IESO Announces Results of First Demand Response Auction
December 10, 2015
Ontario's Independent Electricity System Operator (IESO) today announced the results of the December 2 and 3 demand response (DR) auction, a competitive process through which demand-side resources were selected to be available to reduce their electricity consumption, as needed, during the summer of 2016 and winter of 2016/17 commitment periods.
This is an important development as it shifts the procurement of DR resources from contracts to a market-based mechanism that is more flexible and cost-effective for ratepayers.
In recent years, DR has helped reduce peak demand on summer days by as much as 1,200 MW. The auction marks the latest milestone in the IESO's ongoing efforts to expand Ontario's DR capabilities and transition multi-year, contract-based DR to a more cost-effective, market-based platform. This structural change is intended to facilitate the entry of new DR suppliers and provide the IESO with much needed flexibility to respond to changing system conditions and needs.
For the auction, participants were required to submit their demand reduction capacity (in megawatts, MW) and their offer prices for the summer and winter periods. Prior to the auction, the participants were required to submit a load reduction plan explaining how they would reduce energy use if called upon. The successful DR providers will be integrated into the electricity market along with generators and will help provide capacity to ensure the province's energy needs are met during peak hours.
The auction covered two commitment periods: summer (May 1, 2016 - October 31, 2016) and winter (November 1, 2016 - April 30, 2017). Seventeen organizations registered as Demand Response Auction Participants in the months leading up to the auction. Proponents included high-volume transmission-connected industrial, commercial and institutional users, local distribution companies, and smaller consumers whose facilities are connected to low-voltage distribution systems and whose DR contributions are managed by an aggregator.
The full list of successful participants is as follows:
|DR Participant Name||Participation Type||Commitment Season||DR Capacity (MW)|
|Energy Curtailment Specialists, Inc.||Aggregator||Summer||24.9|
|Gerdau Ameristeel Corporation||Direct Provider||Summer||72.0|
|Gerdau Ameristeel Corporation – Cambridge||Direct Provider||Summer||2.3|
|Resolute FP Canada Inc.||Direct Provider||Summer||51.0|
|Tembec Enterprises Inc.||Direct Provider||Summer||40.0|
The clearing price for the summer commitment period is $378.21/MW-day, and for the winter commitment period is $359.87/MW-day.
Additional information about the auction is available at Demand Response Auction.
"Demand-side resources have proven to be very effective," said Bruce Campbell, President and CEO of the IESO. "Through the DR auction, we're leveraging existing electrical infrastructure and, at the same time, creating new opportunities for engaged consumers to participate in Ontario's electricity markets."
"Demand response is an important part of Ontario's commitment to reduce greenhouse gas emissions and improve electricity system reliability," said Bob Chiarelli, Minister of Energy. "By embracing new technologies like demand response, Ontario stays on the cutting edge of energy innovation and builds on our track record of clean, reliable and affordable energy."
The next DR auction will be held in December 2016, for delivery of DR capacity between May 2017 and April 2018. Auctions will be held on an annual basis. In the future, demand-side resources will have the opportunity to compete – through a capacity auction – against other capacity providers such as generation and imports to cost effectively meet Ontario's electricity needs.
The IESO manages the province's power system so that Ontarians receive power when and where they need it. It plans and prepares for future electricity needs and works with its partners to guide conservation efforts. For more information, please visit www.ieso.ca.
IESO Media Contact: