By: Kelsey Sonntag, Chad Eggerman, Janelle Anderson, Glenn Wright
This is the fourth article in an 8-article series, Renewable Energy in Canada 2024, which covers each provincial jurisdiction and the territories, released by the Energy Group at Procido LLP. The Renewable Energy in Canada 2024 series aims to provide an overview of the current state of renewable energy across the country. The third article Renewable Energy in Manitoba: The New Affordable Energy Plan reported on Manitoba. This article provides an update for Ontario.
Section 92A (1)(c) of the Constitution Act, 1867 of Canada grants exclusive powers to the provinces to enact laws related to the “development, conservation and management of sites and facilities in the province for the generation and production of electrical energy”.
The Past and Future of Renewable Energy in Ontario
As the most populous province in Canada, home to more than one-third of the population, and the largest manufacturing sector in Canada, Ontario’s increasing demand for clean energy is vast. Ontario’s renewable energy regulatory framework has evolved significantly over the past two decades. Between 2004 to 2016 approximately 33,000 renewable energy contracts were signed for various wind, solar, hydro, and biomass projects. With a change in the provincial government in 2018, more than 750 renewable energy contracts were cancelled. No new renewable energy procurement processes were initiated for nearly seven years while the renewable energy industry in Ontario remained largely dormant.
However, in July 2023 Ontario’s Ministry of Energy released a document titled Powering Ontario’s Growth: Ontario’s Plan for a Clean Energy Future (Clean Energy Plan) which sets out Ontario’s ideas for the development of clean electricity generation, storage, and transmission infrastructure to accommodate the rising need for energy. The Clean Energy Plan acknowledges that no one resource can meet all of Ontario’s needs at all times, and that maintaining diverse generation sources is the most effective way to ensure affordability and reliability. The Clean Energy Plan reflected the province’s commitment to reducing greenhouse gas emissions, promoting clean energy technologies, and fostering economic growth to meet the growing demand. Following the recommendations in the Clean Energy Plan, in December 2023 the Independent Electricity System Operator (IESO), which operates Ontario’s power grid, announced plans to procure up to 5,000 MW of new wind, solar, and other forms of renewable energy. Through a dramatic shift in policy, the same provincial government that cancelled 750 renewable energy projects, is now poised to oversee the biggest expansion of renewable energy that Ontario has seen in nearly a decade. More recently in October 2024, Ontario’s energy minister stated the desire to position Ontario’s electricity system to not just meet an expected 75% increase in demand leading up to 2050, but to exceed it, and sell excess power to other jurisdictions, promising details in a forthcoming plan to accomplish this ambitious goal. If the Province of Ontario can successfully execute their plans, they will become a renewable energy superpower, not just in Canada, but in North America.
Current Status of Renewable Energy in Ontario
Ontario currently has a diverse renewable energy mix, which includes wind, solar, hydroelectric, and biomass sources. The province has successfully harnessed its abundant natural resources, particularly its vast water bodies in the North, to generate hydroelectric power. Hydroelectric facilities have long been a cornerstone of Ontario’s energy infrastructure, providing a stable and reliable source of electricity. Moving forward, part of the province’s plan to further develop hydro power includes a focus on re-contracting and modernizing its existing hydro electricity generating facilities. Some of these sites are more than 100 years old, and technology in hydro generation has significantly improved since they were developed. This renewable source not only contributes to a sizable part of the province’s power supply but also plays a critical role in balancing the grid.
With a favorable geographical landscape, Ontario has become home to numerous wind farms, particularly in areas like the Great Lakes region, where wind conditions are optimal. These projects include the Nations Rise Wind Farm which successfully achieved commercial operation on June 14th, 2021, and Henvey Inlet Wind which is the largest First Nation wind energy partnership in Canada. Wind power is currently the province’s second largest source of renewable energy generation, accounting for a substantial share of Ontario’s overall energy generation.
Solar energy is also currently a very important part of Ontario’s renewable energy landscape. The province’s Feed-in Tariff program, launched in 2009, encouraged residential and commercial investments in solar technology, leading to a rapid increase in solar installations across Ontario. From large-scale solar farms to rooftop installations, Ontario has embraced the sun’s potential, contributing to both local energy production and job creation in the clean energy sector.
Biomass energy, while less prominent than wind or solar, currently plays a critical role in diversifying the energy mix in Ontario. Utilizing organic materials for energy production helps reduce waste while providing a sustainable energy source. Ontario has invested in biomass technologies that convert agricultural and forestry residues into usable energy, further enhancing the sustainability of the grid. The Ontario Forest Biomass Program supports the objectives set out in Sustainable Growth: Ontario’s Forest Sector Strategy, and the provincial Forest Biomass Action Plan. This program supports initiatives that secure and increase long-term wood utilization across the province, with a focus on underutilized species and forest biomass. This program is part of Ontario’s commitment to the development of new uses of wood and forest biomass to deliver economic benefits for Ontarians while helping to reduce emissions and address climate change.
