An Irresistible Force Meets an Immovable Object: Assessment of IESO Pathway to Decarbonization Study From the Perspective of Municipal Climate Plans

At the end of 2022, the IESO released their Pathways to Decarbonization Report, which presents one decarbonization scenario that heavily emphasizes nuclear and hydrogen to meet projected electricity demand. The June 2023 Ontario Climate Caucus meeting had Yuill Herbert and Ralph Torrie from Sustainable Solutions Group (SSG) speak to the Assessment of IESO's Pathways to Decarbonization Study: From the Perspective of Municipal Climate Action Plans.

This report outlines the strengths and weaknesses of the assumptions that fed into the IESO report and provides recommendations for how municipal Climate Action Plans and the IESO/Province of Ontario need to work together to manage electrical demand and advance decarbonization actions at the local and provincial level.

• Link to Assessment of IESO Pathway to Decarbonization Study: From the Perspective of Municipal Climate Plans Report
• Link to Briefing Note
• Link to PDF of Presentation Slides
• Link to Recording of Webinar

• In December 2022, the Ontario Independent Electricity System Operator (IESO) released its Pathways to Decarbonization Study (PDS) which presents a scenario for Ontario to reach a net-zero emissions electrical grid by 2050.
• In this scenario, the IESO makes the following projections: There will be a doubling of electricity consumption from 150 TWh to 300 TWh by 2050. The grid will require an additional 69 GW of non-emitting supply and 5 GW in demand reductions from conservation. This will require significant capital investments of $375 to $425 billion by 2050.
• In response, in June 2023, Clean Air Partnership commissioned Sustainability Solutions Group to undertake an assessment of the strengths and weaknesses of the PDS and how to increase municipal and provincial energy planning alignment. The resulting assessment report evaluated the methods, assumptions and results of the PDS. The following conclusions were made about the PDS.
• Too narrow in scope: Focuses too narrowly on the energy commodity system, and particularly on electricity supply rather than seeing the energy system as a whole and adequately focusing on demand reduction opportunities.
• Limited engagement: The IESO only engaged technical stakeholders in the development of the PDS and did not consider municipal perspectives.
• Only provides one scenario: A fundamental aspect of scenario planning is having multiple scenarios to compare. The PDS provides only one decarbonization scenario which leaves out potential alternative or business-as-usual scenarios to compare against it.
• · Overestimates future electricity demand: The PDS projects that electricity consumption will grow by 2.7% per year, reaching 300 TWh by 2050, about double its current level. This conflicts with the estimated 1% per year growth projected by many municipal climate action plans. This overestimation of future consumption is common in provincial energy planning studies. Overbuilding grid infrastructure could increase prices and harm electrification efforts.
• Underestimates renewable energy: The PDS significantly underestimates the potential role that renewables like solar and wind will play in the future energy mix compared to studies in other countries.
• Underestimates risks: Many of the new generation and transmission facilities modelled into the PDS have long lead times. As technology and the regulatory environment evolve, there is a risk that these assets could be stranded before they are complete.
• Does not analyse co-benefits: Co-benefits such as health benefits, new jobs, or avoided damage from climate change are not analysed or factored into the costing by the PDS.
• The report provides 11 recommendations to improve the PDS, with a focus on enhancing modelling, analysis, collaboration, and transparency, and aligning with municipal climate action plans.
• Additional Scenarios: Scenarios are only valuable when they can be weighed against alternatives. In consultation with municipalities, the PDS needs to develop and analyse additional scenarios.
• An Integrated Energy System Analysis: Decarbonisation scenarios need to be developed with an integrated whole-system approach, evaluating demand and supply.
• Review of the IESO Mandate: There is a need to modernize the regulatory framework and mandate of the IESO to address climate change.
• Regional Disaggregation: The PDS should identify the challenges, impacts and opportunities of scenarios on each region in Ontario.
• Climate Change Impacts: The impacts of climate change need to be incorporated into projections of electricity demand and supply.
• Transparency: Modelling assumptions must be transparent and accessible with an appropriate rationale.
• Comprehensive Economic Analysis: The economic impacts on health outcomes and the social cost of carbon need to be reflected in the economic analysis of scenarios.
• Risks: The risks of stranded assets need to be assessed for each scenario.
• Accounting Scenarios: GHG reporting needs to align with the international accounting standard for municipalities, the GHG Protocol for Cities, so that municipalities can assess the impacts of the scenarios on their climate action plans.
• Distribution Transformations: The implications of local climate action plans on distribution systems needs to be reflected in the scenarios.
• Localised Energy Planning: Integrated and localised energy systems planning should be done jointly between municipalities, local distribution companies and the IESO.

CAP is available to deliver a deputation on the Reports findings for your municipal council. Contact Gaby at gkalapos@cleanairpartnership.org