Ontario Demand Forecast

The Toronto Star recently reported that electricity demand in Ontario so far in 2008 on a temperature adjusted basis was 1.2% lower than a year ago. This has profound implications on the future supply requirements for the province.

Demand by directly connected large customers was down by 3.9%. This would reflect the difficulty that Ontario’s manufacturing sector is having because of the troubled auto industry, and the high Canadian dollar. Since industrial demand is about 1/3 of total demand, it means that all of the decrease in consumption is attributable to industry. But it also means that there has been no growth in demand from the residential and commercial sectors.
But the OPA has forecast demand increase of 1.2% per year over the next 20 years. Despite the troubled manufacturing sector, housing starts, population growth, and commercial development has not slowed. Why has demand not grown?

The answer can be found in the many conservation programs that are underway. The OPA’s Conservation Bureau and the programs of various utilities have incentives for everything from upgrading lighting, to replacement of motors, to upgrading HVAC systems, to the Refrigerator Roundup that is removing inefficient refrigerator stock. And it is clear that these programs are working.

The conservation programs have a budget that is measured in the hundreds of millions of dollars. And if they continue to work, and demand growth stops, the need for new supply, that is measured in the 10’s of billions will go away. That would be a very good deal for ratepayers.

Clearly, as the Ontario Energy Board reviews the Integrated Power System Plan, the evidence that conservation is working, and that demand growth need not materialize, must be considered. The current plan has billions of dollars allocated to new nuclear plants. It would seem that we will not need them.

If demand growth is zero, instead of 1.2%/year, then in 10 years, total demand would be 12.5% below the current forecast. This would be 19 TWh, which is about what is produced by a 3000 MW nuclear plant, which would cost $10-20 billion just to build, followed by ongoing operating, fuel, and waste disposal costs. It would seem to be highly risky to build something this expensive that we won’t need.
Imagine what could be done if we allocated a few more dollars to conservation, our cheapest source of new supply by far? Negawatts cost a lot less than megawatts.

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