Ontario’s latest call for new electricity projects, which ditched its focus on non-emitting resources to open the door to fossil fuels, may end up proving unfavourable for some renewables projects, say experts.

Working to address the province’s rising demand, Ontario’s Independent Electricity System Operator (IESO) has issued another call for proposals—the second long-term procurement (LT2)—which was initially designed to focus on non-emitting generation like wind, hydropower, biomass, and solar.

But in August, Ontario’s Minister of Energy and Electrification, Stephen Lecce, instructed [pdf] the IESO to pursue a “technology-agnostic” approach, allowing for the inclusion of fossil fuel projects.

An IESO spokesperson told The Energy Mix in an email that Lecce wants all eligible sources of generation for its next procurement, including gas generation, “to accelerate timelines to ensure our electricity system remains reliable and affordable.”

Non-emitting resources are expected to remain highly competitive in the procurement, the spokesperson added.

Lecce’s letter also endorsed an Enhanced Power Purchase Agreement (EPPA) [pdf] revenue model for contracts, explain analysts at the law firm of Borden Ladner Gervais LLP (BLG). The EPPA follows a contracts for difference model, in which the government either provides or receives payments to meet a fixed price for energy and offset risk while still operating within a competitive market.

That could have an impact on which projects succeed in the LT2, write the analysts, noting that the EPPA framework “may favour facilities with characteristics similar to gas-fired plants.” Facilities that can deliver “adjustable output, speed of development, and ease of entering a market” could have an edge in the LT2 over those that don’t.

Many renewable electricity generation projects like wind and solar are among the facilities that lack these characteristics unless they are paired with energy storage. Because renewables are often intermittent with low output flexibility—and have higher capital costs with lower fuel costs—BLG says the LT2 structure “may not be a good fit for renewable technologies without combining with a storage resource.”

Kristyn Annis, a corporate commercial lawyer specializing in energy and climate change with BLG, told The Mix that “climate policy has not appeared as a driving force in the Ontario government’s agenda to date.”

Instead, said Annis, the government of Premier Doug Ford has focused on making Ontario a net energy exporter by getting capacity built and online, even as shifting customer preferences for non-emitting resources have led the IESO to consider a variety of resource types.

But “if the goal is to get renewables online, a targeted competitive procurement is the best, and obvious, way to go,” said Annis, adding that the IESO’s current efforts are competitive, but not targeted.

The Atmospheric Fund says Ontario is “backtracking” on climate policy commitments after the IESO shied away from prioritizing non-emitting resources. [Disclosure: Energy Mix Productions is an editorial consultant to TAF.]

The final design of the procurement framework is still being finalized, the IESO spokesperson told The Mix.