On August 28, 2024, the Ontario government announced the launch of the largest competitive energy procurement in the province's history. This solicitation process is intended to grow Ontario's energy supply to meet ever-increasing demand, which has a two per cent estimated annual growth rate (or a 60 per cent increase by 2050). However, such estimates may be somewhat conservative in the wake of advanced technology development and deployment, such as artificial intelligence data centres. Further unexpected population growth could also impact these estimates.
Based on recommendations from the Independent Electricity System Operator (IESO), the government is planning on adding 5,000 megawatts (MW) to the power grid through a series of Long-Term Requests for Proposals (LT RFPs). To put things in perspective, this volume of generation is enough to power roughly 5-million homes in the province. LT2 marks the start of this procurement process by earmarking 2,000 MW of energy-producing resources open for competition.
While the government has not yet released specific details on how the procurement process will unfold, Minister of Energy and Electrification Stephen Lecce has asked the IESO to create a framework for LT2 by September 20, 2024, (which includes timelines and design elements) and has indicated a procurement conclusion target of February 28, 2026.
In his letter to the IESO, Minister Lecce outlined his expectations of additional policies that he feels should be reflected in the IESO's LT2 design, including (among other things):
- Adopting a "technology agnostic" approach to producing energy resources at a competitive price. In other words, this approach will adopt a variety of energy sources, including renewables (such as wind, solar and hydroelectric), natural gas, nuclear and biomass.
- Requiring that energy projects cannot be built without municipal-level support (via council resolution by time of proposal submission), including those on Crown land within a municipality.
- Providing rated criteria points targeting northern Ontario communities that were hampered by LT1 transmission constraints.
- Promoting Indigenous equity participation, building off Indigenous energy storage project success under LT1. Projects on Indigenous traditional territories will also attract incentives upon project approval by these communities.
Of note, Minister Lecce has stated that ground-mounted solar panels will be prohibited on prime agricultural farmland (also known as "specialty crop areas") and that any such land being contemplated for use related to other energy products will require an impact assessment prior to approval.
Despite the government's "technology agnostic" approach, significant emphasis has been placed on promoting renewables. As a result, while some stakeholders have criticized ongoing reliance on non-renewable energy sources, many have welcomed the government's apparent "U-turn" on renewables in light of the premier's decision to cancel 750 green energy projects since taking office in 2018. Despite these cancellations, Ontario remains one of the world's cleanest energy producers (with roughly 90 per cent of the grid being carbon emissions-free).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.