Welcome to episode 375 of the Energy Talks podcast. I'm energy journalist, Markham Hislop. Ontario, finally, has a new energy plan. While it's getting some good reviews, critics are also pointing out plenty of weaknesses. The top line is that the province intends to invest in some zero emissions generation and upgrades to transmission and distribution capacity.
Energy efficiency programs will be added to further reduce strain on the power grid, but there are plenty of caveats, including expensive refurbishing of nuclear plants, no commitment to carbon pricing, and a higher percentage of gas fired generation. To discuss Ontario's new energy plan, I'm joined by professor Mark Winfield of the Environmental and Urban Change at York University, and cochair of the Faculty Sustainable Energy Initiative. So welcome back to Energy Talks, Mark. Good afternoon, Mark. Yeah.
It's good to be here. We we have talked about Ontario for a couple of well, probably 4 or 5 years now, if I'm not mistaken. And, a consistent theme from you was and Ontario needs an energy plan. Now it has one. Give me your high level view of it. Well, we sort of have a plan.
We need to be very clear about that. And then there's there's a mixture of what the plan alleges it says and what the government is actually doing. And indeed, minister Lecce emphasized this in his comments in September. The reality is, yes, they've they've somewhat pushed up the efficiency piece. But as he emphasized, the emphasis is overwhelmingly on nuclear.
Both the refurbishments of the existing facilities at Darlington, Bruce, and, Pickering b, which will clock in by our best estimate at least 50,000,000,000 and then 2 new build projects, which based on the data we've been seeing from the United States, an estimate over a 100,000,000,000 is not unreasonable in terms of cost. And then the ramp up of gas fired generation is continuing rapidly. We're basically in a vertical growth curve on gas fired generation and therefore associated greenhouse gas emissions. And that's gonna continue through the 2030s and at best will plateau maybe somewhere in the 2030s is is where we're at. There was last year or being of this year, some notion of a procurement targeted renewables, that has magically turned into a generic procurement, which definitely includes gas.
So the reality and the rhetoric may be quite different in terms of where we're going here.
One of the things I've noticed in the discussion around, nuclear gas, versus renewables is that the folks who don't want to see any change to the power grid are in favor of gas and nuclear. I mean, they see those as a drop in replacement for for coal, and the more you have of it, the more the the grid can pretty much stay the same. Doesn't require a lot of work, doesn't require a lot of imagination or capital. When you but when you, start integrating renewables, wind and solar, and they're intermittent, you need a different grid. It those are the that's the low cost that's the low cost option, and the easily scalable option, but you need more you need more, ability to trade, you need, grid based, grid forming inverters, you need storage, you just need to modernize and change your grid.
And it seems like there are some jurisdictions, and Alberta is is one of them, and Ontario seems to be another one where they don't wanna go down the the path of having to change the grid, and so they go with these old, style of, power generation. I I just that's my observation. What do you think about that?
Well, I think I think there's no other truth to that. I mean, you also have to remember that the the incumbents, which we've discussed before, are also very much in favor of that kind of an approach because it maintains their their dominant positions in the system, be it TransAlta in Alberta or or OPG and Bruce Power because, of course, in Ontario, OPG also owns most of large gas plants too as well as the nuclear plants. So they're very much happy with that. I think the the question becomes especially one around the relative cost. And because, you know, we've got these 2 the problems in Ontario are twofold.
1 is this dramatic growth in the role of gas and therefore the associated greenhouse gas emissions. And we're basically on track to what looks like 6 to 8 fold increase in GHG emissions from the electricity sector. So back up to the neighborhood of 20 megatons a year. The other problems are around the cost comparisons with nuclear and especially new build because the fairly hard data we're now seeing from things like the Vogtle project in Georgia, and we just had new figures from the Tennessee Valley Authority on what the, BWRX reactors they're proposing for Darlington will cost, which are fairly horrifying, and could I think, all to have would have to force an alteration of of the equation around distributed resources. Accounting for needs to change grid systems and their control systems relative to the kind of capital cost we're looking at on particularly things like new build nuclear.
So I think I think that's that's the the the the flip side, but the bottom line is the incumbents like things the way they are, and they wanna be just able to replace like for like in their minds.
