Last month, Ontario’s Independent Electricity System Operator (IESO) announced it awarded contracts for 16 large wind, solar and hydroelectric power projects. This announcement had an important difference from past ones: for the first time in Ontario, the price of wind-generated power is cost-competitive with other sources of electricity generation, including nuclear power, a reflection of the decreasing cost of renewable energy around the world.
The IESO announcement was the result of a process called Large Renewable Procurement (LRP I), in which renewable energy companies put forward bids to develop wind, water and solar projects that produce more than 500 kilowatts of energy, or enough to power nearly 5,000 average homes.
In total, the IESO awarded contracts for 455 Megawatts (MW) of fossil-free renewable energy, including 300 MW of wind power, 140 MW of solar, and 16 MW of hydro. As has become common in Ontario, the bids for projects far outnumbered the amount of renewable power the province was looking to accommodate during this round of procurement, demonstrating the continued popularity of renewable energy across Ontario.
The five contracts for wind power came in at prices ranging from 6.45 to 10.55 cents/kWh, for an average of 8.59 cents/kWh. Compare this with an estimate of 7 to 8 cents/kWH for the price of electricity from the Darlington nuclear reactors that Ontario Power Generation is planning to refurbish.
This means that the lowest bid prices offered for wind-generated electricity were lower than the estimated price of power from rebuilt nuclear reactors. If you factor in that every nuclear project in Ontario’s history went over budget by an average of 2.5 times, the cost of wind power may even be significantly cheaper than nuclear.
In fact, if these nuclear rebuilds are over budget to the same degree as past projects, new solar power recently contracted in Ontario, which came in at an average price of 15.67 cents/kwH, will also be cost-competitive with nuclear.
Wind and solar were never that expensive in the first place. They produce about 11 per cent and 1 per cent of Ontario’s power, respectively, and therefore account for a relatively small part of residential electricity bills. And the province’s decision to invest in renewable energy brought economic and social benefits to the province. These 21st century sources of power created thousands of manufacturing, construction and installation jobs and helped replace dirty coal-fired power plants with renewable energy, giving us cleaner air and fewer smog days.
Ontario’s embrace of wind and solar were part of a global push to scale up renewable energy and kickstart the transition away from fossil fuels. Now that investment is paying off.
The falling prices of wind and solar in Ontario is consistent with renewable energy trends around the world. In the United States, the prices of wind and solar power dropped by 61 per cent and 82 per cent between 2009 and 2015, respectively. These prices will continue to decrease as technology improves and the price of batteries to store wind and solar also come down.
Renewable energy is emissions-free, increasingly affordable, and popular in Ontario. The strong demand for LRP I sets the stage for the next round of large-scale renewable energy development in the province. The LRP II process kicks off in August and will procure 930 MW of solar, wind, hydro and bioenergy.
Now is the time to double down on renewable energy in Ontario. As the province moves to unveil its climate action plan, carbon emissions from the electricity sector are projected to increase.
We can either choose to get stuck in the past and power Ontario with expensive nuclear or emissions-spewing gas, or we can invest in renewable energy. Now that renewable energy is cost-competitive in Ontario, the answer is obvious.