Decarbonizing Ontario's Economy

As the number of electric cars, trucks and buses continues to rise, homeowners and businesses consider a switch to electric heating and manufacturers begin the transition from fossil fuel processes to electric alternatives, Ontario’s demand for electricity will increase. This will put additional stress on the provincial electricity system.

To help ensure Ontario’s electricity grid is prepared, the IESO has adjusted its planning scenarios and forecasts to consider any impacts that the shift to electrification may have on the province’s power system. Future plans will reflect those impacts.


Electrification Drivers in Ontario

Electrification is expected to play a pivotal role in helping Ontario meet its greenhouse gas emissions reduction targets.

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Electric Vehicles (EVs)

The number of EVs on the road in Ontario is expected to grow significantly as the technology improves, production increases and costs fall.

As EV adoption continues to grow, so will the demand for EV charging, which presents an opportunity for the electricity system. Pricing structures are being put in place to encourage EV drivers to charge during low-demand periods and vehicle to grid technologies are exploring how the energy stored in EV batteries can be used to support the grid during high-demand periods, turning electric vehicles into mobile energy storage units.

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Electric Arc Furnaces

Many steel companies are transitioning from blast furnaces that burn fossil fuels to electric arc furnaces. Steel is one enabler of clean energy solutions and it is an integral part of every net-zero scenario. The transition to electric arc furnaces is positioning Ontario’s steelmakers to meet the growing demand for sustainable steel.

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Space and Water Heating

Natural gas is the major source of energy used for heating water and interior spaces in Ontario. As residential customers and commercial operators consider a shift to electric heating, there could be a significant impact on electricity demand across the province.

Efficient Electrification

Currently, Ontario’s electricity system uses natural gas generation to help meet system peaks. As the electrification of the economy continues, the province’s electricity grid will face growing demands, which will lead to the use of more natural gas to generate electricity – and more greenhouse gas (GHG) emissions from the electricity sector.

However, an increase in GHG emissions from Ontario’s electricity sector would not necessarily lead to an increase in the province’s total GHG emissions. Switching the source of energy used in vehicles and manufacturing processes from fossil fuels to electricity made with natural gas will result in an overall reduction in province-wide GHG emissions.

Upwards and downwards trends in greenhouse gas (GHG) emissions. Ontario’s electricity sector GHG emissions were high in 2005 at just over 35 Megatonnes CO2e, dropping to around 5 Megatonnes CO2e in 2021. The electricity sector’s GHG emissions are predicted to increase from 2022 on, reaching around 19 Megatonnes CO2e by 2042. While the electricity’s sectors GHG emissions increase, overall economy-wide emissions decrease with electric vehicles and electric arc furnaces predicted to reduce GHG emissions by around 24 Megatonnes CO2e. The end result is an overall economy-wide reduction of 10 Megatonnes CO2e by 2042 from 2021 levels.
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Natural Gas Phase-Out Study | The Evolving Grid

In 2021, the IESO published a study examining the possibility of phasing out natural gas generation by 2030. The study looked at the steps that would be required, the associated costs and the overall impact it would have on the future of Ontario’s electricity system.