Ontario expects to need another 1400 MW of capacity by 2023
Although the Ontario supply demand picture is generally balanced, the latest analysis by the IESO finds a capacity shortfall of 1400 MW emerging in less than 5 years. A number of options can be used to help meet this shortfall, including demand response and new generating capacity. The IESO has indicated it will take any steps that are required to ensure reliability. It is therefore looking at non-traditional approaches for securing capacity, some of which could have reliability implications, including reducing the reserve requirement.
In a Technical Planning Conference on September 13, the IESO released projections showing more specifically why it foresees a capacity shortfall in 2023. (See slides below.) The size and duration of the shortfall depend on a number of variables including the level of demand and the availability of existing resources. Under the most likely scenario, the shortfall persists at approximately 2000 MW until 2030 when refurbished nuclear units are expected to return to full production.
The unexpected need is being described as a capacity shortfall rather than an energy shortage because the difficulties occur only during summer and winter peaks from 2023 onward.
In the presentation for its September 13 meeting, the IESO says, “In the reference outlook, a need for new capacity of about 1,400 MW emerges in 2023. The need increases to 3,700 MW in 2025 before plateauing to about 2,000 MW over the long-term. This assumes that capacity from existing resources continues to be available post contract, which helps to defer and reduce the need for new capacity.”
“One of the key concerns here is that the IESO projections rely heavily on existing resources with expired contracts to provide capacity, especially in the late 2020s,” notes APPrO President Dave Butters. “Those existing resources will likely respond to market forces. Without robust new contracts or market mechanisms it’s unclear the degree to which they can be counted on to support the IESO’s reliability requirements.”
“Given the lead time required and the number of options that need to be considered, it will be important for the IESO and market participants to address the emerging capacity gap in 2023 of 1400 MW without delay,” Mr. Butters said.
For more information, see the IESO conference presentation at this location:
See also the related article by Shawn McCarthy in the Globe and Mail: "Ontario faces an electricity shortfall within five years, report says," the "Ontario starts preparing for energy shortage" October 16 posting by Bloomberg, the October 19 article by Zoe Thoms of Aird & Berlis, and "IESO sees potential for trouble ahead if 2019 is another hot, steamy summer," also in this issue of IPPSO FACTO.
For further insight on how Ontario will manage its projected capacity shortfall, APPrO recommends attending the Canadian Power Conference, November 12 and 13 in Toronto, featuring Ontario Energy Minister Greg Rickford, Peter Gregg, the CEO of the IESO, and more than 50 other experts presenting their views on current options for the Ontario power system.
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