the IESO announcement, the grid operator explicitly framed its May 16 media release to emphasize Canada’s biggest battery procurement ever.
“Storage facilities charge up during off-peak hours, taking advantage of Ontario’s clean energy supply mix, and inject energy back into the grid when it is needed most,” the release said. “As a result, the grid will benefit from using more non-emitting energy at peak. Grid-scale energy storage also offers the potential to provide critical flexibility to help keep the system in balance.
Chuck Farmer, the IESO’s vice president of planning, conservation and resource adequacy, noted that the province’s storage capacity was slated to rise from 228 to 1,217 MW by 2026, “a growth of more than 430%, and we’re not going to stop there.” Storage “is extremely important in the operation of the system,” he told a media briefing, enabling the system to “capture energy when it’s plentiful and when prices are low, hold that energy within the storage facilities, and release it as demand ramps up or when we get into hot, sunny conditions.”
But he maintained that the province’s existing gas plants, with their ability to ramp up quickly and run for significant periods of time, are “clearly necessary on the peak days of the year,” or when the grid faces unexpected power demand.
“We know that the future of this system involves phasing out the gas fleet, and we need to make sure that we do it in a careful and planned way,” both to meet users’ needs and to “ensure that we provide the reliable service the system requires,” Farmer said. “We are preparing for natural gas to phase out of the system and to be available as a backup in the period post-2035, and we are structuring the contracts in a way to allow that to happen.”
But even though the IESO operates as an independent arm of the provincial government, its ability to structure those contracts may have been shaped or stymied by two key provisions in Smith’s October, 2022 order in council.
An IESO spokesperson told The Energy Mix that this specific procurement is meant “to help ensure we have resources in place between 2025-2027 to meet our reliability needs emerging at that time.” But Smith’s directive allows gas plant contracts to run through 2040. That’s five years after the federal Clean Electricity Regulations, due to be published later this year, are expected to mandate a 100% net-zero grid. The provincial directive allows projects that can’t meet the new regulatory standard to “suspend operations for the balance of the contract term while retaining payments” from Ontario ratepayers or taxpayers.
In his media briefing, Farmer said the IESO is “a little bit in the dark as to what this regulation will look like and what it will allow us to do,” and whether the gas plants will stay on the system past 2035. He added that the contracts are for availability payments—an arrangement that keeps power plants or other system resources on standby in case they’re needed, often making them eligible for the higher rates suppliers can charge when electricity demand is higher.
“Any gas phaseout will need to be done in a carefully managed manner, and even with significantly reduced use post-2035, the gas fleet will continue to be needed as a backup to help prevent blackouts,” the IESO spokesperson said in an email. “This is consistent with current draft provisions of the Clean Energy Regulations and was explored in the IESO’s recent Pathways to Decarbonization report.”
Faster Pathways to Net-Zero
The Pathways report, issued late last year, charted a course to begin drawing down gas plant emissions by 2035 and estimated that a net-zero provincial grid would cost $400 billion—a controversial figure that some independent analysts see as an exaggeration.
But a couple of months earlier, the IESO released a report study by Montreal-based Dunsky Energy + Climate Advisors, showing that distributed energy resources (DER) could clear a looming electricity shortfall that Ontario has seen coming since 2018.
“There is ample cost-effective DER capacity to meet or exceed all incremental system needs under all scenarios,” the Dunsky study found [pdf]. “The achievable potential results reveal that, when factoring in real-world conditions, DERs are able to satisfy a material portion of the province’s energy needs—from 1.3 to 4.3 GW of peak summer demand by 2032.”
That “achievable potential” wasn’t enough to meet all the province’s electricity needs. But the economic potential—what the province could cost-effectively achieve—invariably exceeded the demand peak in winter and far exceeded it in summer.
In early December, a separate analysis commissioned by The Atmospheric Fund found that 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 the grid met rising electricity demand with energy efficiency, solar, wind, and energy storage. It showed the province’s ratepayers saving up to $9.5 billion on wholesale electricity costs compared to a plan where new wind and solar installations were replaced with gas. That was after factoring in the cost of efficiency measures that would save 23 terawatt-hours of electricity per year.
Then in a study for Clean Energy Canada released in February, just weeks after Pathways to Decarbonization made its appearance, Dunsky concluded that wind and solar farms with battery backup are already cheaper to build than natural gas power plants in Ontario and Alberta, before factoring in the 40% price drop the renewable options are expected to undergo by 2035.
“There’s no justification for building more gas infrastructure now,” Saxe said. “If we want even a 50-50 chance of a liveable future, it’s too late. Do they pay no attention to what’s going on around the world? To what’s going on in Alberta right now?”
She added that the local emission estimates for the gas plant expansions leave out upstream methane releases that can make gas extracted through hydraulic fracturing, or “fracking”, as severe a climate risk as coal. “Pretending that it’s a clean or transition fuel is pretending those emissions aren’t happening or don’t matter,” she said. “They are happening, and they do matter.”
Mark Winfield, professor of environmental and urban change at York University, said some aspects of last week’s announcement “reinforced the level of confusion about what the province is actually doing, or even what is the actual plan.” The procurement “does embed more gas and the physical reality of that, and that signals an intention to go down the pathway the IESO was already on in terms of the role of gas-powered generation—bizarrely, in the age of decarbonization.”
The storage announcement “is about renewables, but there’s no actual strategy or plan around that, indeed no commitment to do anything there at all,” he added. “So it’s difficult to say what to make of it, other than as an expression of a somewhat chaotic state of the planning and policy conversation in Ontario.”
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