Ontario Expands Largest Energy Procurement in Province’s History
Earlier today, the Minister of Energy and Electrification, Stephen Lecce, signalled his commitment to ensuring Ontario has access to affordable, reliable power with the announcement to expand the Long-Term 2 (LT2) procurement by an additional 50%. As the province is in the midst of a major energy expansion, the increase from 5,000 MW to up to 7,500 MW will help to power an additional ~1.6 million homes, supporting Ontarians as electricity demand continues to grow.
The LT2 procurement will target 14 TWh through the energy stream, and 1600 MW for the capacity stream. These overall targets are expected to be broken down further into yearly bid submission windows starting in Q3 2025, with projects expected to be in-service starting in 2029 through to 2034. The procurement is technology agnostic – aimed at getting the necessary resources at the best price for ratepayers – with natural gas, wind, solar, storage, and biogas all expected to participate.
The announcement also included a new request for the Independent Electricity System Operator (IESO) to report back on options for two additional procurements:
- A procurement for resources with long lead times and long lifespans, such as certain long-duration energy storage technologies and hydroelectric generation, with the goal of launching the Long-Lead Time procurement by the end of 2025.
- A Local Generation Program for smaller scale, distribution-connected resources, like solar, biogas, wind, and combined heat and power, with the goal of launching the program in early 2026.
At the same time, the Minister directed the IESO to enter into a new electricity trade agreement with Hydro-Quebec for a period of up to 10 years. This new agreement will build off the 2024 Capacity Sharing Agreement that was established to ensure Ontario has access to electricity needed as the province undergoes nuclear planning and refurbishment activities. Finally, the Minister also directed the IESO to enter into a new agreement with Ontario Power Generation’s Atikokan Generating Station, located in Northern Ontario.
What this means
To put today’s announcement into perspective, last year the combined output of Ontario’s existing transmission-connected wind and solar facilities was about 13 TWh of energy. The expanded LT2 procurement is targeting to essentially more than double that output. The series of actions made public today reflects the government’s continued “all-of-the-above” approach to meeting Ontario’s future electricity needs.
This approach has evolved over time and reflects the significant growth in demand for electricity expected in the coming decades driven by the industrial sector, ongoing electrification and data centres looking to connect to the grid. The IESO’s recently updated demand forecast has projected a 75% increase in Ontario’s electricity needs by 2050, 15% higher than what the previous March 2024 forecast.
The design of the LT2 procurement is now underway at the IESO where additional design considerations are being finalized around municipal support, access to Crown Land, agricultural land use restrictions, Indigenous equity participation, and where developers can connect new projects. All these factors will need to be finalized early next year to support the procurement launch in Q1 2025.
At the same time, opportunities will emerge early in the new year to help shape the development of the Long Lead-Time procurement, and the Local Generation Program.
