It was announced on December 12 that the IESO’s fifth demand response (DR) auction had secured capacity from consumers for more than 1400 MW that will help to manage peak demand on the system in the year ahead.
The average annual clearing price of this year’s auction was $58,725/MW, a 36% decrease since the first auction in 2015. The average of the summer and winter qualified capacity was 1,462 MW, a slight drop from last year’s 1,490 MW, while the number of auction participants increased.
The DR auction has been 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 help to maintain the reliability of the province's electricity system, while auction participants benefit by offsetting their energy costs and improving their competitiveness.
Starting next year, the IESO plans to evolve the DR auction into a broader capacity auction in which other resources such as generators, imports and energy storage can compete. Allowing other resources to participate next year is expected to increase competition and put downward pressure on costs for Ontario consumers. The IESO explains that “the competitiveness of the auction will ultimately drive innovation and attract new and innovative technologies to enter the market, as well as low-cost resources that may not have had the opportunity to compete under previous targeted IESO procurements.”
The implementation of the first capacity auction is pending the outcome of an Ontario Energy Board review, which is expected to conclude in late January.
For this year’s DR auction, the following results have been confirmed:
• The auction cleared 858.6 megawatts (MW) for the 2020 summer commitment period and 919.3 MW for the 2020/2021 winter commitment period
• There were 52 organizations registered as auction participants, an increase of 14 over last year
• There were 22 organizations that bid into the auction, an increase of five over last year
• Eight of the 22 participants were new to the auction this year.
The full list of successful applicants is available on the IESO website.