By Terry Young
By Terry Young
What’s playing out in Windsor this week with a potential LG Chem facility may soon become a familiar tune in many parts of Ontario.
As the Windsor Star reported, the region is at risk of not being considered for a $2.5-billion LG Chem plant that would employ about 1,000 workers because there is no guarantee that electricity will be there for the plant when it’s needed.
Ontario is facing a serious electricity supply crunch.
The Pickering Nuclear Generating station, which alone can meet 20 per cent of Ontario electricity needs on many days, is retiring. As we emerge from the COVID-19 pandemic, demand is forecast to grow at an average rate of two per cent over the next two decades.
Electrification will add to that. Existing electricity generators will not be able to keep up with the growing demand. Ontario needs new supply.
Essex Power CEO Steve Ray is right in suggesting that local power solutions known as distributed energy resources or DERs can help provide LG Chem with the assurances they need.
DERs are clean, affordable, community-based resources like solar panels, batteries or even electric vehicles that can quickly be dispatched in parts of the province where the need for power is the greatest — including the Windsor-Essex County area.
While some DERs are in place across Ontario, I believe these assets are under-utilized. And there is significant potential to add so much more.
But DERs are going to need some help and attention if they are going to be part of the solution. Plagued by red tape, cumbersome processes and a lack of action, Ontario’s development of these smaller, clean resources has failed behind other jurisdictions.
In the US, system operators are following a 2020 order from the Federal Energy Regulatory Commission (FERC) that is intent on removing the barriers preventing distributed energy resources from competing on a level playing field in the organized capacity, energy and ancillary services markets run by those regional system operators.
FERC says this will help provide a variety of benefits including lowering costs for consumers through enhanced competition, more grid flexibility and resilience, along with more innovation within the electric power industry. In other words, reliability and affordability.
No such initiative exists in Ontario.
Local community power development needs to be a priority for whichever government emerges victorious in the upcoming June 2 provincial election.
And in turn, the newly elected government needs to ensure this also becomes a priority for its arms-length agencies like the Independent Electricity System Operator (IESO), the Ontario Energy Board (OEB), as well as Local Distribution Utilities (LDCs) across the province.
This means accelerating the registration process for these facilities and providing the rules and processes that can enable these resources in Ontario’s electricity market.
It means providing adequate revenue streams that recognize the flexibility and locational benefits that DERs offer. That will encourage investment in these resources.
It also means making DERs a focus of the planned procurements that will help address the expected electricity capacity shortage.
The IESO is introducing two new processes this year they are hoping will attract approximately 3,000 megawatts of new capacity. At this point, there is limited opportunity for distributed energy resources to participate in these processes.
And it means making sure the IESO, OEB and LDCs have the people they need to commit to this.
All these actions and more need to be taken quickly to enable the development of these resources. Pace is important and Ontario needs to pick it up.
Over the past seven months, Energy Minister Todd Smith issued a number of orders intended to enhance reliability, affordability and sustainability in Ontario’s electricity system. Local energy projects can help in all three of those areas and any new orders post-election should address the need for a rapid development of distributed energy resources.
Otherwise, Ontario will continue to be at risk of losing investments like the LG Chem facility — and the jobs that come with it — to other jurisdictions.
Terry Young is a former executive with the Independent Electricity System Operator and current Executive Director of the Distributed Energy Resources Stakeholder Initiative (DERSI).
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