New IESO Study on Gas Generation Phase-Out Provides Insights into the Future of Decarbonization in Ontario

November 3, 2021

With its low-emissions electricity system, Ontario’s economy is primed for decarbonization, even though it will be necessary to rely on existing gas generators for a number of years to support wide-scale emissions reductions. According to a study released today by the Independent Electricity System Operator (IESO), phasing out gas generation by 2030 would result in blackouts and hinder electrification, but could be considered given more time and planning.

“Ontario’s electricity system is 94 per cent emissions-free as a result of the phase-out of coal generation seven years ago,” said Lesley Gallinger, IESO President and CEO. “This gives us a real advantage when it comes to electrification – our system offers an immediate and cost-effective approach to emissions reduction from other sectors in the economy.”

This study examined the question posed by 31 Ontario municipal councils calling for the complete phase-out of natural gas generation in the province by 2030. It provides an overview of the current importance of natural gas to reliability – particularly over the next decade as the province faces growing demand for electricity.

While the assessment determined that the removal of gas from the grid is not possible by the end of the decade, there are potential pathways to accomplish this over a longer timeframe and ensure reliability.

Report findings include:

• The complete phase-out of gas generation by 2030 would lead to blackouts as electricity would not always be available where and when needed. Gas generation currently plays an important role as it is almost always available, responding quickly to changes in consumption and balancing variable output from wind and solar generation.
• Replacing gas would mean relying on newer forms of supply such as storage, small modular reactors and demand response, which are not yet proven in Ontario at the scale they would be needed. Nor is there sufficient people, capital and equipment to build the necessary replacement infrastructure by 2030.
• At this accelerated timeline, the phase-out would cost more than $27 billion to install new sources of supply and upgrade transmission infrastructure. This translates into a 60 per cent or $100 increase on the average monthly residential bill.

While the study highlights the complexity of change within the electricity system, it also reveals broader possibilities. Only three per cent of all emissions in the province come from the electricity sector, compared to 38 per cent from transportation. By switching to electric vehicles, for example, Ontario car owners could reduce their emissions by roughly 97 per cent.

There is also potential in Ontario to accelerate the adoption of non-emitting forms of supply. Storage and demand response already feature on the grid with another 5,000 MW of clean energy sources operating at the local level. In its role as system operator, the IESO has been working to integrate new technologies whether they are connected to the grid or within a local distribution network as it prepares the system to meet future energy needs.

“As the organization responsible for reliability of the grid, we are taking steps to ensure that it can support wide-scale electrification,” said Gallinger. “But we can’t do this in isolation. We will be working with the electricity sector – as well as businesses, universities, municipalities and other organizations in the electrification space – to determine how we can best support efforts to meet provincial emissions targets.”

The report and backgrounders are available on the IESO website