Ontario’s New Gas Plants Will Raise Your Electricity Rates, Report Says

Ontario’s new gas plants will drive up electricity prices and make it harder to cut carbon emissions to net zero, according to an expert report released Wednesday.

Rather than relying on natural gas generation to meet growing electricity demand, Ontario’s cheapest and most reliable options require new wind and solar, while keeping gas plants for backup , says the report, prepared by Power Advisory, an electrical systems consulting firm that has provided advice to provinces and states across North America, including Ontario.

The findings contradict those of Ontario’s Independent Electricity System Operator (IESO), which has stepped up the use of natural gas generation and last month signed a contract to build new gas plants. The supply came after the IESO concluded last year that shutting down natural gas production would lead to a $100 increase in average monthly electricity bills and power outages across the province.

It’s a debate that boils down to gasoline or no gasoline.

Competing visions for the future of Ontario’s grid clash at a critical time when demand for electricity is expected to soar. Citizens, governments and businesses are turning massively to electricity as a source of energy for cars, heating and heavy industry in a bid to reduce carbon emissions and avoid the worst effects of climate change .

« We all share three key goals around electricity, » said Bryan Purcell, vice president of policy and programs at The Atmospheric Fund, which commissioned the new report. “We need it to be reliable. We need it to be affordable. And more and more, I think people agree that we need it to be clean.

« Our message is really that these priorities are really aligned: the most profitable route is also the most reliable and the least polluting. »

As the federal government finalizes its Clean Energy Standard, which will mandate net-zero electricity coast-to-coast by 2035, the report says Ontario needs to start making significant investments in its network, especially given the long lead times needed to build the transmission, generation and storage network needed to simultaneously meet demand and reduce emissions. Getting to net zero means switching to systems that produce no greenhouse gas emissions, while offsetting the remaining emissions.

Business leaders and municipalities have also urged the Ontario government to start building more renewable energy. All construction was halted in 2018 when Premier Doug Ford was first elected. Ford, which at the time opposed electric vehicle (EV) subsidies, has since doled out hundreds of millions of taxpayer dollars to lure mining and manufacturing companies to Ontario to ensure the local economy benefits from the EV supply chain.

These companies want clean electricity to reduce their own emissions and they are increasingly concerned about relying on natural gas after prices soared this year following the Russian invasion of Ukraine.

« It’s very clear that if we’re going to get to net zero, renewables will be part of the mix, » said Travis Lusney, report author and director of power systems at Power Advisory. « The distance to be covered depends on many factors, even outside the electricity sector. »

With widespread demand for renewable energy from households and businesses, and a significant amount of capital wanting to invest in renewable energy generation, Lusney said, Ontario has a limited time to harness these forces to achieve our climate goals.

The Power Authority report outlines three pathways to a net zero grid by 2035, all of which reduce reliance on natural gas generation to less than 3%.

In the first scenario, major conservation programs would reduce demand while nuclear refurbishments would keep Pickering Generating Station in operation and add a new small nuclear reactor at Darlington. In the second scenario, there is no new conservation. In the third, there is no new nuclear.

In all three scenarios, the report finds that a 97% emission-free grid can be achieved by building new transmission lines, solar and wind power plants, and energy storage facilities. This would allow the grid to reduce its dependence on natural gas to a few days of peak demand in midsummer.

The result: instead of a 400% increase in electricity emissions, as the IESO currently predicts, carbon emissions will be 85% lower by 2035.

In each scenario, electricity prices will be lower than they would be if the province went ahead with its plan to build new gas plants, the report concludes, mainly because gas is expected to become more expensive, an increase which will be exacerbated by the increase in the carbon tax. Meanwhile, wind and solar prices, which are already cheaper than natural gas, are expected to fall.

The IESO is expected to produce its own report in December laying out the path to a net zero grid while meeting increased demand.

« So really, the question for the IESO is, if it’s not renewables, what are you waiting for to actually fill that void? » Lusney said. « We don’t think there’s much that can do this quickly other than renewable energy and conservation. »

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