Ontario energy quarterly: electricity in Q1 2021

Overview

Download the data used to create this report from the Ontario open data catalogue.

Ontario Grid-Connected Peak Demand (Q1)

20,318 (MW) (Set on February 8, 2021, 7:00 pm EST)

Source: IESO

Ontario Grid-Connected Peak Demand (YTD)

20,318 (MW) (Set February 8, 2021, 7:00 pm EST)

Source: IESO

Source: IESO

Source: IESO

Ontario’s transmission grid

Electricity supply

Monthly energy grid output by fuel type

Ontario’s bulk electricity grid has a diverse supply mix, featuring baseload generators that provide energy around the clock, intermittent generators that generate when they are able (primarily wind and solar), and flexible generators that can change their output quickly (primarily natural gas).

The data shown above is sourced from a report developed by the IESO. The report uses settlement data to provide information for all self-schedulers, intermittent and dispatchable Ontario generators registered as Market Participants. The report – which includes all grid-connected generators, plus those embedded generators that are also registered as market participants – is published monthly as per the Physical Settlement calendar.

Imports and exports

Ontario is connected to a large, stable network of transmission systems across North America, which supports system reliability and economic efficiency. Imports compete against domestic generation to provide energy at the best possible price and to support the province’s needs during periods of high demand. Ontario also exports energy when it is economic, which helps to bring in revenue to offset other system and infrastructure costs and maintain system reliability during times of surplus generation.

Ontario imports and exports power across 26 interties with two provinces and three states. While Ontario is electrically interconnected with Manitoba, Michigan, Minnesota, New York and Quebec, the interties allow for electricity trade in transactions that can reach across eastern North America, contributing to a more diversified and competitive pool of supply.

Q1 imports

Q1 exports

Source: IESO
Note: Numbers may not add up to totals due to rounding.

Installed capacity connected to transmission grid

Changes to installed transmission grid capacity in this quarter highlight the continuing process of renewal in Ontario’s electricity sector. While nuclear, hydroelectric and natural gas resources accounted for the vast majority of system capacity, new wind, biofuel and solar generators continued to connect to the transmission grid. The IESO Active Generation Contract List provides the status of individual contracted electricity supply projects within different IESO procurement programs. The list is limited to generation facilities under contract to the IESO.

Grid-connected generation capacity (Q1)

Source: IESO
Note: Installed grid-connected generation capacity is the sum of all market participant generators who supply or bid into the IESO-administered market. Numbers may not add up to totals due to rounding.

The table below shows how Ontario’s generation capacity sources have changed since 2015.

Note: Total IESO-contracted embedded generation in commercial operation at end of each period. Numbers may not add up to totals due to rounding.

Embedded generation (IESO-contracted)

Embedded generators supply electricity to local distribution systems, helping to reduce demand on the transmission grid and supporting some of the needs of local communities. While wind and solar make up the majority of contracted embedded generation, the IESO has contracted for increasing amounts of hydroelectric, combined heat and power, natural gas and biofuel systems that will also connect to local distribution networks.

By the end of Q1 2021, there was 3,522 MW of contracted generation in commercial operation within local distribution systems.

Contracted embedded generation capacity in commercial operation (Q1)

Source: IESO
Note: Each of the above numbers appear in the IESO Q1 Progress Report on Contracted Supply.

A small amount (estimated 180 MW) of contracted embedded capacity is IESO-administered (market participant) generation and therefore reported in both grid-connected and contracted embedded generation totals. Totals do not include non-contracted embedded generation capacity, whose total annual output is approximately 1 TWh.

The table below shows the increased use of embedded generation to supply electricity to local distribution systems in the province.

Contracted embedded generation capacity in commercial operation

The data shown above are sourced from the IESO Progress Report on Contracted Supply. The report provides a quarterly update on the status of supply and procurement initiatives that are under development or in commercial operation, by fuel type, and aggregates total capacities as stated in each contract, which differs from values on installed capacity used for operation purposes. The report is available on the IESO website.

Total grid-connected and contracted embedded generation capacity

This table shows all grid-connected capacity and IESO-contracted embedded capacity in the province.

Note: Numbers may not add up to totals due to rounding.

Conservation

The 2021-2024 Conservation and Demand Management (CDM) Framework is underway and has an energy-savings target of 2,746 GWh and a peak-demand-savings target of 440 MW. As is common with all conservation frameworks, participation levels and energy savings will take time to increase as new programs are implemented, program-delivery vendors are onboarded, and customers became more familiar with new program offerings. As of Q1 2021 – the first quarter of implementation of the 2021–2024 Framework – programs have resulted in electricity and peak demand savings of 2.73 GWh and 0.26 MW, respectively.

