Ontario's electricity sector will need more natural gas generation: report

Power lines are seen against cloudy skies near Murvale, Ont., northwest of Kingston, Wednesday, Sept. 7, 2022 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Ontario's electricity system operator says an expected surge in demand over the next few years means the province will need some new natural gas generation in order to avoid rotating blackouts.

Energy Minister Todd Smith had asked the Independent Electricity System Operator to explore a moratorium on new natural gas in order to reduce emissions, saying he didn't think Ontario needed any more.

The IESO says in an interim report today that a moratorium won't be possible in the near term, but it will likely conclude in its final report due later this year that a moratorium is possible after 2027.

The operator says Ontario will actually need to secure up to 1,500 megawatts of new natural gas capacity between 2025 and 2027, and should also procure 2,500 megawatts of energy storage, which works like a battery to inject capacity into the system when it's needed -- for a total of 4,000 megawatts, enough to power the city of Toronto.

The IESO says over time, it expects natural gas generation can be replaced by storage and other emissions-free solutions, but during a transition period, natural gas is needed to ensure the system is reliable and stable.

However, the reliance on natural gas means that greenhouse gas emissions from the electricity sector are set to rise in order to support the economy's broader electrification in the name of reducing emissions.

Before Friday's report, the IESO had already projected that greenhouse gas emissions from the electricity sector would increase for the next two decades, though by 2038 the net reductions from the proliferation of electric vehicles are expected to offset emissions from electricity generation.

The amount of new natural gas the IESO says Ontario needs in the next few years is expected to increase emissions by two to four per cent over those previous projections.

Chuck Farmer, the IESO's vice-president of planning, conservation and resource adequacy, said the system operator will also look to other solutions to meet electricity supply shortfalls, including more energy efficiency programs and importing power from other jurisdictions.

"This combined effort would ensure that the grid will be able to support a substantial energy storage fleet, which will be essential for the decarbonization of the electricity system,” he said.

An electricity supply crunch is expected in the next several years, with a nuclear plant currently set to be retired, others being refurbished, and increasing demands including from electric vehicles, new electric vehicle and battery manufacturing, electric arc furnaces for steelmaking, and growth in the greenhouse and mining industries.

Ontario has recently announced a number of plans aimed at dealing with that supply crunch, though critics accuse the Progressive Conservative government of being caught flat-footed by the need and say this planning should have started long ago.

The province plans to extend the life of Pickering Nuclear Generating station by a year, to 2026, and is undergoing various rounds of procurements to secure new electricity generation. It is also planning an import agreement with Quebec in 2026 or 2027 and is rolling out new and expanded energy efficiency programs -- though critics say they won't replace conservation programs the government previously cut.

This report by The Canadian Press was first published Oct. 7, 2022.