Ontario’s net-zero transition: ‘Challenging’ or impossible?
Ontario’s Independent Electricity Systems Operator (IESO) recently issued its Annual Planning Outlook setting out its projections of provincial electricity demand, generation capacity and energy needs over the period 2025-50. The report foresees steady growth year after year, with total electricity demand increasing 60 per cent over the next 25 years. As a result, IESO foresees a growing supply shortfall and large “acquisition needs” starting as soon as 2029.
What are the chances the province will be able to build enough capacity to meet these new demands? IESO set out its views on policy and planning in December 2022 in Pathways to Decarbonization, a largely-ignored but extremely important report to Ontario Energy Minister Todd Smith.
The Pathways report assessed both the feasibility and cost of complying with the federal government’s goal of reaching net-zero greenhouse gas (GHG) emissions by 2050. Using the “can-do” terminology of which professional engineers are such masters, the report provides a factual assessment of the changes that would be required in terms of generation, transmission and investment. In several places, it acknowledges how “challenging” these changes would be. “Challenging” may be the closest engineers ever come to meaning “impossible.”
Complete decarbonization of the Ontario economy would entail two broad transformations. First, all or nearly all the energy used now based on oil and natural gas would have to either cease or be converted to electricity. Second, the province’s capacity to supply electricity through non-hydrocarbon sources (either by generation or imports from Quebec) would have to rise by enough to meet the increased demand. IESO projects that electricity demand would double — from about 150 terawatt hours (TWH) in 2024 to 300 TWH in 2050, for an annual average increase of almost 5.8 TWH or 3.9 per cent per year. To put that in perspective, Ontario’s electricity demand has declined almost every year since 2007.
To meet these needs, provincial generation capacity would have to increase from about 42,000 megawatts (MW) today to about 88,000 MW in 2050.
How “challenging” is that? Given expected rates of obsolescence, the capacity of the generation plants now in place will decline to 19,600 MW by 2050. This means 68,400 MW of capacity would have to be built over the next 26 years. The land required for additional generation alone would be 14 times the area of Toronto, most of which would be for wind turbines. The trained labour force required to build all these plants is six times what is currently available. Regulatory reviews that now often take 10 to 15 years or even longer would have to be drastically speeded up or sharply curtailed, no doubt in the face of significant objections from landowners, activists and Indigenous communities.
IESO sees most new generation capacity coming from new nuclear plants, industrial wind turbines and hydrogen. The last grassroots nuclear power plant in Ontario was Darlington, completed in 1993. Only one additional large nuclear plant is even in the preplanning stage, and if that proceeds, it probably will not enter production before 2045.
IESO estimates additional wind generation capacity of 17,600 MW will be required. That’s more than three times current capacity. At today’s average wind turbine capacity of 3.3 MW for equipment with a 130-foot tower, that’s more than 5,300 more turbines, each of which may involve a fight with rural residents.
Even more surprising is IESO’S projected addition of 15,000 MW of hydrogen-based generation, where precisely none exists today.
The total cost of all this new generation, excluding financing costs, would be about $400 billion in 2022 dollars, or around $15.4 billion per year on average. By comparison, Ontario Power Generation’s total capital expenditures in 2023 were $2.8 billion, just one-fifth of what will be required per year.
And that’s just generation. The requirements for additional transmission and distribution capacity are almost awe-inspiring. There would be a large “build-out” of Ontario’s existing transmission networks at a cost ranging from $20 billion to $50 billion. Somewhere between 150 and 280 new transformer stations would be required. This would mean adding between five and 10 new stations per year, which is more than the number of new stations developed across the province over the past decade. Many would be built in major urban areas. The total cost of these transformer stations would be between $5 billion and $10 billion.
What would all this mean for electricity rates? Adding wind and solar plants between 2007 and 2016 almost doubled electricity rates, and since then annual taxpayer subsidies now exceeding $7 billion per year have been used to keep rates from rising higher. Yet Pathways to Decarbonization estimated that all of these new required expenditures to 2050 would end up increasing rates by only 20 to 30 per cent. That estimate is all but certain to be revised. Keeping rate increases that low is likely to be ... challenging.