Distributed energy resources
Kristyn Annis, Partner
The Report is valuable in that it speaks to the role of local stakeholders and distributed energy resources (DERs) will play in contributing to the energy transition. The Report notes that “on a geographic basis, local decisions and distributed solutions can often be implemented and scale more quickly than centralized approaches, produce co-benefits (such as resilience) and build sustained local support by making communities partners in their energy future."
Later in the Report, the Panel references the IESO’s commissioned Ontario’s Distributed Energy Resources Potential Study, “which showed that over a 10-year timeframe (2023–2032), it would be possible to cost-effectively meet all incremental system needs with DER capacity.” Specifically, DERs could satisfy a material portion of the province’s energy needs – and could provide a whopping 1.3 to 4.3 GW of peak summer demand by 2032. The Report also links the use of DERs in local planning to the energy transition and states that:
“Where they are clean and reliable, DERs can also contribute to emissions reduction while supporting reliability at the local level. These innovations in scalable, often customer-owned energy solutions, have the potential to significantly alter the range and number of energy services delivered at the distribution level.”
In addition to the possibility of DERs helping to meet system needs the Report notes that “many local governments in Ontario have developed detailed and ambitious strategies to address climate change, transform their municipal energy systems, conserve energy, and reduce both corporate and total greenhouse gas emissions.” The Report cites Toronto, Ottawa, Hamilton and Oxford as examples. Recommendation 7 makes the link between local planning and emphasizes the need to “facilitate, resource and enable the energy transition at the municipal level”:
Recommendation 7: To ensure municipalities, communities and local businesses are in the best position to participate in energy decision-making and take responsibility in pursuing their energy transition objectives, the Ministry of Energy should develop a strengthened framework for local energy planning and decision-making and take steps to facilitate its implementation. The goal should be to develop mature Comprehensive Local Energy Planning processes through which communities can effectively contribute to Ontario’s energy transition in ways that suit their needs and reflect their local strengths, opportunities, and priorities. Developing Comprehensive Local Energy Plans with transparency on cost implications and rate impacts can help to align community planning with provincial policy objectives.
The Report accurately summarizes the need from the regulatory and market perspective:
“To maximize the cost-effective potential of DERs, the market models and regulatory frameworks by which the distribution sector is managed, and the ways in which the bulk electricity system is planned and managed, will need to evolve. The assessment of the achievable potential of DER technologies therefore must be complemented with rigorous analysis to understand how evolving (utility) business models and design of the wholesale market can enable DERs. New ways of organizing distribution system operation and participation, such as non-wire solutions, aggregators, virtual power plants, Distribution System Operators and other local energy markets, hold significant potential. The emerging consensus holds that DERs, while lacking some attributes of economies of scale compared to central grid infrastructure, offer opportunities to stack multiple value streams for the customer (including resilience) and the electricity system (from ancillary services to energy capacity).”
I couldn’t agree more.