News and Updates

Capacity Auction Results Demonstrate the Value of Competition

December 10, 2020

In an important milestone for Ontario’s electricity sector, the IESO has secured 992.1 megawatts (MW) of capacity from a broad range of eligible resources in its province-wide capacity auction. Capacity providers for the summer of 2021 will include industrial and commercial consumers providing demand response, imports, generation and energy storage. This diverse set of electricity assets will help the province manage peak summer loads.

Competition to provide capacity was very strong, with more than 1,700 MW of resources enrolled to participate in the auction. The final Ontario-wide clearing price for this year’s auction was $197.58/MW-day, a decrease of roughly 26 per cent from the last Demand Response Auction (summer Ontario-wide clearing price) in 2019.

From a system perspective, annual capacity auctions are an important tool to meet Ontario’s needs and provide the flexibility required to enable the province to adapt to changing conditions. Capacity auctions are the IESO’s primary mechanism for acquiring smaller amounts of capacity to meet needs emerging over the short and medium terms.

Having a flexible and competitive mechanism that can respond to changing system needs delivers significant value to ratepayers and ensures cost-effective reliability while balancing consumer/supplier risks. The IESO intends to explore other auction enhancements and enable additional resources to compete in the next capacity auction, currently scheduled for December 2021.

The majority of successful auction participants this year were large and medium-sized industrial and commercial consumers that were capable of reducing their demand for electricity as needed. These consumers had the option of taking part in the auction directly or through an aggregator. In addition to providing revenue, their participation in the auction also enables them to contribute to the reliability, sustainability and cost-effectiveness of Ontario’s power system.

The full list of this year’s successful participants is as follows:

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