From Small to Mighty: Unlocking DERs to Meet Ontario’s Electricity Needs
Source: Sarah Simmons & Roy Hrab| · POWER ADVISORY · | December 12, 2024
The recently released report by Power Advisory, titled "From Small To Mighty: Unlocking DERs to Meet Ontario’s Electricity Needs," provides a vision for integrating Distributed Energy Resources (DERs) to help meet Ontario’s growing electricity needs. Commissioned by the Ontario Energy Association (OEA) and Energy Storage Canada (ESC), and developed in collaboration with their members, this report outlines a strategic approach to harness the full potential of DERs to provide value to Ontario’s electricity customers, distribution system and bulk system.
Ontario's Energy Landscape and the Need for Change
Ontario's electricity demand is projected to grow significantly, from 151 terawatt-hours (TWh) in 2025 to 263 TWh by 2050. This 75% increase over 25 years is driven by industrial growth, electrification, population growth, and the transition to a low-carbon economy. Current supply procurement processes led by the Independent Electricity System Operator (IESO) focuses on large-scale, transmission-connected, market participant generation, and provides little opportunities to leverage the benefits of DERs.
However, the Ontario government’s electricity (and energy) policy is beginning to evolve, recognizing the value of DERs and that changes are needed to facilitate a greater role for DERs to play in meeting supply needs and empowering customers. Ontario’s Ministry of Energy and Electrification’s policy document, Ontario’s Affordable Energy Future: The Pressing Case for More Power, which sets out the government’s vision for the energy sector, notes “Giving customers more ways to participate in the grid, with a focus on creating new ways for families and businesses to save money while reducing province-wide energy demand, benefits us all. As the grid evolves with the increasing adoption ofDER, the policy framework too must evolve to support customer choice and reduce barriers to all types ofDERinvestments that can support local energy needs and improve the efficient utilization of these resources within the energy system.”
A Vision for DER Integration
DERs, which include renewable generation, energy storage, electric vehicles (EVs), and advanced load management technologies, are smaller-scale devices connected to the distribution grid. These resources can operate either behind-the-meter (BTM) within a customer's premises or front-of-the-meter (FTM) directly connected to the distribution system. DERs offer numerous benefits, including enhanced grid reliability, reduced greenhouse gas emissions, and cost savings for consumers.
The report envisions a future where DERs are widely adopted and deployed, maximizing value for Ontario's electricity customers through affordability, bill savings, and enhanced resilience. Key elements of this vision include:
Providing customers with options to manage their energy costs using DERs.
Structuring programs, policies, and regulations to facilitate DER deployment and reduce red tape.
Ensuring fair compensation for DERs providing services to the wholesale market, distribution grid, and end-users.
Modernizing the distribution grid to support a high DER future.
The "Walk-Jog-Run" Approach
To achieve this vision, the report proposes a phased "walk-jog-run" approach:
Walk Phase: Initiate immediate development of new DERs through Local Distribution Company (LDC)-led procurements and foundational programs, supporting grid modernization and preparing for future flexibility markets.
Jog Phase: Enhance coordination between LDCs and the IESO, enabling local flexibility markets and expanding DER capacity to meet near-term supply needs.
Run Phase: Fully integrate DERs into wholesale and distribution markets, with refined market rules and systems to support broad participation and aggregation.