If Ontario is serious about positioning the province as an energy powerhouse in the face of Trump’s tariffs – it has no choice but to change its current energy focus to one that reduces Ontario’s reliance on fracked American gas and instead builds on Ontario’s strength in natural resources.
We’ve all heard the quip “a week is a long time in politics” – an expression that certainly resonates with Canadians given all the recent changes in the political landscape in the U.S, Canada and Ontario.
Ontario is currently seeking proposals for new electricity generation in a process that’s been billed as “technology agnostic” and was supposed to deliver the lowest cost resources.
The direction provided by the Ontario government is important for two reasons: 1) it directs decision-makers not to favour one energy technology over another and 2) rightly suggests in the current inflationary environment that Ontarians will be best served by the most cost-effective resources.
But the thing is, that’s not actually happening…
Ontario is instead seeking proposals for new electricity generating facilities and instead of being technology agnostic and favouring the most cost effective energy, the energy procurement unfairly stacks the deck in favour of natural gas fired electricity generation. This is a big deal because Ontario is currently seeking projects totalling 1,600 Megawatts (MW) of energy – and if all these are awarded for new gas plants, that would be the equivalent to adding three more Portland Energy Centres in the province!
If the deck is being stacked for natural gas on this RFP – will Ontarians be able to trust a total procurement of 7,500MW in the next four years – enough to power over 1.6 million homes?
Natural gas power plant developers are being offered an unquestionable advantage in the upcoming Request for Proposal (RFP) by giving full points to natural gas developers and top points to facilities that can run for twelve hours continuously – something that only a gas plant can do. Despite repeated claims to the contrary, the current approach is neither technology agnostic nor does it reflect that Ontario’s peak demand is a maximum of six hours in any 24 hour cycle in both winter and summer.
Gas is also expensive. As evidenced in the recent LT1 procurement, battery storage beat out gas on price by a wide margin. We really need to question why the province stacked the deck in favour of gas, given that it’s way more expensive than battery storage. In Ontario and other jurisdictions, wind energy is now cheaper to produce than natural gas fired electricity, with even greater cost savings expected in the future. The unfair advantage being provided to natural gas facility developers through a procurement paid for by Ontarians is non-sensical and alarming.
Why is the role of natural gas important as we enter a potential trade war with the US?
While twenty years ago 100% of Ontario natural gas came from Western Canada, today the majority of the natural gas imported into Ontario is fracked in the Appalachia region of the US. According to a Statistics Canada report, in 2020 less than half of the natural gas imported in Ontario (or 1.1 Billon cubic feet per day) came from out West through the Northern Ontario Line.
Given Ontario’s dependence on U.S.-sourced natural gas for home heating and electricity, why is the province’s upcoming energy procurement still prioritizing gas-fired power reliant on American fracked gas? Especially as we enter a potential tariff war with the U.S.
It’s time to revisit the LT2 procurement. Now is the time to move away from American fracked gas in favour of made-in-Ontario energy generation.
