A rushed decision to procure new gas fired power plants, without public consultation or transparent analysis of the alternatives. Hundreds of millions of public dollars wasted due to poor electricity infrastructure planning. I’m not talking about the gas plant cancellations of 2011 that cost an estimated $1 billion. This is Ontario’s next gas plant scandal, unfolding right now unless the province changes course quickly.
On October 7th, Ontario’s Minister of Energy directed the Independent Electricity System Operator (IESO) to procure 1,500 megawatts of new natural gas-fired electricity generation capacity. This decision was taken without any public consultation, based on a very brief IESO report without financial analysis or comparison of other pathways. These new gas plants are to be built by 2027, and some given 20-year contracts to operate until at least 2047. Combined with the planned ramp-up of existing gas plants, they will result in more than a 300% increase in carbon emissions from Ontario’s electricity system.
This decision imperils Ontario and Canada’s progress against climate targets. But it also leaves Ontario on the hook for hundreds of millions of dollars in potential contractual penalties. The federal government has committed to net zero electricity across Canada by 2035, and is in the process of drafting a regulation to achieve that goal. The regulation will prohibit the unabated use of natural gas for electricity generation starting in 2035. No company will risk investing in a new gas plant to open in 2027, knowing they will most likely be required to shut it down in 2035. To bring bidders to the table, the Minister has directed the IESO to offer bidders a guarantee: if climate regulations require the new plants to shut down, the people of Ontario will fully compensate them for their losses.
In other words, this government is planning for Ontario and Canada to fail to meet its climate commitments, and is putting a billion-dollar bet on it. If this is a losing bet – and let us hope that it is – Ontarians will be paying the bill for polluting gas plants we don’t need until 2047. Either way, the people and businesses of Ontario lose.
It doesn’t need to be this way. Earlier this month, the IESO released a much more thorough study showing that it would be more cost-effective to meet Ontario’s energy needs using non-emitting distributed energy resources (DERs).
DERs include solar, energy storage, and automated demand response systems located close to loads in existing facilities. Unlike new gas plants, DERs don’t need to be built over the objections of local communities, and they are fully compliant with the federal government’s forthcoming clean electricity regulation. DERs are shown to generate seven dollars for every one dollar invested, and the benefits are distributed in communities large and small across the province.
Large scale centralized renewables backed by storage is also an option, and overwhelmingly the choice for other jurisdictions that need more generation capacity. Renewables are set to account for almost 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half. In contrast, 50% of planned gas plants in the US have been cancelled prior to construction in recent years, across red and blue states, in favour of cleaner and more cost-effective alternatives.
The bottom line is that investing in new gas fired power plants is fiscally and environmentally reckless.
This Ontario government doesn’t have a long-term energy plan, nor a strategy to comply with the federal clean electricity regulation. Instead, the province and the IESO are rushing into a poor decision that will come at an excessive cost, increasing emissions, and losing our ‘clean grid’ advantage. But it’s not too late to change course.
We’re confident that municipalities with gas phaseout resolutions (there are over 30) and residents of communities near proposed gas plant sites will be strong in their opposition, just as they were in 2011. More than a decade later, amidst growing climate concern and availability of clean solutions, amidst inflation and increasing carbon price – who is going to support these plants? Recent Abacus polling shows that most Ontarians think clean energy will be more important for the economy than fossil fuels within ten years.
There’s a place for any Ontarian’s voice who depends on clean, reliable, affordable electricity. You could contact the Ministry of Energy directly or ask your MPP where they stand and what they can do. All of us should tell the province to put the brakes on new gas plants and invest now in distributed energy resources, large-scale renewables and storage, and conservation. It’s the right path for Ontario.
Image credit: Chris Young, Canadian Press via CTV News