CanWEA’s LTEP submission focuses on price, environment and reliability
December 20, 2016
When Ontarians are asked what they want from their electricity system, they consistently say they want a reliable supply of affordably-priced power that does not harm the environment or climate. CanWEA’s submission to Ontario’s Long-Term Energy Plan review addresses each one of these consumer priorities.
Ontario is the Canadian leader in clean wind energy with 4,781 megawatts of installed capacity, supplying about 5 per cent of the electricity that Ontarians depend on. Wind has been the largest source of new electricity generation across Canada over the past decade. Over this time, costs have come down as capacity factors have increased. As the average cost of electricity generation in Ontario trends upwards, the cost of new wind energy is trending downward, as this graph from Bloomberg New Energy Finance clearly shows:
Ontario 24hr wholesale power prices, historic wind contract prices and current Levelized Cost of Electricity, and residential rates
Source: Bloomberg New Energy Finance, the Bloomberg Terminal, Ontario Energy Board. Note: Reported wholesale prices are 30-day moving averages of 24hr prices. On/off-peak range reflects range for retail time-of-use pricing. Underlying data, which can be seen here, is through Oct 2016. See report Canada wind forecast decreases with Ontario LRP II contract suspension (web| terminal), or reach out to email@example.com for more information.
In the most recent Ontario procurement, the lowest-cost wind projects were secured at 6.45 cents per kilowatt hour for 20 years, considerably lower than the Ontario average retail power price shown on the graph above. What’s more, wind prices are forecast to continue falling, to the point where wind power will offer the lowest-cost energy among all alternatives going forward.
Wind energy, with its decreasing costs, will be needed by Ontario to keep electricity prices affordable for the future. With a record of bringing projects in on budget, a free fuel (the wind), no greenhouse gas emissions, and no water use, wind is quickly becoming the energy source of choice. Wind energy projects can be quickly deployed, with the ability to bring hundreds of needed megawatts online in just four to five years.
Wind power is also indispensable in Ontario if the province is to continue to build a prosperous and low-carbon future, with a goal of reducing greenhouse gas emissions by 80 per cent in 2050. This will mean relying on emissions-free electricity generation to power transportation, industrial processes, buildings and much more.
CanWEA believes that the province’s electricity demand is likely to grow moderately over the next 20 years as decarbonisation and electrification take hold. During this time, there are no plans for major new builds of other low-emission technologies such as hydro-electric or nuclear power – both of which have high capital costs and long lead times. Large imports of hydro from Quebec or Manitoba would require costly transmission reinforcements. Natural gas generation comes with emissions, carbon costs, and fuel price risks. In contrast to other generation options, wind energy can be built quickly, affordably, and sustainably.
Wind energy is also key to keeping Ontario’s electricity supply reliable at a time when it will face significant supply challenges. The proposed life extension of the Pickering Nuclear units to 2022-24 is subject to uncertain regulatory approvals, and the project’s cost-benefit case depends on many potentially volatile factors. Refurbishment of the Darlington Nuclear and Bruce Power reactors over the next 14 years has significant cost and schedule risks, as previous refurbishments have shown. The province’s conservation and demand management targets are aggressive and may not be reached. New wind energy can help to mitigate these risks.
To help the province finalize a Long-Term Energy Plan that results in an electricity system that is affordable, increasingly emissions-free and reliable, CanWEA’s submission includes five recommendations. We plan to explore each in future blogs. Our recommendations are:
- New non-emitting generation should continue to be competitively developed in Ontario to maintain low emissions in the electricity sector in the medium-long term. Ontario will need more electricity supply. Without new wind energy, costs to ratepayer and carbon emissions will continue to rise.
- The province should close Pickering NGS in 2018 to alleviate cost pressures. Integrating new emissions-free generation is a better choice than extending operations of the Pickering Nuclear Generating Station because doing so is necessary to keep costs down for the long term.
- Competitive procurement for long-term contracts should be used to secure the lowest cost electricity generation as this provides the best value for rate-payers. The growing pool of global experience clearly shows that this results in the best value and lowest prices over the long term, enabling the best cost for customers.
- Re-power existing wind generation through competitive re-contracting and enable other earlier optimizations to ensure adequate, affordable, non-emitting supply. Without competitively re-powering existing wind energy generation, Ontario won’t have adequate electricity supply that is both affordable and non-emitting.
- The province should ensure that Market Renewal Initiatives under review by the Independent Electricity System Operator (IESO) support renewable energy generation. The current approach of the IESO, with an emphasis on capacity auctions, will increase Ontario’s electricity grid emissions and should be refocused to provide opportunities for the lowest-cost, non-emitting technology-agnostic generation that benefits Ontario.
Ontario has been the Canadian leader in developing a wind energy industry that is quickly evolving into the lowest-cost source of new electricity generation, a fundamental support for the province’s climate action plan, and a growing source of clean-tech jobs, investment, and community benefits. It is time to build on the foundation Ontario has put in place and to grow these benefits for Ontario as part of the next Long-Term Energy Plan.