Ontario Suspends LRP II and Energy from Waste Program: What Does It Mean for the Ontario Energy Sector?

September 27, 2016

Earlier today, Minister of Energy Glenn Thibeault announced that the Government of Ontario will suspend the 980 MW of large renewables procurement (LRP) and the Energy from Waste Standard Offer program on the basis of the Independent Electricity System Operator (IESO) Ontario Planning Outlook. The government estimates that these actions will save customers up to $2.45 on monthly bill costs as estimated in the 2013 Long-Term Energy Plan (LTEP), and outlines the other measures that the government has already announced to ease Ontario electricity bills.  

 

The full announcement is available here. Ministry briefings have stressed that the move is reasonable and prudent in light of the IESO planning projections, that bidders in the LRP I procurement will not be affected, and that the bidding fees and connection costs of LRP II bidders will be refunded. FIT 5 and the microFIT program will not be affected.

 

This move signals the Ontario government's clear prioritization of lowering customer electricity bills over all other objectives. It may also signal greater reliance on the IESO to conduct measured and non-technology-specific procurements that are more directly responsive to electricity demand projections as determined by the LTEP process(es).

 

The announcement may also have a number of broader implications for the energy sector, including:

 

  • It appears to signal a trend away from technology-specific large renewables procurement to optimizing distributed generation, energy storage, imports of low-cost clean power, and zero emission "community power plus storage" projects;

  • It is likely to have a greater impact on wind power providers, which are not as conducive to distributed and rooftop generation, than solar power providers;

  • It is likely to put greater pressure on the government and Ontario renewable energy developers to look south to the US Clean Power Plan, east to Nova Scotia, and west to Alberta and Saskatchewan to achieve new growth;

  • It may heighten the importance of Ontario clean energy exports from post-2012, zero-emission Ontario power facilities to the US in accordance with the Clean Power Plan that is being reviewed by the United States Court of Appeals for the District of Columbia Circuit over the next days;

  • It is likely to place a greater emphasis and challenge on the natural gas, transportation, and consumer sectors in order to achieve the Ontario climate targets of 20% reduction from 1990 levels by 2020, and 37% reduction from 1990 levels by 2030;

  • It may place enhanced pressure on power utilities to increase focus on conservation and demand management; and

  • It is unclear as to how this may impact the demand parameters submitted to support Ontario transmission projects, and the value of a number of those projects and initiatives for First Nations and Métis stakeholders.

 

For more information, please contact Lisa DeMarco at lisa@demarcoallan.com.

 

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