Ontario Government Increases Electricity Capacity for Battery Production

The Ontario government is moving swiftly to expand Ontario's ability to provide electricity in order to meet the demands of large monopolies like LG, GM, Ford and Volkswagen for electric battery production as well as for the expanding greenhouse sector, electrified steelmaking plants and mining operations. This includes investments in new battery storage for the electrical grid, new natural gas electricity generation, a new small modular nuclear reactor and increased use of auctions to purchase electricity from private industrial and commercial facilities.

It is of note that although this is all talked about in terms of Ontario, in fact Ontario's electrical grid is fully integrated into a North American electricity grid with most of Ontario electricity exports going to two U.S. states, Michigan and New York.

An article by Allison Jones from CBC notes that Ontario's "energy needs are quickly rising, with the proliferation of electric vehicles and increasing manufacturing demand for electricity on the horizon just as [Pickering,] a large nuclear plant that supplies 14 per cent of Ontario's electricity is set to be retired [in 2025] and other units are being refurbished."

According to Ontario's Independent Electricity System Operator (IESO), "the switch to electric transportation and production processes as well as economic growth in the agricultural greenhouse and electric vehicle manufacturing sectors are increasing Ontario's overall electricity demand."

Ontario Minister of Mines George Pirie said, "Our government is building an integrated supply chain for critical minerals in Ontario as we become a leader in battery manufacturing. Energy system reliability and affordability is essential so that Ontario mines can continue to competitively produce the critical minerals we need for battery manufacturing and other technologies that support the transition to a clean economy."

Todd Smith, Ontario's Energy Minister said, "Our government is building the electricity generation and storage needed to support our success in driving electrification and attracting new jobs to the province, including unprecedented investments, from electric vehicles and battery manufacturing to clean steelmaking."

The IESO notes that "after years of surplus, a capacity gap in the mid-2020s will emerge, translating into capacity and energy needs in the latter half of the decade. These needs will continue through 2040, with demand expected to increase by about 1.7 per cent per year during this period."

Jones reports that Energy Minister Smith has directed the IESO to secure 2,500 megawatts of clean technology such as energy storage along with 1,500 megawatts of new natural gas [electricity generating] capacity between 2025 and 2027. The IESO suggests that both sources of electricity -- natural gas and storage -- can be quickly ramped up and down to meet changes in demand.

At the moment Ontario has only 54 megawatts of energy storage in its electrical grid. In addition the Ontario government through Ontario Power Generation (OPG) has confirmed that it has contracted GE Hitachi Nuclear Energy to deploy a 300 MW Small Modular Nuclear Reactor at the Darlington, Ontario nuclear site.

Besides expanding capacity, the IESO is also relying more on buying electricity from industrial and commercial entities to add short-term capacity. It reports that through the 2020 Capacity Auction they were able to secure 992.1 MW of capacity for summer 2021 from a province-wide auction and will continue to enhance this mechanism to meet short-term demand as "system needs grow."

Justin Rangooni, the executive director of Energy Storage Canada, said that because of the relatively tight timelines, the 2,500 megawatts of storage capacity is likely to be mostly lithium batteries. "Getting that supply for those lithium batteries will be challenging.... It's not a total obstacle, but it will take some time because now ... [you have] not just supply chain constraints, but you're also competing with the U.S., which is really accelerating energy storage adoption," he said.

It appears that in order to provide enough electricity for electric battery manufacturers, Ontario will set up electric battery storage facilities requiring large amounts of lithium and other strategic minerals on top of those that will be used in the batteries made for commercial use which will then be electrified from storage batteries in the grid.

Indicating that electricity storage will be a venue where private interests will seek to make profits, Rupp Carriveau, director of the Environmental Energy Institute at the University of Windsor, said the timing is good. "The space is there, the technology is there, and the willingness among private industry to respond is all there," he said. "I know of a lot of companies that have been rubbing their hands together, looking at this potential to construct storage capacity."

Many commercial and industrial consumers, such as large manufacturing facilities and downtown office buildings, are using storage to manage their electricity usage, relying on battery energy when prices are high. These are the same entities which currently sell capacity to the grid through auctions.

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This article was published in

Volume 53 Number 4 - April 2023

Article Link:
https://cpcml.ca/Tmlm2023/Articles/M530048.HTM

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