Three years ago, in the search for more power, the Ontario government launched its first competitive bidding process where large, grid-scale batteries went head-to-head against the gas peaker plants that have been relied upon for decades to keep the lights on when energy demand spikes.
At the time, the batteries and the gas plants came in at about the same average price.
On Friday, batteries bid at prices so much lower that not a single gas plant was contracted.
“Gas plants aren’t competitive anymore,” said Keith Brooks, program director at Environmental Defence. “If there’s a level playing field, clean energy and batteries win every time.”
Climate-friendly technologies that don’t produce any carbon emissions, like batteries, are advancing so quickly that in three years, their contract price in Ontario has dropped by half — from over $1,100 per megawatt in 2023 to $563 this year. It’s one of the first local signs of an “electrotech” revolution that’s sweeping the globe.
Sales of non-emitting technologies like wind turbines, solar panels, electric vehicles and heat pumps are surging around the world, according to data from the International Energy Agency, and their popularity has spread beyond those concerned by climate change as governments and regular people turn to them to insulate themselves from repeated fossil fuel price spikes.
Even the government of Premier Doug Ford, which came to office in 2018 and cancelled hundreds of renewable energy projects, ended EV subsidies and ripped out public EV chargers, is now buying in.
“Despite a very obvious ideological distaste for renewable energy, the economics are so compelling now that this government was forced to go in that direction,” Brooks said, adding that his organization tracked at least five gas plant proposals that were not successful.
Asked for comment, the Canadian Gas Association said natural gas remains “highly competitive.”
“While competitive procurements assess specific system needs at a particular point in time, natural gas continues to provide affordable home heating, reliable electricity generation and the flexibility needed to support a growing and increasingly complex energy system,” wrote CGA spokesperson Meeta Singh.
On Friday morning, Sam Oosterhoff, Associate Minister of Energy-Intensive Industries, announced contracts for three new large battery projects, with a total capacity of 640 megawatts, or enough electricity to power 640,000 homes during times of peak demand, like hot summer days when millions of Ontarians crank up the A/C.
“We have secured the lowest cost electricity capacity procurement in Ontario’s history,” he said at a press conference in Aylmer, crediting the power of the market “to ensure greater transparency, stronger accountability, and ultimately better long-term value for ratepayers.”
“They need to know that on the very hottest of days in the summer, the very coldest of days of the winter, the power will be there when and where we need it,” Oosterhoff added.
Currently, the provincial grid employs natural gas peaker plants when all other sources of power are maxed out. Batteries can perform the same duty without any emissions and at a significantly lower price, and Ontario is leading all other provinces in the rollout of this technology.
California, a world-leader in battery deployment, has been able to eliminate fossil fuels from its grid for long periods of time each day, reducing natural gas combustion for electricity by 62 per cent since 2023, according to Stanford professor Mark Jacobson.
After several rounds of procurement, Ontario now has contracted 3,000 megawatts of batteries and 1,000 megawatts of natural gas to come online by 2030 to meet peak demand. This is in addition to “capacity” procurements that provide power at other times. This spring, the province announced contracts for 14 wind and solar projects to provide 1,300 megawatts of power. Ontario is also proceeding with a new small modular nuclear reactor at Darlington, the first of four planned SMRs that will together provide another 1,200 megawatts.
The Independent Electricity Systems Operator has projected that Ontario could need to nearly double the amount of electricity it generates by 2050 to meet growing demand from EVs and heat pumps. Transitioning to electricity from natural gas and gasoline will not only reduce emissions, but it will also insulate consumers from the wild spikes in energy prices that have repeatedly hit over the last few years, energy analysts say.
The 2022 Russian invasion of Ukraine caused natural gas prices to nearly triple. The current U.S. bombing campaign in Iran drove up oil prices to almost double their pre-war levels. While both commodities have subsided since, the volatility of the international fossil fuel market has accelerated the adoption of renewable energy, UK-based think tank Ember found.
And while Canada is a leading oil and gas producer, this has not insulated us from price spikes caused half a world away. The majority of natural gas in Ontario is imported from the U.S, according to filings at the Ontario Energy Board.
“As we are in the midst of ongoing geopolitical changes, it’s more important than ever to reinforce Ontario’s electricity grid so that the families, the workers, the businesses, the industries that are here … are protected and powered by affordable electricity,” Oosterhoff said.