The province established three electricity conservation and demand management (CDM) frameworks for the period of 2015-2020. The province had established electricity savings targets for the Conservation First Framework (CFF) and the Industrial Accelerator Program (IAP) of 7.4 and 1.3 TWh, respectively. However, to streamline conservation programs, the Minister issued a Directive in March 2019 to wind down the CFF and IAP and establish a new Interim Framework for 2019-2020, for which IESO has set targets of 1.4 TWh and 189 MW. As a result of the wind down of the CFF and IAP, the IESO revised the CFF and IAP targets as follows: 1) CFF target of 6.0 TWh; 2) IAP target of 1.3 TWh. Together the CFF, IAP and Interim Framework (IF) are expected to exceed 8.7 TWh savings. Actual savings for the CFF, IAP and IF are expected to continue to accrue through 2021–2022 as committed projects enter into service, including projects that may have been challenged to complete due to COVID-19-related disruptions.

As of Q1 2021, CFF programs have achieved 7,521 gigawatt-hours (GWh) in electricity savings representing 125% of the 6.0 TWh CFF target. The IAP program has achieved 527.9 GWh in electricity savings representing 40.6% of the 1.3 TWh target. The IF program has achieved 346.4 GWh and 56.5 MW in electricity and demand savings representing 24.2% and 29.8% of the targets, respectively.

For more information on CDM results, please see the IESO Energy-Efficiency Resources and Reports website: http://ieso.ca/power-data/conservation-overview/conservation-reports.

Source: IESO
Note: Totals may not align due to rounding.

Incremental savings (2021 Q1)

Source: IESO
Note: Totals may not align due to rounding.

All conservation metrics above are presented as ’net’ savings which take into consideration the actual influence of the program on participants (e.g., estimating free-ridership and spill over savings). Furthermore, all savings presented above persist until the year 2020 at the end-user level (e.g., accounting for transmission and distribution system line losses). To align savings with generation level metrics, values should be increased by factor 6.7% for distribution system level savings or a factor of 2.5% for transmission system level savings.

Results presented are ’reported’ (i.e. ’unverified’) based on project installation dates corresponding to the indicated period and are based on projects reported and invoiced to the IESO as of Q1 2021.

Demand response (DR)

Demand response and peak savings programs benefit the electricity system and lower energy costs for consumers by contributing to overall peak savings for the province.

Beginning in December 2015, DR capacity has been procured through a competitive DR Auction process. The DR Auction provided a transparent and cost-effective way to select the most competitive providers of DR, while ensuring that all providers were held to the same performance obligations.

In 2020, the IESO’s Capacity Auction replaced the Demand Response (DR) Auction to enable competition between additional resource types. Capacity auctions help meet Ontario’s reliability needs in a cost effective manner while allowing the IESO to transparently adjust capacity procurement targets with changing system needs. The IESO held Capacity Auction #1 on Wednesday, December 2, 2020, securing 992.1 MW of capacity for the summer 2021 obligation period from a range of eligible resources including demand response, imports, generation, and energy storage. Forecasts indicated that it was not necessary to secure additional capacity for the winter 2021–2022 obligation period.

More information on the Capacity Auction is available on the IESO Capacity Auction page.

Peak savings

The Industrial Conservation Initiative (ICI) encourages large consumers to shift their energy use away from system-wide peaks. Customers who are able to reduce their impact on peaks benefit the system by reducing the need to build new infrastructure. In 2017, ICI is estimated to have reduced peak demand by 1,400 MW.

Participating customers pay Global Adjustment (GA), based on the percentage that their demand contributes to the top five system coincident peaks measured during a defined base period (May 1 to April 30).

The ICI program was paused temporarily due to the COVID‑19 pandemic; however, Ontario provided ICI participants with temporary relief on their electricity bills as a COVID‑19 relief measure. Specifically, Ontario deferred a portion of GA charges from April to June 2020.

Beginning in January 2021, deferred GA is being collected from the same classes of consumers over a twelve-month period. The government also implemented a Peak Hiatus under ICI, so that participating companies did not need to reduce their electricity demand during peak hours in 2020-2021, allowing them to focus on returning to full levels of operations.

The table below lists the top five daily peaks for the base period that began on May 1, 2019 and ended on April 30, 2020.

Source: IESO
Note: The value in the Total (MW) column is the number used to calculate a customer’s Peak Demand Factor.
The above values are used for the July 1, 2019 to June 30, 2020 adjustment period.

Information on peak tracking can be found on the IESO Peak Tracker page

More information on the ICI is available on the IESO website (PDF).

Greenhouse gas emissions

The marked decline in greenhouse gas emissions (measured in megatonnes of CO₂ equivalents) is a result of the phase-out of coal-fired electricity generation in the province, uptake of emissions-free generation and conservation measures. Emissions of oxides of sulphur (SO_x) – which are predominantly a by-product of coal combustion – have also shown a marked decrease with the phase-out of coal-fired electricity.

