After a decade of flagging growth, Ontario may see an increase in electricity demand in 2020 as a healthy U.S. economy and a relatively low Canadian dollar provide a boost to manufacturers.
Even with the forecast spike in demand, electricity supplies in Canada's most populous province are expected to be adequate for the next 18 months, the Independent Electricity System Operator, or IESO, said in a quarterly outlook. The grid operator noted in the Sept. 19 outlook that it may have to reschedule planned outages during the summer demand peak in 2020 because of potential delays in refurbishing a unit at Ontario Power Generation Inc.'s Darlington nuclear plant. The bulk of Ontario's electricity is generated by nuclear plants operated by province-owned Ontario Power and by Bruce Power LP.
During Ontario Power Generation's second quarter earnings update, the company pushed back the projected return to service of Darlington unit 2 to the second quarter of 2020. Refurbishment of Darlington unit 3 is scheduled to begin in the first quarter of 2020.
"For 10 years, the demand for energy from the grid has remained fairly stable in Ontario, and 2019 is expected to wrap with a small decline in demand," the IESO said in its outlook. "In 2020, a strong U.S. economy, a low Canadian dollar and all the associated economic activity, are foreseen to spur increased demand."
For 2019, the IESO forecast a 0.2% decline in overall energy demand in Ontario compared to 2018. For 2020, the grid operator forecast a 0.7% annual increase.
The outlook, which covers October 2019 through March 2021, anticipates that resources will be adequate to meet demand under normal circumstances and that any unexpected changes could be managed through rescheduling planned maintenance. Demand in the forecast period is expected to peak at 22,138 MW in summer 2020 under normal weather conditions and 24,500 MW in extreme heat. Demand to-date in 2019 peaked in July at 21,791 MW. The IESO estimated it could deliver 26,411 MW of power at the peak of the outlook.
Over the next 18 months, the IESO expects 1,500 MW of new generation to be added to the grid, most of which will come from the nearly 1,000-MW gas-fired Napanee Generating Station (Oakville), expected to begin operation early in 2020, while 38 MW will reach the end of its contract life. The outlook could be altered by Ontario's first capacity auction, expected in December. "Potential risks in summer 2020 are expected to be mitigated by outage rescheduling and by the capacity that will be acquired in the IESO's upcoming capacity auction," the grid operator said.
