The Independent Electricity System Operator has begun a series of initiatives to reinforce reliability during the uncertain times ahead, particularly addressing potential capacity shortages foreseen in the period 2023 to 2030. Peter Gregg, the CEO of the IESO, in a speech January 28 indicated that the Demand Response Auction planned for December 2019 will be opened up for bids from generation and other sources of supply: “In December, we will run an auction to meet capacity needs for 2020. Our goal is to have that auction and subsequent auctions build on the current demand response auction including allowing more resource types to compete. This would provide generators whose contracts are expiring over the next few years an opportunity to compete in our electricity market and help meet emerging capacity needs.” The auction may effectively serve as a test of mechanisms for procurement of short and medium term capacity in Ontario.
Mr. Gregg also explained that the IESO is working to refine supply projections for the critical period starting in 2023: “Our Planning Group is now working to confirm that earlier assessment (from the Technical Planning Conference of September 2018) and we expect to have a clearer picture of our more immediate capacity needs in the third quarter of this year.”
At the same time, the IESO is paying increasing attention to the role of DERs: “DERs are helping to shape a more decentralized electricity system, changing the relationship between local distribution systems and the broader transmission system … . At the end of 2017, there were more than 3,880 MW of contracted embedded generation within local distribution systems, a 25 percent increase over 2016.”
Mr. Gregg explained that “The priority areas of focus for the IESO include:
• Unlocking the value of new and existing resources;
• Leadership with respect to emerging cybersecurity risks;
• Increasing transparency and visibility of distributed resources; and
• Developing new capability to collect, store, analyze and use that data that comes with the operation of the power system.”
Interpreting the Demand Response Auction announcement, Bonnie Hiltz of Sussex Strategy Group said, “[T]he IESO signaled the first step on its strategy to address upcoming capacity shortages. ... This initiative is specifically targeted at operating or laid-up facilities whose contracts have expired, and is the mechanism by which the IESO expects to maintain existing, cost effective capacity in the system per its historic modelling assumptions. The auction will procure resources to meet the capacity needs for 2020.”
See also the column by Len Kula, “High-Level Design for capacity auctions coming this March,” and “Participation up, costs down in 4th demand auction,” elsewhere this issue in Ontario news.