New technologies are transforming the way we produce and use electricity. The IESO is at the forefront of this change, driving and guiding the electricity sector’s evolution. See how Ontario’s power system is transforming.
The IESO is forecasting strong electricity demand growth across Ontario, driven by economic development, population growth, and increased electrification. Meeting this demand will require a significant investment in new energy infrastructure.
Some factors that impact Ontario’s electricity supply include:
Decommissioning: Power plants have a finite lifespan and aging assets must be replaced.
Refurbishments: Renovations and improvements are currently underway for several power plants in Ontario, reducing their ability to produce electricity while the work is taking place.
Increased Demand: The switch to electric transportation and production processes, as well as demand from agricultural greenhouse and manufacturing sectors, are increasing Ontario’s overall electricity demand.
Aligning New Supply with System Needs
The IESO works with electricity sector partners to address future supply challenges in a timely, cost-effective and flexible way. One approach involves securing competitive contracts with electricity suppliers, recognizing that:
A one-size-fits-all approach is not sufficient to reliably and cost-effectively meet Ontario’s needs
Different electricity resources contribute to the electricity system in different ways
Different electricity resources have different risks, requirements and development timelines
Competitive Procurement
The IESO’s Resource Adequacy Framework sets out a competitive strategy for securing new resources in the short, medium, and long term while balancing risks faced by ratepayers and suppliers.
Short-Term (Capacity Auction): With a short forward period (less than 12 months in advance), the Capacity Auction offers great flexibility to adapt to changing system needs at the lowest cost to electricity customers.
Medium-Term (3-5 Years): Medium-term procurements provide certainty that Ontario will have a supply of electricity sufficient to meet future demands, while also helping the IESO make adjustments for changes in its forecasts.
Long-Term (20+): Long-term commitments are considered when current or future needs cannot be met in the short or medium term. In these circumstances, contracts with longer terms provide certainty for suppliers as they make significant investments in new assets or major upgrades to existing assets.
