TORONTO — The Ontario government’s plan to meet growing energy needs almost exclusively with natural gas and nuclear generation risks setting Ontarians up for pricey energy bills, according to a new Pembina Institute report.
Wind and solar are the lowest-cost new electricity generation available and other jurisdictions around the world are rapidly taking advantage of these affordable options. But the Ontario government’s plan leans into risky bets and misses opportunities, states our report, Powering ON: Examining Ontario’s Integrated Energy Plan.
Ontario’s landmark Integrated Energy Plan, released this past summer, sees an increase in natural gas generation while nuclear plants are refurbished. It then seeks to transition away from gas and build more new nuclear capacity than all of Ontario’s currently installed plants by 2050.
Diversity in energy generation brings resilience. There are risks in Ontario’s strategy of relying so heavily on gas, and then nuclear. Our report argues that these risks could be better managed by adding a larger proportion of wind, solar and battery storage to the grid than currently planned.
Ontario gets the bulk of its natural gas (70 per cent) from the U.S., currently its cheapest supplier. This is an energy security risk from a trade relationship perspective, as well as a cost risk, as natural gas prices are volatile. The other 30 per cent of its gas comes from Western Canada, but it’s more expensive. Increasing gas generation would expose Ontarians to potential energy security and/or price risks.
Nuclear generation’s track record isn’t encouraging, either: our analysis shows new facilities typically come online six years late and at double the initial estimated cost. Aside from sticker shock, a limited electricity supply could make Ontario less competitive at courting new investment opportunities, particularly in sectors seeking clean energy.
The provincial government has taken an encouraging step forward, though, by running Canada’s largest “technology-agnostic” energy procurement process. Ontario could incorporate a higher proportion of wind, solar and battery storage into its grid if that process was on a level playing field; for example, if natural gas generators weren’t being reimbursed for 75 per cent of the gas network upgrades they would require.
Wind, solar and batteries are quick to build and cost-competitive with new gas generation. Wind and sunshine are zero-cost fuels so there is no energy security risk and operating costs are minimal. Added to that, the dramatic downward cost curve for solar, wind and batteries is forecast to continue.
David Pickup, Electricity Program Manager, is available for comment.
Quick facts
- Since 2009, the cost of solar has plummeted 88 per cent and wind costs are down 74 per cent.
- Lithium-ion battery costs for energy storage have also fallen — by 90 per cent since 2010.
- These costs are expected to keep falling: costs fall by around 20 per cent every time global deployment of this technology doubles.
Quotes
“Ontario could reduce security and cost risks to its electricity system by leaning into ever-cheaper solar, wind and battery storage, instead of relying on natural gas and nuclear generation.”
“Many other countries around the world are building energy systems fit for the future, centred on wind, solar and batteries. Ontarians risk falling behind on economic competitiveness if the province continues to prioritize expensive electricity investments with energy security and project delivery risks.”
“Ontario could more quickly achieve its goals of a reliable, affordable, clean electricity system — and reduce reliance on high-cost imported natural gas from the United States — if it were to more quickly expand wind and solar generation over the next 5 to 10 years."
— David Pickup, Electricity Program Manager, Pembina Institute
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Contact
Hanneke Brooymans
Senior communications lead, Electricity program
587-336-4396
