On September 27, 2016, the Minister of Energy of Ontario issued a policy direction to suspend the Large Renewable Procurement II (“LRP II”) process. In response to this direction, the IESO cancelled the first phase of the LRP II (the Request for Qualifications (“RFQ”)) and will not commence the second phase of the process (the Request for Proposals (“RFP”)).
Launch of LRP II Process
The LRP II was announced on April 5, 2016 with procurement targets of 600 MW of wind, 250 MW of solar, 50 MW of waterpower, 30 MW of bioenergy and 50 MW for technical upgrades and optimization of existing facilities. Submissions for the LRP II RFQ were due on September 8, 2016. The IESO received 59 RFQ submissions and successful applicants were to be notified in November 2016. The second phase of the process, the LRP II RFP, was expected to begin in early 2017, with contracts offered by May 2018.
Suspension of the LRP II
Suspending the LRP II is part of the Ontario government’s plan to reduce electricity costs for consumers. As renewable energy prices are expected to decline, the Ministry of Energy has advised that suspending the LRP II would allow the government to procure renewable energy at a lower cost in the future. It further noted that suspending the LRP II process “would save up to $3.8 billion in electricity system costs relative to Ontario’s 2013 Long-Term Energy Plan (“LTEP”) forecast” and up to $2.45 per month on the average residential electricity bill of a typical consumer.
The Ministry of Energy based its decision to suspend the LRP II process on the Ontario Planning Outlook (“OPO”) published by the IESO. The OPO indicated that Ontario had abundant electricity resources to support the development of projects planned in the LTEP. The findings in the OPO considered a range of demand forecasts for electricity in Ontario from 2016 to 2035.
Next Steps – Ontario’s Long-Term Energy Plan 2017
In the fall, consultations will begin with various stakeholder groups regarding the development of a new LTEP to be released in 2017. In regards to the LRP II RFQ, the IESO noted on its website that additional details will be available shortly for RFQ Applicants regarding the cancellation of the first phase.
For more information, please visit: http://www.ieso.ca/Pages/Participate/Generation-Procurement/Large-Renewable-Procurement/default.aspx.