For the first quarter of 2015, Ontario experienced overall demand that was typical for the province in winter, and strong generator output. Demand for Ontario electricity increased as a result of cold weather in the United States and a lower Canadian dollar, providing many opportunities for generators to derive revenues from selling energy to neighbouring jurisdictions. Nuclear and wind generation achieved record monthly outputs, and new solar facilities also came online early in 2015, increasing the contribution by solar to the high-voltage grid. Overall demand in Ontario continued to remain flat, in part due to the successful implementation of conservation initiatives and the restructuring of the economy, and the system continued to benefit from solid capacity and energy margins. The period of robust supply provides an opportunity to review existing procurements and identify opportunities for enhancements, while ensuring that any commitments for new supply reflect the system need, and maintain one of the cleanest fleets in North America. Electricity Supply Monthly Energy Grid Output by Fuel Type (MWh) Ontario s bulk electricity grid has a diverse supply mix, featuring baseload generators that provide energy 24 hours a day and variable generators as well as flexible generators that change output quickly. The chart below sets out single month-end values of output to the grid, by fuel type, from October 2013 to March 2015. The chart illustrates how generator availability, demand for electricity and price can lead to month-to-month variances. Nuclear generator output was at record high levels in January and exceeded January levels in March. Grid-connected wind hit new records for output, as newly installed facilities continued to come online. Solar generation also took on new significance in supplying power, as the first solar facilities connected to the transmission grid. 15,000,000 12,000,000 MWh 9,000,000 6,000,000 3,000,000 0 OCT 2013 NOV 2013 DEC 2013 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN 2015 FEB 2015 MAR 2015 Nuclear Hydro Coal Gas Wind Note: Nominal grid-connected solar and biofuel output not shown. The data shown above is sourced from an IESO report, available at http://reports.ieso.ca/public/genoutputbyfuelmonthly/pub_ GenOutputbyFuelMonthly.xml. The report uses settlement data to provide information for all self-schedulers, intermittent and dispatchable Ontario generators registered as a Market Participant. The report which includes all transmission grid-connected generators, plus generators that are embedded and Market Participant registered is published monthly following the Physical Settlement calendar. 2
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 prices are higher which helps to bring in revenue that helps offset other system and infrastructure costs and can help 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. Imports Q1 Exports Q1 Quebec 74.9% Michigan 9.3% New York 7.9% Manitoba 7.6% Minnesota <1% New York 38.6% Michigan 38.5% Quebec 19.3% Manitoba 2.8% Minnesota <1% Q1 GWh Manitoba Michigan Minnesota New York Quebec Total Imports 114.06 138.92 5.45 117.68 1,120.99 1,497.10 Exports 187.03 2,561.16 49.06 2,567.65 1,280.36 6,645.26 Note: Numbers may not add up to source totals due to rounding. Installed Capacity Connected to Transmission Grid Changes to installed grid capacity in this quarter highlight the continuing process of renewal in Ontario s electricity sector. While nuclear, hydroelectric and natural gas production accounted for the vast majority of bulk supply, new wind, biofuel and solar generators continued to connect to the transmission grid. New Facilities Registered in Q1 The following projects have completed commissioning and the market entry process and are included in current installed grid-connected generation capacity data: Adelaide (Landon) Wind Power 40 MW Bruce Power (nuclear plant upgrade) 31 MW Dufferin Wind Power 91.3 MW Goshen Wind Energy Center 102 MW Grand Renewable Energy Park (wind) 148.8 MW 18-Month Outlook June 22, 2015 3
