Province Launches Largest Competitive Energy Procurement in Ontario History
August 28, 2024
Procurement will ensure long-term affordability as electricity demand forecasts to rise 60 per cent by 2050
The Ontario government is launching the largest competitive energy procurement in the province’s history, focused on generating affordable electricity for families and businesses. This builds on the province’s plan to procure up to 5,000 megawatts (MW) of energy through a series of procurements to help foster economic prosperity and meet the growing demand for clean and reliable energy.
The government announced a plan of action for more affordable energy, supporting Ontario’s diverse supply mix including nuclear, hydroelectric, renewables, natural gas, and biomass. The Second Long-Term Procurement (LT2) will plan future energy initiatives in communities that provide consent while protecting prime agricultural areas, including:
- Requiring energy project developers to receive municipal support resolutions to ensure local support and consent for new projects.
- Prohibiting all projects in specialty crop areas and ground-mounted solar in prime agricultural areas to prevent solar farms.
- Incentivizing projects located in northern Ontario and those which avoid prime agricultural areas, along with a plan to unlock Crown Lands for renewable energy.
- Incentivizing economic opportunities for projects with or by Indigenous communities on whose traditional territory the projects are proposed.
- Requiring Agricultural Impact Assessments for projects that are permitted on all prime agricultural areas.
“With energy demand growing rapidly, our government is stepping up by advancing our largest energy procurement in our history. Our ‘all-of-the-above’ energy resource approach will expand access to affordable electricity to families and businesses across Ontario while opposing the regressive carbon tax,” said Stephen Lecce, Minister of Energy and Electrification. “Unlike the former government who imposed energy projects on unwilling communities, we are putting municipalities in the driver’s seat as we expand energy generation. We are delivering more affordable and reliable energy while protecting prime agricultural areas.”
The Minister’s letter to the Independent Electricity System Operator (IESO) outlines that the procurement should be transparent, competitive, and cost-effective to secure technology-agnostic energy resources, including wind and solar. This includes explicit directions to protect prime agricultural areas. The Minister is also requesting that the IESO bring options to expedite delivery of the procurement to help meet growing demand.
“This historic plan will deliver the new electricity our dynamic province and growing agricultural sector will need while protecting farmland,” said Rob Flack, Minister of Agriculture, Food, and Agribusiness. “By requiring municipal support resolutions and Agricultural Impact Assessments for new energy projects, banning solar farms on prime farmland and crop areas, and promoting new projects in the North, we’ve secured a four-tier lock to ensure a balance between our energy needs and the needs of our farmers.”
To advance Ontario’s expanded electricity needs, the IESO is expected to report back with a procurement design framework by September 20, 2024, and consider how to conclude energy and capacity procurements by February 28, 2026. The accelerated timelines will ensure that Ontario can continue to support large-scale investments that require a clean and reliable energy supply to create well-paying jobs across the province.
By launching a competitive procurement framework, the government is ensuring long-term affordability for Ontario’s ratepayers and businesses. This procurement also builds on the government’s recent procurement of nearly 3,000 MW of new battery storage projects ranging from five to over 400 MW in capacity.
“Our forecasts show that Ontario will need more resources to meet demand as our population and economy grows and continues to electrify,” said Lesley Gallinger, Chief Executive Officer of the Independent Electricity System Operator. “We’ve been engaging with the sector and communities, and with this accelerated timeline, we are ready to move quickly to secure supply from all eligible technologies.”
Advancing the largest energy procurement is just one part of the government’s plan to meet growing energy demand and reduce emissions by expanding Ontario’s clean, reliable, and affordable energy grid, including:
- Nuclear Energy – Advancing clean, reliable, and affordable nuclear power through the largest pre-development work at Bruce Power in 30 years, four small modular reactors at Darlington and supporting Ontario Power Generation’s plan for refurbishing the Pickering Nuclear Generation Station
- New Transmission Infrastructure – Designating and prioritizing transmission lines in Southwestern, Northeastern and Eastern Ontario that will power job creators, including EV and EV battery manufacturing and clean steel production.
- Keeping Costs Down – Launching new energy efficiency programs on January 1, 2025, and building on the government’s $342 million expansion of existing energy efficiency programs which are helping families and businesses reduce their electricity usage and save money on their energy bills.
- Additional Competitive Procurements – Successfully re-contracting existing capacity resources at about a 30 per cent discount and plans for additional competitive procurements to re-secure both existing capacity and energy resources.
Quick Facts
- The IESO has forecast that by 2050, Ontario’s electricity consumption will rise by 60 per cent. This demand stems primarily from Ontario’s rapid increase in population, new manufacturing facilities, advanced technologies like artificial intelligence (AI) data centres, the electrification of industry, and the charging energy required for electric vehicles.
- The IESO has recommended cadenced procurements of approximately 5,000 MW of new electricity resources to be procured by 2034.
- The Canadian Department of Natural Resources estimates that data centres currently consume one per cent of all electricity used in Canada.
- In Spring 2024, the Ontario government secured nearly 3,000 MW of capacity, including the largest battery storage procurement in Canada’s history.
- Ontario’s electricity system is among the cleanest in the world, powered by a diverse supply mix including nuclear, hydroelectric, renewables, natural gas, and biomass.
Quotes
“As Ontario’s economy grows, the importance of having an abundant supply of clean and reliable energy in every corner of the province cannot be overstated. Our province’s industry and workers rely on dependable electricity grid to keep factories, mines, greenhouses, and construction sites going. This historic procurement will ensure the work underway to expand our province’s energy grid will continue to be powered by clean, reliable, and affordable electricity for years to come”
– Hon. Sam Oosterhoff
Associate Minister of Energy-Intensive Industries
“AMO commends the province for investing in clean energy and empowering municipalities to assess the suitability of energy projects for our communities. Energy is essential for our prosperity. Municipalities look forward to seeing the IESO’s procurements deliver the clean, reliable and affordable energy needed to power more homes and businesses.”
– Robin Jones
AMO President, Mayor of Westport
“CanREA welcomes Minister Lecce’s announcement. The coming procurement of 5GW of new energy projects—including wind and solar—is great news. Low-cost, quickly deployable and reliable non-emitting projects are a critical part of the solution for Ontario’s growing energy needs. Across Canada, CanREA members have been successful in building and operating renewable energy and energy storage projects—in partnership with project stakeholders and rights holders, including Indigenous communities, municipalities, landowners and farmers. Together, we will build the affordable, reliable and clean energy system that Ontarians need, expect and deserve.”
– Vittoria Bellissimo
President and CEO, Canadian Renewable Energy Association (CanREA)
“Energy Storage Canada (ESC) applauds the ambitious leadership of Premier Ford and Minister Lecce in driving forward the province’s Clean Energy Advantage. Already the third largest market for energy storage and smart grid technologies in North America, this upcoming procurement will secure Ontario’s position at the forefront of the global race for a clean, reliable, and abundant energy future. Our members are eager and ready to work with municipalities, farmers, and Indigenous communities to deliver the most competitive prices, build market-leading Long Duration Energy Storage (LDES) projects, and invest in our local supply chains.”
– Justin Rangooni
Executive Director, Energy Storage Canada
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