That makes that makes a lot of sense based on what we're seeing. One of the things I was surprised to see in the from the, the government is they clearly made the connection between a clean electricity gear grid and the ability to attract investment. And I get that all the time. You know, when I when I talk to, companies that are, you know, startups, they're scaling up, they're building new plant. I say, what are your criteria for siting?
And they always say, number 1, low cost, reliable, clean electricity. That's a competitive advantage, and I in fact, the government called it a competitive advantage. So the decision to increase the percentage of gas in power generation to as much as 25% seems odd. It seems odd. Well, both both core themes are odd because the, you know, the
indeed, they're being dragged in front of the competition bureau on on some of this. Both dimensions of are are odd from that perspective. The the the grid is becoming distinctly less clean, dramatically so, and seems destined to stay that way through the 2030s and possibly beyond depending on what happens with the federal clean electricity regulations whose future is, of course, now under something with cloud multiple clouds. But the cheap part doesn't work either with the emphasis on nuclear because we're clearly coming out in, you know, based on these numbers we're seeing from the US, we would be in the 30 to 40¢ per kilowatt hour kinda range. That's not cheap.
Whereas renewables plus storage, we're looking in the 10¢ per kilowatt hour range, and and we've had nice cost curves on renewables and storage over the past decade, exactly what you wanna see. So this this is a problem, and it so far, the light bulbs don't seem to be going on in terms of of, where we're heading. I'm a bit of a loss to explain other than, as is we've said before, you know, the role of the incumbent seems very dominant, and it's not clear how much clear thinking is happening on the part of the province about all of this. How they're gonna keep no. They may be thinking they're gonna keep industrial rates low somehow.
I think that's a large piece of this. And then offload much of these costs onto residential consumers, I think, is what Degrees thought about that maybe what they're thinking.
I I wanna talk about what they're thinking, because, the longer I do this do energy journalism. And the fact that, you know, regular listeners will know we just released our 1st online training course. It's called how this energy transition really works. It's based on technology adoption theory, evidence, and data, from people like Michael Liebrecht and professor Dorian Farmer and so on. And one of the things that is now occurring to me more and more often is how the people in who are in charge of planning, who are in charge of the expansion of the or, you know, the, say, growing the power grid to accommodate, you know, the doubling of electricity demand that we're expecting by 2050, are not plugged into that That literature, that mind that world view, that it's it's like we're all we're doing in many too many provinces is we're simply looking at the energy past, and extrapolating that into the energy future with some minor tweaks.
And we think that's going to be good enough. Is that a fair comment to make about Ontario?
I think I think certainly for Ontario, I mean, the extent to which we are we are at risk of repeating the past is profound, because we have a history going back half century of of, you know, huge demand forecasts, which don't materialize. I mean, this was instrumental in the bankruptcy effective bankruptcy of Ontario Hydro. And we've been through several other rounds, although we we realized early enough, partially because there was some kind of review process that these plants had to go through, at which point the light bulbs went on about cost of certain options, but also the demand forecast were not playing out the way they were thought they were going to. In the current environment in Ontario, there is no planning process, and there is no oversight, and there is no one to whom the government or the ISO has to explain how any of this makes sense, or how are they managing risks about how demand growth might play out? And so, yeah, you you get this pathway.
We have a very interesting conversation with people from Quebec where there's similar questions about demand growth and about how do we deal with this. And, interestingly, Hydro Quebec, for example, is taking a quite different approach that its emphasis on a capacity expansion is on wind. They're very clear. We're not building big dams anymore, because we don't know what's gonna be out 20 years when the big dam is finished. Whereas, if we add capacity with wind now you can do that in Quebec because you got big hydro storage.
By adding the capacity in the form of wind, we can we can follow the low growth much more directly. You've got shorter timeline. So if demand does go way up, we can build lots of wind turbines fast. If demand doesn't go up, we don't build them so fast. And so we built in much greater flexibility in terms of an uncertain future going forward.
I did an interview 2 or 3 years ago with professor Kent Fellows, who's an economist at the University of Calgary, and he was looking at site c. And hit the question he asked is, if all you're going to do with site c is sell and that's a hydro dam,
in in British Columbia. Yep. Yep.
