Fossil Fuel Phase Out in Ontario's Electricity System Discussion

The IESO has released their Gas Phase Out Impact Assessment. Feedback thus far from municipalities is that the Report did not address speak to what municipal resolutions were seeking re identification of different pathways towards decarbonization of the electricity system, and the actions and policies of the pathways and their pros and cons from different perspectives. There is an IESO consultation that will be taking place on October 21^st at 9:30 am and you can register by sending an email to: engagement@ieso.ca

Many municipal resolutions were seeking a plan for fossil gas power plant phase out and identification of new investments in storage, solar, and wind for electrification of transportation (ie. market driven EV adoption) and buildings.

There has been a letter sent to the IESO from the Minister of Energy to evaluate a moratorium on procurements of new natural gas generating stations in Ontario and develop a pathway to zero emissions in the electricity sector, requesting a report by November of 2022.

Some of the concerns regarding the IESO impact report include:

• The lack of background on the methodology and assumptions that went into the report (there is an excel spread sheet that accompanies the report but there are still significant methodology and assumptions that are not clearly laid out).
• Identifies the potential to achieve a 99.7% gas plant phase-out by 2030, but then raises the concern of black/brownout and claims that it is not possible to meet remaining 3/10th of 1% of our electricity needs (500 GWh) from carbon-free sources by 2030.
• The Report also raises the prospect of higher electricity prices as a result of a fossil fuel phase out which ignores over $2 billion annual carbon tax saving for consumers from phasing out fossil fuel gas. And focuses solely on high cost nuclear to meet the electricity gap rather than identifying the pathways for lower cost opportunities such as efficiency, renewables, demand response, and storage.

Municipalities have been asking the Province for a Possible Pathways to Decarbonizing Ontario's Electricity System that would help answer the below questions:

Efficiency Potential Pathway

1. What is the potential for electrical energy efficiency to reduce electricity demand? High, medium and low potential pathways? What is cost effective at today's electricity prices, what is expected to be cost effective at projected 2030 electricity prices? High, medium and low scenarios.
2. What are the policies, business models, programs that would need to be advanced to capture the electricity energy efficiency potential? What other jurisdictions are implementing those actions? What are the policies/actions/market design that are being advanced to capture the efficiency potential. What can we learn from them?
3. What are the costs of the possible efficiency pathways and how does that compare to other possible pathways? What are the co-benefits of the efficiency pathways (lifecycle cost savings, employment, reliability, etc).

Solar Potential Pathway

1. Undertake analysis of total solar potential (rooftop/ground potential; financial potential at present electricity prices and/or analysis of potential cost per KWh).
2. The policies that would need to be advanced to capture potential (ex. virtual net metering, consistent and transparent connection fees, etc).
3. Estimates for low, medium and high uptake solar potential.
4. Total lifecycle costs of solar potential ranges. Job creation opportunity. Local manufacturing potential benefits?
5. Identification of grid connection issues that may need to be addressed to capture potential. Where the grid can handle renewables into the system, lifecycle of transmission re upgrades. Identification of asset management understanding/identification re transmission. How do we handle transmission limitations/issues ate of asset and renewal timeframe?
6. How much of an issue will the temporal considerations of solar inhibit its ability to replace natural gas fired electricity? Winter/cloudy/daily/shoulder seasons/etc.
7. What would be some of the siting issues that would need to be taken into account? How would siting issues affect potential? How does solar potential and energy storage potential connect to each other?
8. What would be some of the co-benefits of advancing solar potential and/or grid transmission upgrades? Reliability benefits? Asset management benefits?

Demand Response/Flexibility Pathway

1. What is the potential for demand response to reduce peak electricity? High, medium. Low scenarios. What are the temporal and geographical issues that would need to be considered re potential in addressing the natural gas gap?
2. What are the business models that would need to be advanced/scaled up to capture that potential? (time based pricing, incentives based programs, direct load control, demand bidding/buy-back, emergency demand response programs, direct participation in power markets, etc)
3. What are other leading jurisdictions doing in advancing the Demand Response/Flexibility opportunity? How is demand response factoring into other jurisdiction's electricity system decarbonization efforts?
4. What would the consumer behavior, grid transmission, and communication implications of demand response actions be?
5. Costs of Demand Response opportunity , co-benefits of demand response, avoided costs of demand response, any employment benefits?

Storage Pathway

1. Identification of the role storage needs to play in the electricity system to enable renewables to replace natural gas generation.
2. Storage opportunities and market at present, storage opportunities and market likely in 2030.
3. Who are the other jurisdictions advancing the role of storage in their electricity system? How are they approaching storage within the electricity system?
4. Lifecycle cost analysis of storage opportunities. Co-benefits of storage pathway (local manufacturing, employment, grid reliability, deferred infrastructure, etc).

Quebec Ontario Hydro Partnership Pathway

1. Total potential re hydro purchase with Quebec, transmission upgrades that would be required and other transmission issues that may be of concern.
2. What would the business model look like - open market, flexible contract (buy when needed or total allocation which would need to be paid regardless of use? What would be the pros and cons of different models? How would the costs of those different models differ?
3. What are some of the other challenges that this scenario would need to address to speak to the role fossil fuel gas presently plays in Ontario's electricity system?
4. What would be some of the co-benefits of this pathway? What would be some of the concerns/issues with this pathway?

Wind Power Potential Pathway

1. Total wind potential for Ontario. Potential in our current regulatory/siting environment.
2. How would the regulatory/siting environment need to change to capture Ontario's potential?
3. How does the potential supply coincide with demand? How does it coincide with grid potential?
4. What jurisdictions are advancing their wind potential and what does their regulatory/siting/market look like. How does it differ from Ontario's regulatory/siting/market?
5. Price of wind generation potential? How do those costs compare to other pathways? Co-benefits of capturing wind potential (lifecycle cost savings, employment, local manufacturing, etc).

The above pathways/questions was developed via a consultation with municipal staff, ENGOs, and energy consultants.