Greenhouse gas emissions for the Ontario electricity sector

The chart below shows annual greenhouse gas emissions (measured in megatonnes of CO₂ equivalent) for the years 2012-2021. Year-to-date greenhouse gas emissions in Q1 2021 totalled approximately 1.2 megatonnes (Mt).

Air contaminants

Air contaminants, including oxides of sulphur (SO_x), oxides of nitrogen (NO_x) and fine particulate matter (PM_2.5), are also released during combustion of fossil fuels.

Source: IESO, Environment and Climate Change Canada

Electricity demand

Ontario Grid-Connected Peak Demand in Q1: 20,318 (MW) (Set on February 8, 2020, 7:00 pm EST)

Ontario monthly peaks and minimums

Forecast demand peaks

The demand for electricity on the provincial grid is forecast on a rolling 18-month basis. An assessment is done to assure the adequacy of the existing and proposed generation and transmission facilities to meet demand needs. The chart below presents normal weather forecasts, representing a typical peak for the time of year, and extreme weather forecasts that reflect severe weather conditions. The impacts of time-of-use rates and the Industrial Conservation Initiative – which incent customers to reduce demand in peak demand hours – are also factored into the demand forecast in this report.

Source: IESO Reliability Outlook

Source: IESO Power Data, Demand Overview
Note: Total does not include the impact of embedded generation to reduce demand.

Source: IESO Power Data, Demand Overview
Note: Total does not include the impact of embedded generation to reduce demand.

Electricity prices

Commodity cost

Commodity cost comprises two components, the wholesale price (the Hourly Ontario Energy Price) and the Global Adjustment. The commodity cost is only a portion of the total energy bill.

Source: IESO

Source: IESO

Note:

1. Averages are weighted by the amount of electricity used throughout the province within each hour to broadly reflect the consumption profile of Class B (i.e., residential and commercial) consumers.
2. Values may not add up to the total due to dollar values that are rounded down to cents
3. Related reports can be found at http://reports.ieso.ca/public/PriceHOEPAverage and http://reports.ieso.ca/public/GlobalAdjustment

Monthly wholesale electricity prices

The wholesale electricity price fluctuates by the hour. This chart shows the average wholesale prices for each month. The monthly price varies depending on factors in the electricity market that shift the energy price higher or lower. A higher average monthly price exerts a downward pressure on costs that needs to be recovered through Global Adjustment.

Time-of-use and tiered pricing under the Regulated Price Plan (RPP)

In accordance with the mandate provided under the Ontario Energy Board Act, 1998, the OEB developed the Regulated Price Plan (RPP), which provides residential and small business consumers with stable and predictable electricity pricing and encourages conservation. The plan has been in place since 2005.

RPP consumers with eligible time-of-use (or "smart") meters that can determine when electricity is consumed during the day pay RPP prices under a time-of-use or tiered price structure. The prices for the time-of-use plan are based on three time-of-use periods per weekday. These periods are referred to as off-peak, mid-peak and on-peak and are shown below. The hours for mid-peak and on-peak periods are different in the summer and winter months to reflect energy consumption patterns in those seasons, as explained below. With the tiered price plan, a consumer can use a certain amount of electricity each month at a lower price. Once that threshold is exceeded, a higher price applies. The threshold is different in the summer and winter months to reflect changing usage patterns in those seasons, as explained below.

Effective November 1, 2019, the OEB resumed setting RPP prices under section 79.16 of Ontario Energy Board Act, 1998. At the same time, the Ontario government also introduced the Ontario Electricity Rebate, providing a rebate on the pre-HST amount of the bill, largely offsetting the RPP price changes on the Electricity line.

On March 24, 2020, the Government of Ontario provided electricity rate relief to support families, small business and farms paying time-of-use prices in response to the COVID‑19 pandemic. Ontario suspended time-of-use rates and held electricity prices to the off-peak rate of 10.1 ¢/kWh. This pricing was available all hours of the day, seven days a week, for 45 days.

On June 1, 2020, the Government of Ontario continued to provide electricity rate relief by introducing a fixed electricity price of 12.8 ¢/kWh, to continue supporting Ontarians during the COVID‑19 pandemic. This all-day pricing continued to October 31, 2020.

On November 1, 2020, the OEB set new RPP prices, which were effective for most of the Q4 reporting period and are below. Additionally, effective November 1, 2020, the Ontario government introduced customer choice, where customers have the option to choose between TOU or tiered billing.

On January 1, 2021, the Government of Ontario held RPP prices for time-of-use and tiered customers to 8.5 ¢/kWh, equivalent to the off-peak price set by the OEB. This pricing, which was for all hours of the day, seven days a week, was in effect until end of day February 22, 2021, most of the Q1 reporting period.

