Ontario's Independent Electricity System Operator (IESO) released its most recent Ontario Reliability Outlook report (Outlook). The Outlook shows that Ontario's efforts to renew its electricity infrastructure and to meet its environmental targets have resulted in an improved reliability outlook in the near term. Still, new challenges to reliability are emerging as Ontario moves towards a cleaner supply mix. The Outlook identifies three priority areas for the province's electricity system: the changing supply picture; the challenges of operating a cleaner electricity system; and the continuing need for transmission enhancements.

Ontario's Changing Supply Picture

There is no doubt that Ontario's supply picture is changing. According to the Outlook, the Ontario Power Authority is currently managing almost 10,000 MW of new generation and demand management projects. These new resources include 3,000 MW of nuclear refurbishment, 5,400 MW of natural gas generation and more than 1,400 MW in renewables. With these projects scheduled to be completed by 2013, the Outlook predicts that Ontario will be well-positioned to support the elimination of coal-fired generation by the end of 2014.

The changing supply picture presents a number of challenges for the IESO. First, the transition away from coal requires the careful management of transmission operations. For instance, the loss of the key voltage support provided by the coal-fired Nanticoke Generating Station, will require the installation of shunt capacitor banks and interim reactive support from Nanticoke. Second, as gas-fired generation moves to replace coal, the IESO has been working to ensure the adequacy and security of Ontario's natural gas infrastructure. This has involved working to develop communication protocols with partners in the natural gas and electricity industries. Third, the need to retire, replace or refurbish Ontario's aging nuclear units will require intricate planning and important decisions as facilities are taken out of service while others are reintroduced or commissioned.

Operating a Cleaner Electricity System

With an Ontario Government target to put in place 22,000 MW of renewable resources and conservation efforts by 2025, it is clear that renewables will occupy a more prominent role in Ontario's supply mix. New renewable resources, however, have different operating characteristics than the large-scale generating facilities at the core of the traditional electricity management system. Adapting the system operations to meet these new operating characteristics presents a number of challenges for the IESO.

Integrating additional wind generation capacity into the province's electricity system is an example of one such challenge. Wind power is well-positioned to grow in Ontario, and a number of potential sites have already been identified. The intermittent output of wind facilities, however, requires a constant balancing of the supply mix to meet the needs of the province and its interconnections. Moreover, wind, like other renewables, is often an embedded or distributed generation source and is therefore outside of the traditional control of the IESO.

In response, the IESO believes that there is a need for centralized information gathering and coordination. Other jurisdictions with large renewable energy portfolios often have such system controls in place. These 'smart grids' are used to track production and consumption activities at the local level, and if necessary, move to direct large-scale generation facilities to meet any remaining demand. Ontario's smart metering initiative is a step in this direction, since the information collected will be used to signal producers and consumers when generation and demand response is needed. The IESO is currently leading the Ontario Smart Grid Forum to develop a vision for a smart grid in Ontario and its report will be released shortly.

The Continuing Need for Transmission Enhancements

The third priority area identified in the Outlook concerns the continuing need for transmission enhancements to revitalize the province's transmission system. New infrastructure is needed on the one hand to replace aging transmission facilities and, on the other, to support changes to the supply mix. Hydro One, for instance, has identified $600 million in capital investments to be made in the next two years to maintain the reliability of existing infrastructure. In addition, new transmission lines will need to be built to support renewable generation in areas that are either congested or located away from existing transmission facilities. These transmission lines will be in addition to other new and proposed transmission infrastructure, such as the Ontario/Quebec interconnection.

These changes to the transmission system will require careful outage planning, since changing one part of the transmission or generation system affects the capabilities of the other parts of the system. The IESO, therefore, proposes to work closely with Hydro One and other partners to ensure the reliability of the system while these significant changes are taking place.