Ontario is walking back plans for a major new renewable energy purchase and opening the door to new climate-polluting gas plants with Wednesday’s announcement of an “energy agnostic” bid process that will include gas and nuclear as well as hydroelectric, solar, wind, and biomass suppliers.
The province touted the 5,000-megawatt Second Long-Term Procurement (LT2) as the biggest competitive bid process in Ontario history. “We will need at least 60 per cent more energy by 2050,” said Energy Minister Stephen Lecce. “The province needs more energy to grow our economy.”
That was already the intent last winter when the province’s Independent Electricity System Operator (IESO) announced plans to procure 5,000 megawatts of new non-emitting wind, solar, hydropower, or bioenergy capacity over the next decade. In a December 11 backgrounder, the IESO said Ontario would be looking for 2,000 MW of renewables to go online by 2030, with subsequent procurements calling for another 1,500 MW in 2032, then 1,500 MW more in 2034.
At the time, then-energy minister Todd Smith waxed enthusiastic about the IESO plan. “Many communities have already reached out to me to share their interest in hosting new energy projects,” he told the Empire Club in Toronto. “(They) can start working with proponents today to ensure that projects can be built that are going to bring new opportunities, they’re going to bring new jobs to their communities, and they’re going to contribute to the province’s electricity grid at the same time.”
And the IESO had a clear plan in place to make it happen. “This staged approach for acquiring new supply will allow for a regular reassessment of needs as time progresses, and for ongoing technological advances to occur that may reduce associated costs,” the system operator’s backgrounder stated. The initial wave of renewable energy contracts would also mark “the first time that small-scale electricity generation and storage devices smaller than 1 MW will be eligible to participate in the IESO procurement process.”
That was before Lecce and Smith traded cabinet portfolios in early June, with Smith taking over as provincial education minister and announcing his retirement from politics soon afterwards. Now, the province is saying only that the IESO will develop a framework for the new procurement by Sept. 20, then complete it by Feb. 28, 2026.
Lecce said Ontario needs more energy to keep up with population growth, CP writes, and to power electrification of industry and the rise of artificial intelligence, which requires massive amounts of electricity. The province’s electricity demand is expected to grow by about two per cent each year, but could be higher depending on the pace electrification in the broader economy.
Energy Politics vs. Energy Pricing
The provincial release said Ontario will look at a variety of energy sources during the procurement, including wind and solar. That’s still something of a turnaround for a government that tore up 758 signed renewable energy contracts, many of them with Indigenous communities, and ripped a finished wind farm out of the ground after it took office in 2018. The new government led by Premier Doug Ford initially swore those decisions would cost taxpayers nothing, but later acknowledged a price tag of more than C$230 million.
“If we had the chance to get rid of all the windmills, we would,” Ford said at the time.
Even with nuclear and gas plants brought back into the mix, CP says the Ford government has taken a U-turn on renewable energy, and is now poised to oversee the biggest expansion of green energy the province has seen in nearly a decade.
Ontario has also recently been adding electricity storage projects, with an eye to about 2,500 megawatts, and the IESO said the province’s emerging battery fleet will pair well with wind and solar, so that the power generated by those resources can be stored and injected into the grid when needed. Earlier this year, the province fell short of its target to procure 1,500 MW of new gas capacity, but made up the difference with 10 new battery storage facilities.
With details of this week’s announcement still scarce, the expectation is that gas plants will have the opportunity to participate in the initial round of LT2 bidding, but may have trouble competing with more affordable renewable energy suppliers. In February, 2023, a report released by Clean Energy Canada concluded that wind and solar farms with battery backup were already cheaper to build than natural gas in Ontario and Alberta, with the price of the renewable options expected to fall another 40% by 2035.
“Even without carbon pricing, wind power is set to be 40% cheaper than gas-fired power in both provinces by 2030,” the organization stated, citing research by Dunsky Energy + Climate Advisors. “Solar power, meanwhile, is already cheaper than natural gas power in Alberta and is on track to be 16% less expensive by the end of the decade.”
Canadian Renewable Energy Association President and CEO Vittoria Bellissimo welcomed Lecce’s announcement as a step toward a “highly anticipated procurement.” But Keith Brooks, programs director at Environmental Defence Canada, declared the move back toward gas plants a “significant and shocking reversal” in the province’s electricity planning.
“By opening the LT2 procurement to natural gas, Minister Lecce is walking back the terms of the original procurement, which focused on 2,000 MW of electricity generation from wind, solar and biomass,” he said in a release. “Gas is a fossil fuel, and most of the gas used in Ontario is fracked. When we consider the full climate impacts of gas, including extraction, using gas to generate electricity is no better than using coal.”
Restrictions on Farmland, Local Consultation
Like other recent procurements, this week’s announcement leaves it to municipalities to decide if they want a particular energy project to proceed. But Lecce’s statement suggested he may have missed the memo on the local interest in renewables that Smith reported in his Empire Club speech.
“Long gone are the days where Queen’s Park imposes projects on unwilling communities,” including agricultural areas, Lecce declared.
The new plan contains specific measures to protect agriculture, with ground-mounted solar panels prohibited and other projects subject to impact assessments if they’re to be built on prime farmland, despite emerging opportunities elsewhere for farmers to generate badly-needed income from agrivoltaic arrays and small wind installations. Lecce pledged the province would “never misuse” those lands, CP writes.
“Our farmers need more energy more than ever,” Lecce said. “They need access to affordable energy and so we made a commitment to work with them on a policy that ultimately will respect prime agricultural land.”
That’s welcome news to farmers, said Drew Spoelstra, president of the Ontario Federation of Agriculture.
“The new energy procurement framework is a major step forward for Ontario,” he said. “Reliable and affordable energy is incredibly important to the growth of the Ontario economy, including food production, food processing, and the agri-food sector.”
Farmers and Premier Doug Ford’s government have had an up-and-down relationship in recent years in light of the Greenbelt scandal, CP says.
The province had announced plans to build 50,000 homes on the protected Greenbelt, which includes prime agricultural land. But several investigations by provincial bodies found the process was flawed as it favoured some developers with ties to the government over others.
Farmers did not like the possible encroachment onto farmland and joined the chorus to denounce the Greenbelt move. Last summer, amid mounting public pressure to reverse course, Ford walked back those Greenbelt plans.
Major elements of this report were first published by The Canadian Press on Aug. 28, 2023.