On February 23, 2021, the OEB set new RPP prices, which were effective for the remainder of Q1 reporting period.

Summer and winter time-of-use hours

The RPP time-of-use periods are normally different in the summer than they are in the winter to reflect seasonal variations in how customers use electricity. During the summer, people use more electricity during the hottest part of the day, when air conditioners are running on high. In the winter, with less daylight, electricity use peaks twice: once when people wake up in the morning and turn on their lights and appliances, and again when people get home from work. The time-of-use (TOU) prices applicable from January 1, 2021 for RPP consumers with eligible time-of-use meters are shown in the table below.

Summer (May 1 – October 31) Weekdays
Off peak: 7pm to 7am
Mid peak: 7am to 11am, 5pm to 7pm
Peak: 11am to 5pm

Winter (November 1 – April 30) Weekdays
Off peak: 7pm to 7am
Mid peak: 11am to 5pm
Peak: 7am to 11am, 5pm to 7pm

Weekends and Statutory Holidays
Off peak: 24 hours a day

Summer and winter tier thresholds

The RPP tier thresholds are different in the summer than they are in the winter to reflect changing usage patterns – for example, there are fewer hours of daylight in the winter and some customers use electric heating. In the winter period, the tier threshold is 1,000 kwh, so that households can use more power at the lower price. In the summer period, the tier threshold for residential customers is 600 kwh. The tier threshold for small business customers is 750 kwh all year round. The tiered prices applicable from January 1, 2021, are shown in the table below.

This table shows a monthly bill for a residential RPP TOU consumer with monthly usage of 700 kWh with 64% of consumption occurring off-peak, 18% occurring mid-peak and 18% occurring on-peak. The delivery and regulatory charges are weighted-average charges as calculated by the OEB. Line losses are based on the weighted-average loss factor as calculated by the OEB. Delivery charges and line losses will vary depending on utility. Bills are shown under RPP rates under the government’s 2021 Off-peak Initiative that was in place until November 23rd and under the RPP rates in place from February 23rd to the end of the quarter. For additional information please see the OEB’s bill calculator.

Ontario industrial electricity rates

Industrial electricity consumers can either be directly connected to the high-voltage transmission grid or receive electricity from their local distributor (e.g., Toronto Hydro). Directly-connected consumers do not pay distribution charges, thus lowering their electricity cost. The table below shows the distribution of average all-in prices for all directly-connected consumers in Ontario for 2021. In Ontario, electricity rates for large industrial consumers in Ontario vary by customer as they are determined by individual consumption patterns. Generally speaking, the less energy a large industrial consumer uses during peak hours, the more these consumers reduce their impact on the provincial power system as well as their electricity costs. For most, the commodity cost incorporates both the fluctuating market price and the allocation of the Global Adjustment based on their energy use during peaks.

Transmission-Connected Industrial Rates^{footnote 8[8]} (2020)

The table below shows average all-in electricity price for a distribution-connected industrial consumer inseveral service territories.^{footnote 9[9]}

Source: IESO and OEB
Note: The Debt Retirement Charge ended for all electricity users on March 31, 2018.

2020 indicative industrial electricity prices (Canadian ¢/kWh)

The table below compares indicative retail industrial electricity prices across North American jurisdictions. For reference, Ontario – South reflects the average price for April 2019. Ontario – North is based on the same figure, along with the 2 cent per kilowatt hour Northern Industrial Electricity Rate Program rebate. See footnote for more details.

Note: Estimates may differ from actual costs to a consumer based on location, connection, and operational characteristics. Prices exclude taxes and participation in any applicable jurisdictional benefit programs.

The Ontario price is based on April 2020 data and includes the Hourly Ontario Energy Price, Class A Global Adjustment, delivery, and wholesale market service charges. The Ontario price reflects Global Adjustment Deferral, implemented from April to June 2020 to provide temporary electricity rate relief to consumers.

All other Canadian prices are from the Hydro Quebec Rate Comparison for rates effective April 1, 2020 for select local distribution companies servicing specific cities and reflects a 50 MW consumer with an 65% load factor. Where Hydro Quebec reports prices for two cities in a province (e.g. Calgary and Edmonton), an average of the two is used, in provinces where only one city is reported e.g. Vancouver in BC, Montreal in QC), that one price is used to represent the province for indicative comparison purposes.

American jurisdictions reflect April 2020 data from the US Energy Information Administration’s survey of approximately 500 of the largest electric utilities. The price reflects the average revenue reported by the electric utility from electricity sold to the industrial sector. The value represents an estimated average retail price, but does not necessarily reflect the price charged to an individual consumer. Prices are converted at an exchange rate of 1 USD = 1.41 CAD.

Electricity – what’s new

The complete Refurb reports are no longer being posted to OPG.com. An update report is being posted instead.