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Demand for electricity in Ontario fell last year to levels rarely seen in decades amid shifts in usage patterns because of COVID-19 lockdowns and other anti-pandemic measures, new data show.Nathan Denette/The Canadian Press

The agency that operates Ontario’s electricity system has announced procurements of power from seven new battery energy storage projects and increasing generation capacity at existing natural gas-fired plants.

In what it called the largest procurement of storage capacity in Canada, the Independent Electricity System Operator said it will purchase 739 megawatts of storage, predominantly from two proposed battery facilities in Hagersville and Napanee, Ont. The IESO also announced expansions of two existing natural gas-fired plants in Western Ontario, with a combined new capacity of 318 MW.

“The projects we are announcing today are setting the stage for the transformation of our electricity system,” Chuck Farmer, the IESO’s vice-president of planning, conservation and resource adequacy, told reporters in a briefing.

Ontario faces energy shortfalls primarily owing to falling output from its nuclear fleet, which has long met more than half of the province’s electricity needs. The Pickering Nuclear Generating Station, with six operating reactors producing 3,000 MW, the oldest of which entered service in the early 1970s, is scheduled to retire in 2025. Other reactors at the Darlington and Bruce stations are out of service for refurbishment. Meanwhile, the IESO expects demand will grow by about 2 per cent each year.

The North American Electricity Reliability Corporation, a non-profit organization that monitors reliability and security of the continent’s electricity infrastructure, on Monday identified Ontario as one of several jurisdictions that “may experience resource shortfalls” this summer should widespread hot weather arrive. (The NERC also warned of possible shortfalls in New England, the U.S. west, Midwest, Texas and the southeastern United States, but did not mention any other Canadian province.)

Mr. Farmer told The Globe and Mail that the IESO’s own assessments show that the province could suffer shortfalls amid widespread extreme heat, but said his organization is scheduling reactor outages to avoid that, and would import power from neighbouring jurisdictions if needed.

“That isn’t a condition that we haven’t seen before,” he said. “We are confident that the system is reliable.”

Battery storage facilities can charge up when electricity demand is low, and deliver it back to the grid for several hours at a time, before recharging again. The largest new facility will be Boralex Inc.’s battery energy storage project near Hagersville, Ont., scheduled to begin commercial operations in the spring of 2025, with a capacity of up to 300 MW for four hours at a time. Boralex’s website says it has secured land options for that project.

The IESO said it plans to announce further storage procurements by June.

“There are still some projects that are in discussion with the Canada Infrastructure Bank, which will offer them financing to help manage their proposed costs,” Mr. Farmer said.

Though there’s interest in building energy storage across the country, very little capacity exists today. Ontario currently has only 220 MW, which includes the 175-MW Ontario Power Generation’s Sir Adam Beck Pump Generating Station, built in 1957. The IESO says it will increase that capacity more than fourfold by 2026.

“Energy storage makes the grid stable,” said Justin Rangooni, executive director of Energy Storage Canada, an industrial lobby group. “It’s critical that we continue to grow that number.”

Mr. Rangooni said Ontario’s new projects will likely rely on lithium-ion batteries, the most economical technology for short-term storage. Such projects can take two to three years to build, he added, but “supply chain constraints could be an issue because everyone’s fighting now for these batteries.”

The IESO forecasts Ontario will need 2,500 MW of new capacity by 2026, Mr. Farmer said, but seeks to procure as much as 4,000 MW to address the risk that some projects might not be completed on schedule.

In its latest long-term reliability assessment published in December, the NERC said Ontario faces shortfalls of 1,700 megawatts in each of 2025 and 2026. That would be reduced if Ontario is able to continue operating the Pickering station beyond 2025. In September, the Ontario government asked OPG to continue operating the plant into 2026, which would require approval from the Canadian Nuclear Safety Commission.

The Ontario Clean Air Alliance, an energy advocacy group, decried Ontario’s purchases of additional natural gas generation, which releases significant quantities of greenhouse gases.

“The IESO is determined to pursue greater gas use simply because it prefers to stick with an expensive gas/nuclear system,” it said in a statement, “rather than joining the rest of the world in aggressively pursuing energy efficiency, demand response, and renewable energy sources like wind, water and solar.”

The IESO said natural gas will “phase out of the system” by 2035, and thereafter will serve only as a source of backup power. In its most recent planning outlook, the IESO forecast that emissions from the province’s electricity sector are poised to significantly increase, from about 0.1 tonnes of CO2 equivalent per megawatt hour currently to nearly 0.4 tonnes by 2026.

The IESO did not reveal pricing details for its latest procurements, but promised to do so soon. Mark Winfield, a professor in York University’s environment faculty, said Ontario’s preference for storage and gas-fired generation could prove costly because the government will pay for the new gas-fired capacity even if it isn’t used, and also rising federal carbon charges.

“You’re embedding a lot of cost there in the longer term by going down this pathway,” he said.

“If we were serious about controlling costs, we’d be moving much more aggressively on the demand side, because we know that’s where the lowest cost options lie.”

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