ONTARIO NEWS

The Independent Electricity System Operator released the results of its fourth Demand Response (DR) auction in December, noting that it showed continued growth in consumer DR participation and significant decreases in cost.

          The auction is an annual competitive process through which participating residential, commercial and industrial consumers are selected to be available to reduce their electricity consumption as needed. Successful DR providers compete in the electricity market along with generators to help maintain the reliability of the province’s electricity system.

          2018 had 38 organizations registered as auction participants, the highest number since the auction began in 2015, including four new participants representing a mix of commercial and industrial consumers.

The average annual clearing price for availability payments of $52,810/MW represents a 30% decrease from last year, and a 42% decrease since the first auction in 2015. The auction cleared 818 megawatts for the 2019 summer commitment period and 854 MW for the 2019/2020 winter commitment period.

          Travis Lusney of Power Advisory LLC noted that, “the increasing participation and declining clearing price can impact behind-the-meter Distributed Energy Resources (DERs) in Ontario that rely on the DR auction revenue to fund their projects. Specifically, the falling clearing price trend can impact the value stacking economics of behind-the-meter energy storage resources that are also offering Global Adjustment cost reductions to large commercial and industrial customers (i.e., Class A customers). As the IESO moves towards adopting Incremental Capacity Auctions, clearing price trends in the DR Auction will be an important indicator of future capacity value.”

          See also the related article “IESO sketches broad plans to address potential capacity shortages,” page 8, and the column by Len Kula, “High-Level Design for capacity auctions coming this March,” page 12.