Utility Week

Utility Week 27th September 2013

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Markets & trading Market special report: Ontario Ontario, the coal-free province In the first of a two-part series, Megan Darby reports from Ontario, which has determined to close all its coal-fired power stations by 2014 despite having some very energy-intensive industries. The 35th floor of a Toronto skyscraper is not a bad place to start if you're trying to impress foreign journalists. The view from the boardroom stretches from condos and leafy suburbs of Canada's largest city to trees and lakes beyond. Near the harbour, a single wind turbine turns. Half a dozen reporters from the UK and the US are here because the Ontario government is keen to show off its ambitious green energy plans. The province has become the first jurisdiction in North America to commit to phasing out coal from its generation mix. It is on track to burn its last lump of the black stuff next year. "We are quite proud of the fact that replacing coal is the largest climate change initiative in the whole of North America," says John Whytock, director of communications at Ontario Ministry of Energy. It is not a trivial boast. At its peak, the province had 10GW of coal capacity, accounting for a quarter of electricity generation. Replacing it with lower carbon energy sources is expected to slash the sector's carbon emissions by 75-80 per cent. It is the equivalent of taking 7 million cars off the road. Ditching coal leaves a big gap to fill. Not only did coal provide a hefty chunk of capacity, it was also the principal source of flexibility on the system. Nuclear and hydro continue to provide three-quarters of the power, but have limited ability to respond to variation in demand. Intermittent wind and Timeline solar power add to the challenge of balancing supply and demand. Ontario energy minister Bob Chiarelli says: "When we came to government in 2003, Ontario's electricity grid was in need of investment. We were a net importer of power and had increasing capacity requirements. "Ontario was once heavily dependent on coal and home to the single largest point source emitter of greenhouse gas in Canada (Nanticoke Power Station). We made it a priority to modernise the electricity system and produce clean, reliable, generation." As anyone working in energy knows, exchanging established power plants for emerging green technologies does not come cheap. Ontario is home to energy-intensive industries including mining, forestry and steel production. In deciding to take a lead on green energy, the Ontarian government risked putting up prices for consumers and driving industry away to less ambitious neighbours. Canada as a whole has a mixed record on fighting climate change. A Liberal government signed the Kyoto agreement in 1997 but its Conservative successors pulled out in 2011, amid fears the country would not meet its carbon reduction target. Energy policy is a provincial matter and while Ontario is promoting green energy, Alberta is engaged in the controversial practice of extracting oil from tar sands. There is no levy on carbon emissions. In the absence of external pressure, why go ahead with such a politically risky strategy? Chiarelli says: "The decision to phase out coal was made to ensure a cleaner, healthier Ontario for current and future generations." His ministry estimates that the province will avoid costs of C$4.4 billion (£2.7 billion) from the health and environmental impacts of burning coal. Toronto and other populated areas are regularly hit by smog. While a unilateral crackdown on coal does not stop smoke blowing in from the 131 coal plants in Illinois, Indiana, Michigan and Ohio, the early signs are that it is helping. Officials also cite the economic opportunities of developing the low-carbon technology other parts of the world will inevitably need sooner or later. While the unit cost of power might increase, "we are doing everything we can to get overall consumption down so the bill does not go up", says policy director Tom Chapman. "Renewables add cost, smart grids add cost, but we will end up with a much more efficient system." From 2005 to 2011, demand fell by 1.9GW across the province. Much of that may be down to the economic downturn, but conservation also played a part. Ontario is way ahead of the UK when it comes to smart meters, having rolled them out to every household by 2010 (see box). There was no need to debate – as in the UK – whether it should be retailers or distribution network The development of generation in Ontario 1906 – Ontario's electricity system conceived, built and operated by Ontario Hydro, starting at Niagara Falls 2002: electricity market opened to competition 1951-1985: five coal plants built with a combined capacity of 10GW 2007: provincial government commits to phase out coal power by 2014 1906-1950s: Ontario develops almost exclusively hydro power 1900 19201940 1960 19802000 2020 28 | 27TH SEPTEMBER - 3rd OCTOBER 2013 | UTILITY WEEK

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