An Open Letter to the Minister of Electrification
- John Kirkwood
- Sep 10, 2024
- 5 min read
Updated: 3 days ago
[The following is a copy of a letter submitted to Ontario Minister of Energy and Electrification Stephen Lecce on 10 September, 2024.]
Enabling Distributed Energy Resources (DERs) to Help Transform Ontario into a Clean Energy Economy
Recommendations by OREC (the Ottawa Renewable Energy Co-operative)
10 September, 2024
Dear Minister Lecce,
It was a pleasure to meet with you at the Association of Municipalities of Ontario Annual Conference on August 20th [2024]. You asked me to provide you with OREC’s recommendations to enable the Distributed Energy Resource (DER) sector to help Ontario meet its energy sector goals. Thanks for the opportunity.
1. Ontario’s Electricity Challenge
The challenge facing Ontario’s electricity sector is well known. On Wednesday August 28th, Minister Lecce, you shared how Ontario’s electricity demand is forecast to grow 60% by 2050. You estimated an additional 5,000 MW of electricity will be required. In the same letter, you instructed the IESO that LT2 procurement should be transparent, competitive, and cost-effective to secure technology-agnostic energy resources, including wind and solar.
However, transmission of electricity across the province from large, centralized sources like nuclear power plants and hydro generating stations is “in danger”. As you know, Minister, transmission infrastructure is very expensive to upgrade.
The Ontario Government outlined “principles and next steps for Ontario to navigate and succeed in the transition towards a clean energy economy in the long term”, including the following:
“Establishing a government-wide commitment to develop a clean energy economy by 2050 to align private, social and public forces, and act as a catalyst for pursuing dynamic opportunities to enhance Ontario’s prosperity.
Articulating a clear strategic policy vision to focus the sector, bring alignment in managing change and deliver an orderly transition that prioritizes affordability, reliability and resilience. This is an urgent need.
Undertaking a series of actions to ensure that Ontario’s planning and regulatory systems are ready for electrification, support the move to a clean energy economy and can manage increasing pressures in a proactive, coordinated and adaptive manner.”
Clearly, Ontario needs a collection of complementary energy solutions to successfully meet this urgent challenge.
2. The Opportunity of DERs
We believe Ontario’s agile and cost-efficient Renewable Energy Cooperatives (RECs) – such as OREC – can and should be instrumental in helping Ontario meet its key energy policy goals. RECs contribute Distributed Energy Resources (DERs) which “reduce carbon emissions, increase community resilience, and help grids delay or reduce their investments in costly new infrastructure”. As identified by the IESO, DERs can provide the following valuable assets to Ontario’s electricity challenge:
Provide energy resiliency and security
As demonstrated in leading jurisdictions like California, Texas and the EU, DERs reduce peak demand for electricity generation & transmission while enabling communities to cope with extreme events through increased resiliency.
Distributed systems are collectively more resilient than centralized power services. An analogy would be how the Internet easily tolerates individual points of failure. Ontario’s electricity system can benefit from a similarly effective (and inevitable) distributed service model.
Lower system costs
Renewables are the most cost-effective new energy source available. Ontario can both reduce its energy budget and focus on clean energy by investing in RECs.
Ontario’s regulations uncompetitively subsidize major producers and expensive mega-projects over smaller electricity producers like RECs and their more efficient DERs. The model proposed by the Long-Term 2 initiative similarly excludes smaller, more agile producers.
‘Prosumer’ Energy Communities (ECs) can lower their electricity costs up to 42%. Institutions will increasingly leverage a combination of production, storage and consumption. The current policies are a barrier to this progressive, hybrid model.
DERs reduce line losses and transmission requirements thereby slowing the growth of transmission and distribution costs.
Give customers & communities control
A Canadian study demonstrated that community-led renewable energy projects are three times more likely to garner community support than developer-led initiatives.
As a co-op, OREC is committed to ensuring that our projects generate direct benefits to the local community. OREC has over 1,000 members from across Ontario. Our profits go to them.
We believe membership-serving co-ops will produce greater municipal, community, and citizen buy-in for renewable energy projects. Too many renewable energy projects are rejected by municipalities and citizens because solutions are imposed from afar.
3. Our Recommendations
As illustrated above, RECs and their DERs can help Ontario meet its electricity challenge. Innovations to effectively implement DERs are already being considered through the OEB’s and IESO’s public consultations and innovation programs (to which OREC has applied). But new legislation is crucial to delivering the benefits of DERs.
Renewable Energy Co-ops are not looking for charity. Nor do we expect special consideration. We only need a level playing-field to enable DERs to help solve Ontario’s looming electricity crunch.
OREC recommends the following:
Open Long-Term 2 (LT2) procurement to small- and medium- scale energy producers
Lead the development of a progressive, cost-effective, and market-driven economic model that enables small-scale producers such as RECs to be fairly compensated for clean, local capacity.
There is no mechanism in place today where Ontario will pay community-scale producers for renewable energy - why not?
Remove the constraint that prohibits LDCs from being able to buy (renewable) energy and storage capacity
Direct the OEB and IESO to collaborate with both large- and small- prosumers to develop an integrated management model. This should enable time shifting while preserving resilience of the grid. Currently, only the central IESO can purchase electricity production, which limits innovation and cost efficiencies. A segregated economic model is poorly aligned with storage resources which are both consumers and producers of electricity.
Develop a simplified procurement model where RECs can deal with a single party to contract and connect production, storage & consumption of local, distributed energy.
Prioritize affordable, local renewable energy production over uneconomical centralized projects.
Enable Microgrids and Prosumers
The market is evolving towards harmonized and economical generation, storage, and consumption at community scale.
Enable the integration of storage into communities’ electricity systems and billing models.
Remove constraints to pooling and sharing renewable electricity generation and consumption behind the meter
Facilitate Virtual Power Plants (VPPs) as shown to be effective in other jurisdictions.
Community- or Virtual- Net Metering (VNM) enables solar net metering systems to be located where they can provide optimal value to the grid and make use of economies of scale. Current legislation prevents VNM.
VNM also makes renewable energy accessible to renters and those without a solar-friendly rooftop.
The theme of the IESO’s session at the AMO Conference was “The Power to Say Yes”. I call on you, Minister, to please say yes to enabling Distributed Energy Resources (DERs) to help transform Ontario into a clean energy economy and take action on our recommendations.
On behalf of OREC, I look forward to further collaboration with you, Minister Lecce, and the Ministry of Energy and Electrification on how the government might best leverage all available agents and resources towards achieving Ontario’s electricity goals.
Sincerely,
John Kirkwood
President, OREC
web: orec.ca
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