Phasing out Ontario’s natural gas power plants by the end of this decade is not feasible and would lead to rolling blackouts and soaring electricity bills, the body in charge of planning and operating the province’s power system said Thursday in a report that gas opponents have criticized as too pessimistic.
In the report, which responds to demands from municipalities to phase out natural gas by 2030, the Independent Electricity System Operator (IESO) estimates it would cost $27-billion to build alternative generating facilities and transmission lines, plus additional operating costs of $5.7-billion a year, causing a typical homeowner’s monthly bill to skyrocket by an average of $100, or 60 per cent. Power shortfalls would lead to rotating outages during periods of high demand. And that, the report says, is a best-case scenario.
“The key message is that the 2030 timeline really just didn’t provide us with enough runway” to replace natural gas, said David Devereaux, the IESO’s senior manager of resource and plan assessments, during a technical briefing with reporters.
Mr. Devereaux said the IESO team “challenged themselves to make this work” and avoided dwelling on obstacles, but that coming up with a plausible scenario required them to make heroically optimistic assumptions. Those included taking for granted that Ontario could build the world’s largest energy storage network (more than 6,000 megawatts) in the next eight years, as well as secure an additional 3,300 megawatts of supply from Quebec. Those assumptions probably weren’t reasonable, Mr. Devereaux said.
“It’s been a very useful exercise, but not feasible in reality.”
That message will disappoint many who have urged a rapid retreat from fossil-fuel power generation as a way of avoiding the worst impacts of climate change. The report was the IESO’s response to more than 30 Ontario municipal councils (including those of Kitchener, Hamilton, Windsor, Mississauga and Toronto).
Nuclear power plants and hydroelectric dams generate most of Ontario’s electricity. According to the IESO, gas plants represent nearly 30 per cent of the province’s total generation capacity, but they have been used primarily to bridge shortfalls when demand for electricity spikes, such as when a heat wave strikes Toronto and residents turn on their air conditioners. Consequently, they account for just 7 per cent of electricity actually produced.
That’s expected to change. IESO forecasts indicate the gas fleet will need to ramp up this decade to offset the retirement of the Pickering Nuclear Generating Station (currently scheduled for 2024-25) and ongoing refurbishments of reactors at the Bruce and Darlington nuclear stations, which are expected to continue into the 2030s.
Until recently, natural gas was regarded as the fuel of choice for new power generation. It’s the cleanest-burning fossil fuel. Its other advantages include relatively short construction times for new plants and lower capital costs. And gas-fired plants have generally attracted less public opposition than new dams and nuclear plants. This led to a rapid buildout across North America, sometimes referred to as the “dash to gas.”
The same factors contributed to global growth. According to the International Energy Agency, natural gas accounts for nearly a quarter of global electricity generation, and it met one-third of global energy demand growth during the last decade – more than any other fuel.
But with industrial nations unveiling plans to achieve “net zero” emissions by mid-century or sooner, natural gas’s flame has dimmed considerably. In a commentary published last year, RMI, a U.S. energy think tank, said new gas-fired power plants “face ever-stronger financial headwinds,” while costs for renewable generation and storage continue to decline.
“Gas generation is now attracting only a small fraction of investor interest compared to clean energy and will soon likely see its market share decline accordingly,” RMI concluded.
The Ontario Clean Air Alliance is among the non-governmental organizations eager to see natural gas disappear entirely. The organization has encouraged municipal councils to lobby Queen’s Park to make that happen.
Jack Gibbons, the organization’s chair, said the IESO’s analysis was “fundamentally flawed” because it considered high-cost battery storage while ignoring more attractive options.
“They’re analyzing the most-expensive storage options they can think of, in an attempt to discredit the request for a gas plant phase-out,” he said.
“Ontario is located right next door to the largest battery in the world, Hydro Quebec’s reservoirs. And by 2030, the storage capacity of our electric vehicle batteries will be more than double the capacity of our gas plants. But they don’t analyze that option either.”
Richard Carlson, director of energy policy with Pollution Probe, agreed with the IESO’s conclusion that Ontario would be hard pressed to phase out natural gas by 2030. Part of the reason for the difficulty, he said, is that the province has never addressed key questions, such as what sort of power generation should replace the Pickering facility once it’s retired.
“If we are serious about meeting our climate commitments, we cannot burn unabated gas,” he said. “And we need a proper plan to get there.”
Mr. Carlson said he believes a 2035 deadline would be aggressive but feasible, “if we started planning for it now.”
Other observers expect that demand for natural gas will actually increase, as electrification of things like buildings and vehicles causes electricity demand to skyrocket. In a forecast published earlier this year, the Canada Energy Regulator projected that if actions to reduce greenhouse gas emissions continue at their current pace, installed natural gas generation capacity will increase 70 per cent across the country between now and 2030. The increase would be far less – about 30 per cent – if nothing more is done to reduce greenhouse gas emissions beyond policies already in place today, mainly because there would be less need for new generation capacity.
In 2014, Ontario became the first jurisdiction to eliminate coal-fired generation from its electricity mix. The IESO had similar reservations about that transition: its report in 2006 said the provincial government’s plans to close coal-fired plants threatened system reliability and “will require significant delays.”
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