Strategy needed on meeting Ontario’s electrical needs
As the power sector prepares for a significant growth in demand over the next 20 years and Ontario begins to take advantage of its electricity sector’s strengths, the provincial government has a number of initiatives it must implement in order to ensure public and private confidence in the sector and its financial stability.
These proposals fall into the two main categories of:
Re-implementing what we already have done to build confidence in the sector; and
Transforming the power system to make the best use of its inherent strengths.
The government’s first priority is to ensure that the electricity sector is competitive with other industries.
The Energy Sector Strategy has identified three key drivers of future growth:
Increased energy demand and a growing population
Increased production of renewable resources
Greater efficiency and reduced emissions
In support of these goals, the government has made a number of initiatives available to support the sector, and to improve its performance and competitiveness.
One particular initiative in this direction is the Energy Efficiency Program, which aims to ensure that every customer receives a competitive price on their electricity bill, without affecting other services or revenues.
The program aims to increase the value of electricity sold in Ontario by $30–$50/ton, compared to other sectors, and to make the system more robust against an array of non-conventional risks, such as fire, flood, and storm.
However, this program comes with a number of challenges.
The government is not currently able to guarantee that new power plants, transmission lines, or other infrastructure can be built without increasing the level of debt or other costs.
The Energy Efficiency Program can be financially challenging to implement because there are only so many possible locations where it can be implemented.
This is why there are some safeguards in the legislation which allows the government to use the revenue it generates from a project to compensate for the costs that would normally be incurred in a public-private partnership.
These cost savings must be offset by the cost of purchasing the capacity on the private market. However, in order to do this, the government would need to guarantee that the private market would not price the capacity in a way which was competitive with electricity sold from Ontario’s nuclear power plants.
Additionally, the Energy Efficiency Program relies on the use of demand reduction measures, whether through demand curtailment or other means.
The need for demand management