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Market News

 August 10, 2006
Seeking a balance in Ontario's energy equation

 Toronto, Canada (GLOBE-Net) -- Electricity demand in Ontario peaked last week at an all-time high of over 27,005 Megawatts, prompting calls for greater energy conservation. In the short term not much is likely to change, and the province will continue to rely on imported power to get through the high heat and humidity of the summer. Increased energy efficiency standards and incentives for renewable energy are some of the longer term measures being considered to establish more of a balance between the province's energy demand and consumption.

Summer weather is straining the bulk power system, mainly due to the increased use of air conditioners in homes and businesses, says the Independent Electricity System Operator (IESO), which manages the electricity system and wholesale market. Demand approached or exceeded 26,000 MW on three days last week, each ranking as one of the top ten recorded days for power consumption.

The province's electricity supply system was boosted by favourable conditions for hydroelectricity and the return to service of the 515-MW Pickering nuclear unit 1, according to Tom Adams of Energy Probe. But even the increased supply is unable to meet demand, and Ontario will continue to import electricity -- currently around 2,000 MW - on peak consumption days, says the IESO.

IESO is urging consumers to shutter windows and turn off lights in order to reduce air conditioner usage, which accounts for up to 40 percent of energy demand on a hot day. Residential customers use around one-third of power in the province, while commercial, retail and industrial consumers use most of the remaining two thirds.

In emergency situations, industrial customers make be asked to make temporary reductions in energy use by idling plants or processes during peak hours. A reduction in transmission or generation availability, or any increase in demand however, could lead to protective actions such as a system voltage reduction or rotating power cuts, said an IESO statement.

It is estimated that a one-degree increase in indoor temperatures would reduce air conditioner usage enough to cut imports, but individual consumers and businesses are unlikely to make significant changes to their daily routines, say experts. Turning off lights and similar measures are regarded by many as being too small to be relevant, even though such actions could have a large impact if adopted on a wide scale.

The increased use of energy efficient-technologies, spurred by regulations and financial incentives, could have a much more significant long-term effect on energy demand. The Ontario Power Authority (OPA) will spend $400 million over the next three years on energy conservation campaigns, funding a variety of rebates and incentives for replacing old appliances with energy-efficient ones, and encouraging the public to curb air conditioner use.

Education and information campaigns can help raise awareness, but are not nearly as effective as putting a monetary value on replacing old, power-sucking appliances, or forcing new products to be more efficient. Even simple measures such as replacing incandescent lights with fluorescent bulbs -- something the OPA campaign will encourage -- could yield huge savings.

"Dollar for dollar, if you can save a kilowatt (of power) it's cheaper than building a kilowatt, so every megawatt we save in total saves us money," noted Energy Minister Dwight Duncan recently.

Changes recently made to the Ontario Building Code for instance, will make new houses built after 2007 more energy efficient, possibly by as much as 21 percent, than houses built today. Highly efficient windows, increased insulation and advanced gas and propane-fired furnaces will make these houses easier to heat and cool, and more comfortable to live in. Requiring these technologies will also spur demand for such products and encourage innovation of energy-saving solutions.

Increased efficiency standards for appliances, industrial equipment and businesses could also help further reduce electricity use in Canada's most populous province.

A variety of conservation and efficiency likely will be employed in Ontario's long-term energy plan. The provincial government has directed the OPA to implement programs to reduce energy consumption by 6,300 megawatts by 2025. Conservation a major component of the plan, twice the amount initially proposed by the OPA.

Increasing supply -- the other side of the energy equation -- is also being sought through the refurbishment of nuclear reactors and doubling the use of renewables such as wind and solar. By 2025, the government hopes to make Ontario North America's leading renewable energy producer, with 15,700 MW of capacity installed.

A Standard Offer Program currently offers direct incentives for grid-connected solar and wind projects, and has led to 400 percent growth in the installation of solar photovoltaic systems this year, reports the Canadian Solar Industries Association.

Such programs are clearly beneficial to the renewables industry in Ontario, and will add to energy capacity and encourage the development of renewable technologies and related services. Demand for solar energy system installers and technicians, for example, is surging.

This host of initiatives by the Ontario government provides some bright signs for the energy situation in the province, and may help turn the tide of increased consumption and limited supply that led to the current situation.

However, providing electricity for the industrial center of Canada will continue to pose environmental and economic challenges, and further forward-thinking policies are required to spur private and public sector investment in advanced energy technologies. Regulation and funding must continue to be directed toward what has become one of the most significant issues facing the province.