The Independent Electricity System Operator released a technical update in May to an October 2014 report on the status of Ontario’s interties with adjacent jurisdictions. The technical report explores the potential to add new physical tie-lines and presents several cases in which expanding the eastern Ontario transmission system could enable Ontario to maximize the firm import capability of the existing tie-lines with Quebec.
The IESO’s analysis finds that “an investment of about $20 million could enable the full 1,250 MW nominal import capability of the Outaouais intertie and a further investment of over $200 million could boost firm import capability to 2,050 MW.” The report also describes several conceptual options for new tie-lines. However, constructing a new tie-line and completing the necessary upgrades to Ontario’s transmission system “would be a major infrastructure project that would require up to 10 years to develop, and cost over $1 billion.” It would need to be weighed against alternatives like domestic supply or equivalent imports from other jurisdictions to determine which are cost-competitive, the IESO says.
The report was developed in response to a request from the Deputy Minister of Energy for an updated review of Ontario’s interconnection capability with Québec. Building on the 2014 report, the Review of Ontario Interties, and using updated modeling and analysis, the technical review presents several cases in which expanding the eastern Ontario transmission system could enable Ontario to maximize the firm import capability of the existing tie-lines. Notably, the report identifies relatively modest Ottawa-area improvements to the Ontario system that would facilitate competitive market-based Quebec trade.
While the report was prepared in order to address intertie capabilities, this is only one of several factors in determining whether further energy or capacity transactions would provide value for Ontario consumers. The scope for the report did not include analysis of any commercial aspects.
As the IESO points out, “On an hourly basis, Ontario’s wholesale electricity market economically schedules energy transactions to and from Ontario via the interties, providing an important balancing function that helps address the peaks and valleys of electricity demand and ultimately results in lower costs to consumers. Electricity trade provides valuable operational flexibility that helps the IESO manage increased variability as more wind and solar resources are integrated into the system, as more generation is connected at the distribution level, which affects demand for grid-supplied energy, and as consumption patterns become less predictable.”
The IESO report noted that it does not examine the “characteristics and costs of the capacity and energy resources in each jurisdiction, current and forecast demand/supply conditions, and market-based alternatives” – but states they “are equally, if not more important to assessing the value of potential transactions”. In the same week, the CCRE (the Council for Clean and Reliable Energy) released a report on related questions that does consider those factors. Authored by Marc Brouillette, the Principal Consultant at Strategic Policy Economics, the CCRE report argues that building an entirely new tie-line is unwarranted under today’s supply and demand situation. This is because of planned capacity upgrades in the Ottawa area, the low utilization of the interties, and the available capacity in the two provinces over the next 15 years. Brouillette notes that by 2028, “neither Ontario or Quebec will have sufficient low carbon generation to supply the others’ needs. I would add that when the expected emission reduction induced demand is considered, the argument and relevant factors change considerably.”
He explains, “The IESO report is focused specifically on expanding the eastern Ontario transmission system to enable Ontario to maximize the firm import capability of the existing tielines with Quebec. My analysis assumed the IESO would pursue these options based on their report of 2014.”
The CCRE commentary can be found at www.thinkingpower.ca/commentary.cfm.
The IESO report can be found here.