ONTARIO NEWS

The pace of new cogeneration installations appears to be picking up speed in Ontario. Although the total capacity contracted is modest, reasonably mature programs are now in place that have proven their ability to bring high efficiency projects online. Household names like Toyota, Campbell’s Soup and Algonquin College are among the dozens of proponents with projects under development or recently brought on line in Ontario.

Behind the Meter generation

Part of the driver for this kind of development, and a reason to expect a quickening pace of development in the near future, is a regulatory and policy initiative in Ontario known as “Conservation CHP.” Under this program, new Combined Heat and Power (CHP) projects, if they save energy and are configured as load displacement or Behind the Meter generation, may qualify as conservation initiatives in certain respects. “This is an insightful approach,” says APPrO Executive Director Jake Brooks. “Ontario is one of the few jurisdictions around the world to recognize the conservation value of CHP by including high efficiency generation projects in its energy efficiency programs.”

          As part of the province’s “Conservation First Framework,” electricity distributors can use eligible CHP projects to meet a portion of their obligatory conservation targets in a system overseen by the industry’s provincial regulator, the Ontario Energy Board. Some of the key criteria used to determine eligibility include (a) electricity is produced exclusively for load displacement with no export to the grid, (b) use of natural gas or propane as the sole fuel, (c) projects achieve a minimum annual total system efficiency of 65%, and (d) projects do not use the thermal output from the CHP to generate electricity. On April 8, the IESO posted Version 2.0 of the Energy Conservation Agreement (ECA), the document that sets out the contractual relationship between the IESO and LDCs under the Conservation First Framework.

          Several cogeneration projects have recently been awarded contracts by the IESO and others are expected to be added in the near future, using one of two long-standing IESO conservation programs – the Industrial Accelerator Program for transmission-connected customers, or the Process and System Upgrade Initiative (PSUI) for distribution-connected customers.

Procurements for CHP

Until recently, cogeneration, or CHP, for all its virtue in the way it squeezes maximum value out of the potential energy in its fuel supply, has seen relatively slow growth over the last decade in Ontario. The Independent Electricity System Operator has run several CHP procurement programs, including processes focused on large scale CHP, phases 1 through 4, and the CHP Standard Offer Program (CHPSOP) phases 1 and 2.

          Currently, CHPSOP 2.0 is not an active procurement, and there are no current plans to restart it or initiate another large scale CHP procurement process. The first application window resulted in 15 contracts executed, for a total of 92 MW. A second application window is awaiting further ministerial direction.

          As of the end of 2015, the IESO had 27 contracted CHP projects through these procurement programs. Of these projects, 10 are in commercial operation and 17 are under development. These totals do not include conservation-based CHP projects implemented through the “Save on Energy” program.

          Going forward, the IESO explains that its aim with respect to generation procurement is to secure new capacity on a competitive basis through a capacity auction or competitive procurements with broad eligibility and to explore how to ensure that small CHP projects can competitively participate.

CHP through Save on Energy programs

The form of CHP procurement that is most active currently is conservation-oriented: Contracts for load displacement, in which electricity is generated behind the customer's meter and used entirely by the customer for part or all of its own power needs. The program is offered through the IESO and delivered in collaboration with local distribution companies who may use the results to help meet their regulatory obligations as outlined above.

          As shown in the table below, there are 12 in-service CHP projects currently implemented through the Save on Energy Process and System Upgrade Initiative (PSUI) and the Industrial Accelerator Program (IAP). The former is available to LDC-connected customers, while the latter has been available to direct-connect customers since 2011. The projects under development range between 50 kW and 20,000 kW, and represent a total capacity of 75,000 kW. These projects received a one-time financial incentive towards on capital expenses with a contractual commitment to produce energy over time.

          The Toyota Motors cogen listed below, for example, was a $27 million project announced at their Cambridge, Ontario plant in May of 2014, which went online at the end of last December.

          Toyota Motors Canada President Brian Krinock said, “For Toyota, the increased efficiency is substantial and will result in a major cost savings for our company, helping us stay competitive in the global manufacturing landscape.” As part of what the company calls a unique community service component to the development, a greenhouse will be constructed, which will tap the heat produced by the cogeneration project to produce vegetables for local non-profit organizations.

          “This is a natural extension of the Giving Garden initiative our Team Members started several years ago,” explained Mr. Krinock. “Now we’ll be able to support them on a year-round basis.”

CHP Projects in Ontario’s Save on Energy Program:

*Waste Energy Recovery (WER) is the generation of electricity primarily from heat or fuel that is a waste by-product of the Facility.

          There are currently 19 additional CHP projects in development through both industrial programs (PSUI and IAP), ranging between 50 kW and 20,000 kW, all of which are expected to come into service between 2016 and 2018. The capacity of the projects under development represents about 40 to 50 percent of what’s already in-service.

          Announcements have recently been made for two CHP projects – see the two stories below, for the unit at Campbell's Company, listed above, and one in development at Algonquin College.

          For industrial customers looking to participate in conservation programs, further information can be found here: https://www.saveonenergy.ca/Business/Program-Overviews/Process-and-System-Upgrades.aspx.

          The IESO is also operating procurement programs suitable for non-industrial electricity customers. For example, see the story in a previous edition of IPPSO FACTO on the results of the most recent round of standard offer procurement under the CHPSOP program: “92 MW contracted under CHPSOP 2,” IPPSO FACTO, August 2015.

          The IESO is currently undertaking a study on behind-the-meter (BMG) potential, to better understand the prospects for BMG in the province. The study is expected to be completed by summer 2016. Further information can be found here: http://www.ieso.ca/Pages/Participate/Stakeholder-Engagement/Working-Groups/2016-Achievable-Potential-Study-LDC-Working-Group.aspx?_cldee=Y29uc2VydmF0aW9uZ3JvdXBhbGxsb2NzQGllc28uY2E%3d

          With thanks to the IESO for providing much of the information above.

See also the following stories:

Campbell's Toronto cooks with cogen

Algonquin College to install cogen

Ecosystem and Lakeridge Health Launch Combined Heat and Power Plant