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BREAKING: ‘Very Nasty Trade-Off’ as Ontario Picks Gas, Nuclear Over Renewables

BREAKING: ‘Very Nasty Trade-Off’ as Ontario Picks Gas, Nuclear Over Renewables

October 3, 2022

Mitchell Beer

Ontario can deliver enough distributed energy resources (DER) to clear a large electricity shortage over the next decade, but a prominent analyst says the provincial government is still pivoting between two equally “catastrophic” options—relying more on methane-heavy gas plants, or extending the life of an aging nuclear station outside Toronto.

The blockbuster assessment of distributed resources like solar, small hydro, and energy storage shows up in a study by Montreal-based Dunsky Energy + Climate Advisors, released Friday by the province’s Independent Electricity System Operator. The IESO published the report the day after Energy Minister Todd Smith announced plans to extend the operating licence for the Pickering station, the third-oldest nuclear plant in North America, by one year.

“It’s a very nasty trade-off that we should never have found ourselves having to make,” said Mark Winfield, professor of environmental and urban change at York University. “We have a pretty clear picture of what something going seriously wrong at Pickering looks like, and that’s not very pretty at all.” But “the bigger question is the trajectory around natural gas,” with heavier reliance on the province’s gas-fired power plants set to increase power grid emissions by more than 400%.

“We should not be in the position of having to choose between a catastrophic risk on one side versus a catastrophic problem on the other,” Winfield said in an interview. “The whole point is to avoid ending up in that kind of situation.”

“This terrible idea is where you end up if you ignore better alternatives, like rapidly expanding use of much lower-cost solar and wind, getting back to promoting ultra-low-cost energy efficiency to lower bills while saving power, and cooperating with your energy-rich neighbours in Quebec,” agreed Ontario Clean Air Alliance (OCAA) Director Angela Bischoff in an email to supporters.

“Faced with strong public concern about the climate consequences of a huge surge in the use of gas-fired power plants, the Ford government has opted for the highest-cost and highest-risk response: Extending the life of a nuclear station that has long exceeded its engineering life span,” she added.

Planning for a Power Shortage

Ontario has seen its electricity shortfall coming since 2018, when the IESO warned the province faced a 1,300-megawatt gap in the summer of 2023, increasing to 3,500 MW later in the decade. That was after the Ford government summarily cancelled signed contracts for 758 renewable energy projects that would have delivered 450 MW of capacity, and a few months before the province cut direct spending on its energy conservation programs.

But even now, the trade-off between gas and nuclear isn’t a done deal.

The solar, small hydro, energy storage, demand response, and vehicle-to-building/grid (V2BG) technologies covered in the Dunsky study “could obviate the need to engage in this very risky pathway of taking a 50-year-old nuclear plant that’s well past its best-before date and trying to extend its life,” Winfield said. “The problem is that the province has done a very effective job of painting itself into a corner,” with successive Liberal and Conservative governments “removing all the alternatives they might have had available from the table.”

But it may not be too late. “There is ample cost-effective DER capacity to meet or exceed all incremental system needs under all scenarios,” the Dunsky study states [pdf]. “The achievable potential results reveal that, when factoring in real-world conditions, DERs are able to satisfy a material portion of the province’s energy needs—from 1.3 to 4.3 GW of peak summer demand by 2032.”

That range is based on three different future scenarios in the study, titled Business As Usual (BAU), BAU+, and Accelerated, each reflecting its own set of electricity market conditions, technology trends, and provincial policy decisions. Each of the scenarios shows differences in peak power demand between the summer and winter months. The more ambitious scenarios all have power demand rising faster, as a more serious approach to cutting carbon drives faster electrification.

In almost all cases, what Dunsky calls the “achievable potential” for DER isn’t enough to make up the shortfall.

But the economic potential—what the province could affordable achieve—invariably exceeds the demand peak in winter and far exceeds it in summer.

“The gap between achievable and economic potentials relates to a range of factors, including DER adoption and diffusion, market barriers, [demand response] program participation limits, and the limited financial attractiveness of some DERs to specific customers,” Dunsky writes. But the province could narrow that gap by setting out to procure more distributed resources, fully compensating them for their practical value to the grid, and allowing them to participate more fully in the wholesale side of the province’s electricity market.

Going Nuclear

But instead, Ontario plans to extend the life of the Pickering station by one year and is looking to see if it can refurbish the plant to run for another 30 years in order to fill the expected electricity supply gap, The Canadian Press reports. On Thursday, Smith said he had asked Ontario Power Generation to keep the plant going until September 2026.

“Earlier this year, at the government’s request, OPG reviewed their operational plans and concluded that the station could continue to safely generate emissions-free, reliable, low-cost electricity,” Smith said outside the plant.

CP says Pickering accounted for 14% of electricity generation in the province last year. The plan needs approval from the Canadian Nuclear Safety Commission, which Bischoff says has never turned down a licence application.

The province has also asked OPG to examine whether Pickering is worth refurbishing, a process that can see a nuclear plant produce power for another 30 years.

Smith said OPG will complete a feasibility study exploring a long-term extension that would require a complete refurbishment. That study will be completed over the next year.

He said demand for electricity is high and will only get higher with investments in electric vehicles, electric arc furnaces in steel plants, and investment in general that would require more electricity.

Without the extension of Pickering Nuclear, there would be an electricity gap, he said.

“When we were exploring opportunities on how we fill that gap,” he said, “we’ve got an existing asset here that has a proven track record of providing safe and reliable electricity and affordable electricity every day, why not look at extending that through September 2026?”

He added that keeping the plant operational will save thousands of jobs in the interim. But a 2016 study commissioned by OCAA found that decommissioning Pickering would create 16,000 person-years of employment and save the province money.

Over the medium term, the province will rely heavily on natural gas, CP says. As a result, greenhouse gas emissions from the electricity sector are set to rise for at least the next two decades. Emission reductions from electric vehicles won’t fully offset that increase until about 2038, the IESO has projected.

Still Time to Switch Tracks

But that was before the Dunsky study for the IESO showed that distributed energy can cover much or all of the gap—if the government has the political will to act.

“There’s something very substantial here that is cost-effective, technically feasible, and achievable. So it’s a very interesting counterpoint,” Winfield said. At present, he added, Ontario taxpayers are subsidizing the grid to the tune of C$7 billion per year.

“That’s a lot of hospitals. That’s a lot of schools,” he said. “At some point, we hope some government comes to that realization.”

In her email to supporters, OCAA’s Bischoff said a lot of that money is being sunk into the province’s nuclear adventures. The much newer Darlington station, now being rebuilt, will drive up the price of nuclear-generated electricity by 30% by 2027. And Pickering “has the second-highest non-fuel operating costs for any nuclear plant in North America, with costs that are triple those of the continent’s best-performing plants,” she wrote. “Its aging and brittle pressure tube system is a nightmare in the making—economically and for the safety of us all.”

The plant “is surrounded by more people than any other nuclear station in North America,” Bischoff said.

Originally posted on The Energy Mix