Current Installed Generation Capacity (Grid-Connected) (MW) Nuclear 37% Gas 29% Hydro 24% Wind 8% Biofuel 1% Solar <1% As of May 8, 2015 18-Month Outlook June 22, 2015 Note: Data includes all transmission-connected generation facilities and distribution-connected facilities that are Market Participants. The table below shows the increased use of renewable resources for generating electricity in the province. Current Installed Generation Capacity (Grid-Connected) as of May 8, 2015 Year Nuclear Hydro Coal Gas 1 Wind Biofuel Solar 2 Total 2015 MW 12,978 8,462 0 9,920 2,925 455 40 34,780 2015 % 37% 24% 0% 29% 8% 1% <1% MW 12,947 8,462 0 9,920 2,543 455 40 34,367 2013 MW 12,947 7,939 2,291 9,920 1,725 124 0 34,946 2012 MW 12,998 7,947 3,293 9,987 1,511 122 0 35,858 2011 MW 11,446 7,947 4,484 9,549 1,412 122 0 34,960 18-Month Outlook June 22, 2015 Distribution-Connected Generation (IESO-contracted) Embedded generators supply electricity to local distribution systems, helping to offset demand on the high-voltage grid by 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 bio-energy systems that will also connect to local distribution networks. By the end of Q1 2015, there was more than 2,600 MW of contracted generation in commercial operation within local distribution systems. 1. Units that use natural gas, oil or are dual fuel, such as Lennox, NP Kirkland and NP Cochrane, are included in the Gas category. 2. Solar category represents grid-connected solar facilities. Most solar generation in Ontario is currently connected to distribution systems. 4
Contracted Embedded Generation in Commercial Operation (Q1) Solar Wind Hydroelectricity Natural Gas Combined Heat & Power Bio-Energy 63% 16% 10% 4% 4% 3% 1634 MW 425 MW 248 MW 108 MW 100 MW 88 MW Note: Numbers may not add up to source totals due to rounding. Historical Totals Contracted Embedded Generation in Commercial Operation (YE MW) 2500 Bio-Energy MW 2000 1500 1000 Combined Heat & Power Natural Gas Hydroelectricity Wind Solar 500 0 2011 2012 2013 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 at http://www.ieso.ca/documents/supply/progress-report-contracted-supply-q12015.pdf. 5
Available Capacity versus Ontario Demand Peak demand on the grid in this quarter was typical for winter months, despite very cold weather in February. Factors such as conservation, demand response programs and time-of-use rates all contributed to reducing demand on the grid, and embedded solar generation continued to moderate demand on sunny days. Available Capacity at Peak 28,374 MW (Q1) Peak Demand 21,814 MW (Q1) Operating Reserve Requirement 1,573 MW (Q1) Minimum Demand 12,675 MW (Q1) Available capacity is all installed grid-connected capacity, less allowances made for seasonal derates, planned outages and the capacity of energy-limited resources. Operating Reserves are required to ensure that the forecast Ontario Demand can be supplied with a sufficiently high level of reliability. Required Reserve is the amount of supply resources required to handle the loss of the largest contingency on the grid, plus the loss of half the amount of the second largest contingency. More information on the criteria, tools and methodology the IESO uses to perform resource adequacy assessments can be found at http://www.ieso.ca/documents/market Reports/Methodology_RTAA_jun.pdf. Conservation As part of the new Conservation First Framework for 2015-2020, the province has targeted a reduction of 7 terawatt-hours (TWh) in electricity consumption by initiatives offered through local distribution companies (LDCs). The IESO will work with transmission-connected customers toward an additional reduction of 1.7 TWh, to achieve an overall 8.7 TWh in provincial savings by December 31, 2020. By Q1, Ontario LDCs had signed Energy Conservation Agreements with the IESO. LDCs also developed Conservation and Demand Management (CDM) plans, which the IESO will review and approve by Q3, 2015. Approved CDM plans will be posted at http://www.ieso.ca/ Pages/Conservation/Conservation-First-Framework/Conservation-and-Demand-Management-Plans.aspx. Conservation Portfolio Results (Q1) Results as of Q1 2015 LDC Delivered Programs IESO and other Non-LDC Programs Net Peak Demand Savings (MW) 414 Net Energy Savings (GWh) 159 Net Peak Demand Savings (MW) 184 Net Energy Savings (GWh) 0 Total Net Peak Demand Savings (MW) 599 Total Net Energy Savings (GWh) 159 Note: Preliminary unverified results (as of Q1). Totals may not align due to rounding. 6