One of the most significant achievements in Ontario’s renewable energy journey has been the phase-out of coal-fired power plants. This landmark accomplishment, completed in 2014, eliminated one of the most significant sources of greenhouse gas emissions in the province. Alberta also recently eliminated coal-fired power generation, but other provinces like Saskatchewan and Nova Scotia still rely heavily on coal to generate electricity.
Aboriginal Loan Guarantee Program
The $1 billion Aboriginal Loan Guarantee Program is administered by the Ontario Financing Authority and supports Indigenous participation in electricity infrastructure projects, including wind, solar and hydroelectric generation projects and transmission projects in Ontario. The program provides a provincial guarantee for a loan to an Indigenous entity to finance a portion of its equity investment, typically about 75%, in an eligible project. The program is available to entities that are wholly owned by Indigenous communities.
Project ownership is a route that has been used to improve Indigenous participation in various energy projects. In Ontario, there are numerous examples where the level of Indigenous ownership of clean energy projects ranges from strong minority ownership of 25-50% to a majority ownership. Hydro One has also launched an equity partnership model where First Nations will be offered a 50% equity stake in all future large scale capital transmission projects with a value exceeding $100 million. For example, in the Waasigan Transmission Line project eight First Nations represented by the Gwayakocchigewin Limited Partnership, and Lac de Mille Lacs First Nation are to hold a 50% investment.
Ontario has a history of encouraging Indigenous equity ownership in renewable energy projects dating back to the “Aboriginal Price Adder” in the previous Feed-in-Tariff contracts introduced in 2009.
The Focus on Nuclear Energy
Public support for renewable energy has grown substantially, which may have been the motivation behind the current provincial government’s abrupt change in policy. Ontario’s new policy direction on renewables appears to be fueled by increasing public awareness of environmental issues and the importance of sustainability. Communities in Ontario are becoming more engaged in energy planning and decision-making, leading to localized initiatives that bolster renewable energy development. The majority of Ontario’s clean energy is generated through nuclear energy. In 2022, 59% of non-emitting electricity was generated by nuclear power.
The province operates several nuclear power plants, primarily located along the shores of Lake Ontario and the eastern part of the province. The Bruce and Darlington nuclear stations are among the largest in the province, with Bruce being one of the largest nuclear facilities in the world. In recent years, the province has also invested in the refurbishment of existing reactors to extend their operational lifespan and enhance performance. This strategy not only secures the ongoing contribution of nuclear energy to the grid but also minimizes the need for new power generation sources, which can be costly and time-consuming to develop. The refurbishment projects at Bruce and Darlington have been significant undertakings, involving complex engineering and extensive upgrades to modernize the facilities. Together, these plants produce over 30% of Ontario’s electricity, making nuclear power one of the key pillars of the energy mix alongside hydroelectric, wind, and solar power.
Nuclear energy’s role in Ontario’s energy strategy is particularly important in the context of climate change. As a low-carbon energy source, nuclear power significantly reduces greenhouse gas emissions compared to fossil fuel-based generation. This aspect is increasingly relevant as Ontario aims to meet its climate targets and transition towards a more sustainable energy future. Despite its advantages, the nuclear sector does face challenges, including public opposition and concerns about waste management. The long-term storage and disposal of nuclear waste remain important issues that require careful planning and public engagement. Ontario has established programs and initiatives to address these concerns, focusing on transparency and community involvement in decision-making processes. Within Canada, Ontario is without doubt the undisputed leader in nuclear power generation. If Ontario can concurrently become the leader in renewable power generation, the Province can fulfill its goal of becoming a true energy superpower.
While Ontario’s renewable energy framework has made significant strides, challenges remain. The transition from conventional energy sources to renewables requires careful management of grid stability, market integration, and the potential impact on existing energy industries. Additionally, public acceptance and community engagement continue to be vital for the success of renewable projects. However, the opportunities are vast. As technology advances and costs decline, Ontario is well-positioned to become the renewable energy leader in Canada once again. The province’s commitment to sustainability not only supports environmental goals but also creates jobs and stimulates economic growth in the clean energy sector.
Procido LLP’s Energy Group advises Indigenous groups, developers, suppliers, and landowners on renewable energy projects in Ontario. The 5th article in the Renewable Energy in Canada 2024 series will cover Saskatchewan.
Disclaimer
This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice. Contact Procido LLP (www.procido.com) if you require legal advice on the topics discussed in this article.