If if you're going to all you're gonna do is sell the electricity from that hydro dam to to consumers, stop it, shut it down now because it's never gonna be economic. It's never gonna make economic sense. He said the only justification for building it is to act as storage. Storage, is far more valuable than simply a selling the electrons into into the market. And it seems to me that now BC Hydro was kind of claw you know, got that idea because, they're not building any more dams, and they're they're taking, project proposals from, independent power producers.
And so wind and solar will be a big part of their of how they made expansion. Hydro, Quebec hydro seems to do the same. But Ontario is in a very interesting place because it looks like now they are gonna talk to Quebec about interties and having more trade with, between Ontario and Quebec. And it seems to me that they could take advantage of some of Hydro Quebec's storage capacity. Now is that would that be a correct assumption or or not?
Unfortunately, at the moment, Ontario seems to have managed to miss the boat there, that monsieur Lagos was was banging on the door and making offers, and mister Ford utterly refused him. Quebec then has looked inwards in terms of the use of the surplus they now have. Now how this plays it out, there may still be opportunities, but I think the chance of a large scale relationship that was on the table before, at least for now, is is probably less on the table. There will be some exchange continuing on a transactional basis is basically where the we've sort of concluded here. But on a large scale interaction, it's less clear what the path is because Quebec, having been refused from the west side of the Ottawa River, has said, okay.
We're gonna do something else instead. And we're less interested in you, at least for now. We have ways of using that power internally. So this is there's an interesting moment that that, we may have missed the boat, at least for now. I mean, there I said there will be some exchange, but, this is a problem.
I mean, the door was open. We refused to go through it in Ontario, but the government did. And now the door is a lot less open on the Quebec side, so that's gonna be a challenge. It would have been it's a with a relationship made, it's a good option. What we're gonna do now or how this will work.
And it may we may still have access to Quebec resources somewhat, but probably not on the scale that that had been anticipated earlier. That seems to be the message from our Quebec colleagues at this stage.
One of the comments the, the government made is that they see their plan as driving more competition, and of course, hey, they stuck in the comment, unlike previous governments that were driven by ideology, and I don't see where the competition is. I mean, unless you talk about a few gas plants, but you but those seem to be belong to OPG. So No.
No. I mean, there isn't. I mean, the long term procurements that they've talked about in theory are on a competitive basis. But, that's very much at the margin of the overall system. I mean, the the past expansions that have, you know, sort of already committed to or being committed to around the 2 nuclear projects, and, apparently, there's other ones being contemplated.
And so by the time we've done that, there's not a lot of oxygen left. There's a bit of a margin. You know, 6,000 megawatts has been talked about. That theoretically would be on some sort of competitive procurement approach. But but the the the bulk of the system, which will amount to about 85%, is gonna be locked in, because your hydro is the hydro portion is not going anywhere, and everybody agrees for keeping that.
But then you have this massive commitment on the nuclear side, which occupies a very large piece of the pie, and there's very little left otherwise. And and, crucially, the nuclear procurements are not being asked to compete with alternatives in any way. They're they're essentially being removed from the conversation, and then what's left at the margin, there may be some kind of, you know, competitive acquis you know, competitive bid process, but that's about it. And that's the way things have been working for some time. So the the basic problem, if you like, in terms of competition, is we would have wanted all resources on the table and then had a conversation of what's our least cost pathway to decarbonization, and that's emphatically not what's happening.
85% of the table was gone before their conversation can start.
Here's an interesting wrinkle to this, and I'm not sure what I think about it. K. So the, you know, Premier Ford says that Ontario is never going to have a carbon tax, and they that was in the energy plan. Instead, Ontario will meet its emission reduction targets with affordable and clean power. Now that sort of has a I mean, a clean energy industrial policy tinge to it, but usually then when, you know, if you're looking at the Americans or the Chinese or the Europeans, it's it's both clean energy technology and supply, so you support it with industrial policy, and on deployment.