Energy Savings through LDC-led Conservation Programs (Q1) Net Energy Savings Peak Demand Savings Residential Initiatives 12 GWh Residential Initiatives 140 MW Business and Industrial Initiatives 146 GWh Business and Industrial Initiatives 274 MW Other Consumer Initiatives 1 GWh Source: http://www.ieso.ca/documents/conservation/quarterly-conservation-report-q12015.pdf Note: Preliminary unverified results (as of Q1). Totals may not align due to rounding. Demand Response 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. The DR3 program supplied approximately 400 MW of available contracted demand response capacity in the first quarter, providing payments to both aggregated and individual customer loads prepared to reduce their consumption at times of peak demand. On February 19, there was 335 MW of available demand response activated every hour from 5 p.m. to 9 p.m. DR3 Activation February 19, 2015 25000 Peak reduction 335 MW 22500 Demand (MW) 20000 17500 15000 12500 HE 1 HE 2 HE 3 HE 4 HE 5 HE 6 HE 7 HE 8 HE 9 HE 10 HE 11 HE 12 HE 13 HE 14 HE 15 HE 16 HE 17 HE 18 HE 19 HE 20 HE 21 HE 22 HE 23 HE 24 Ontario Demand DR3 Activation The Capacity-Based Demand Response (CBDR) program came into effect on March 4. The program brings contracted demand response providers from the DR3 program into the wholesale energy market to better reflect system needs. By the end of March, all DR3 program participants had transitioned to the CBDR and the program represented approximately 500 MW of demand response capacity. The IESO is also focusing on the development of demand-side resources, market-based mechanisms such as a demand response auction and will continue to put conservation first in planning the power system. 7
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. Participating customers are assessed an individual Global Adjustment (GA) rate, based on the percentage that their highest demand during peak hours contributes to the top five system coincident peaks measured during a defined base period. The table below lists the top five daily peaks for the most recent base period, which began on May 1,, and ended on April 30, 2015. Given the relatively mild summer in, three of the top five Ontario demand peaks occurred in the first quarter of 2015. More information on the ICI is available at http://www.ieso.ca/documents/settlements/april_2015-ici_backgrounder.pdf. Industrial Conservation Initiative Coincident Peak Values (for base period May 1, to April 30, 2015) Date Hour Ending Net Ontario Load (MW) Embedded Generation (MW) Total (MW) January 1, 2015 19 21,118.570 491.57 21,610.140 February 19, 2015 20 20,976.264 440.031 21,416.295 August 26, 17 20,967.233 682.792 21,650.025 February 23, 2015 20 20,862.399 539.973 21,402.372 September 5, 17 20,830.888 884.74 21,715.628 Note: The value in the Total (MW) column is the number used to calculate a customer's Peak Demand Factor. 8
Emissions CO 2 Equivalents The marked decline in CO 2 equivalent emissions is a result of the phase-out of coal-fired electricity generation in the province. 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. CO 2 Emissions for the Ontario Electricity Sector (as of Q1) 35 33 35 30 27 30 25 20 Mega Tonnes (MT) 20 15 10 5 16 15 14 11 7 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015 Q1 CO 2 e Emissions, Environment Canada 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. Air Contaminants for the Ontario Electricity Sector (Q1) (Tonnes) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015 SO x Emissions 114,323 87,932 105,420 76,020 30,768 38,448 11,971 10,342 10,192 1,033 364 NO x Emissions 48,143 38,955 43,846 38,314 24,389 28,130 18,988 19,077 17,183 9,726 2,757 PM 2.5 Emissions 1,787 1,529 1,876 1,314 1,779 2,120 562 478 439 246 73, Environment Canada 9