Yeah. Here, there's someone it looks like a bit of industrial policy on on supply. What are they doing anything on on the demand side, like with heat pumps and EVs and
The province itself, the short answer is no. And also keep in mind that there is industrial carbon pricing in Canada in Ontario. That part's retained, and I think the expectation increasingly is that the some form of industrial carbon pricing is going to continue regardless of what happens federally. And that's largely driven by, I think, trade concerns given the European Union is moving to carbon border adjustments beginning in January 1, 2026. But the short answer is is no in terms of you know, there is no plan for electrification of transportation, and we took away all that back in 2018.
There's emphatically no plan around electrification of space heating. I mean, the government's official policy has asked you to expand access to the gas grid. We have one offs in areas, you know, steel, we've put money into some degree of electrification. What's really happening there would be a useful other conversation for us to have. And then there's been lots of money dumped into the auto sector.
The estimates are approaching certainly past 30,000,000,000, possibly more. But in terms of of but that's not necessarily requiring electrification of the actual automobile manufacturing, and that's just to make the batteries in the cars. But we have no nothing on the demand side and certainly no sort of broader decarbonization strategy of any any real meaningfulness. And the only official one we have goes back to 2018 and was largely ever implemented. So it's a very weird situation where where, you know, there there is no plan on at the demand side to to move in the direction of decarbonization or electrification or extent to which there is a few sectoral things.
So it's a very kinda odd thing that where we've ended up in terms of what the province says it's doing. It's it's a semi plan or quasi plan, but it's a very incomplete plan, and it has all kinds of internal contradictions.
So then is it a new plan at all? Because, they were Ontario is is committed to more nuclear a long time ago. It's been talking about gas for a long time. It's it's rejected a carbon tax in the past, like a consumer carbon tax, and there's a little bit more on energy efficiency Yeah. Which I guess is a good thing. Yeah. But it doesn't look like that this is not a radical departure from the status quo.
No. This is this is well, from 2018 onwards, to be clear, because because we did have a excuse me. We did have a fairly comprehensive climate plan up until June 2018. But from there, no, this is largely a double down with the exception as you know that we might do a little more in energy efficiency. This is largely a double down on the pathway that we were already on.
I'm not seeing a whole lot different. I mean, there's this this crack in the door about renewables, but there's yeah. How real that is is a matter of considerable debate. So, no, this is this is largely the effective result is a double down on the pathway they're already on, which is overwhelmingly nuclear with at least for the electricity sector and then with with a very, very large growth in the role of natural gas. I mean, that seems to be the reality of what we've got here, which has more or less been the plan from day 1 with the Ford government.
And indeed elements of it go back further into the the later stages, liberal government as well, although not quite in the same way.
Well, Mark, thank you very much for this. It's it's very interesting talking to you because we've got 4 big provinces in in Canada. So BC and Alberta, Ontario, and Quebec. BC and Quebec, the hydro provinces, big hydro provinces, seem to be going in the right direction. They've they've got this figured out.
Alberta is going backwards, and Ontario seems to be do kind of bumbling along, but with no real plan. And that you know, from a when you put it all together with what other provinces are doing, it's no wonder that the Canadian emissions aren't going down. And but maybe more important from our point of view at Energy Media is you're not seeing a real clean energy economy emerge. It's very patchy, very unconnected, very disjointed. And, so we're gonna talk to keep talking to you about this because, this is, I think, a serious problem as the world electrifies is that Canada can't seem to get its act together.
No. And indeed, we may have just dodged a bullet in BC, which which would have taken BC out of the equation. So, yeah, I think I think it's a very good set of questions, and this is on the table federally as well very much in terms of what sort of a strategy would we be left with if there is a change in government federally? And do we really see any obvious leaders at the provincial level? Let's say, BC kinda survived by a hair.
Quebec is very inwardly focused at the moment in terms of what its role is, and the rest are not very engaged. That's that'd be the nicest thing you could say. You know, Alberta, Saskatchewan. There are less nice things you could say about where we're at. So, yeah, it's the prospects are are far from rosy at this stage. One has to concede. Relative to where we were in 2018, we are in a very, very different universe, and it's not necessarily a better one.
Well, on that depressing note, thank you very much for this, Mark, and we will have you back in the near future.
Great. Thanks, Markham. Good talking to you.