The ongoing IESO York Region Non-Wires Alternatives (NWAs) Demonstration project in Ontario’s York Region allows customer-owned resources to help manage the growing energy needs of their communities.
Alectra Utilities are in the initial stages of changing the energy ecosystem. Distributed energy resources (DERs) – which include small-scale energy storage, combined heat and power facilities, demand response and renewables such rooftop solar – are transforming the energy landscape of Canada. As part of this transition, consumers and communities are choosing to play a more active role in energy planning and management, instead of relying on conventional electricity infrastructure.
Traditionally, when the forecast for electricity load growth exceeds existing grid capacity, new poles-and-wires infrastructure is built to meet new demand. However, in York Region, where electricity demand is growing rapidly and is expected to exceed system capability by 2030, the NWA project is exploring how a local electricity market can meet new demand with customer owned DERs over two years (October 2020-October 2022). Funded by the Independent Electricity System Operator (IESO) and Natural Resources Canada (NRCan), and delivered by Alectra Utilities, the IESO York Region NWA Demonstration Project is North America’s first distribution level electricity market with encouraging results thus far.
A ‘Canada First’!
The project achieved a ‘Canada first’ in the fall of 2020, with the local capacity auction procuring a total of 10 megawatts (MW) of capacity from a wide variety of resources. These resources, owned and operated by manufacturers, supermarket operators, and residential participants, were procured with a clearing price of $0.64/kilowatt-day ($80,000 MW/year). The procured resources committed to being available for a six-month summer period (from May 2021 to October 2021) to support the grid during demand peaks, by either generating electricity for the grid, or by reducing their consumption on demand.
Another ‘first’ was achieved in June 2021, when participant DERs were activated during a heatwave to help reduce local demand (4.5MW on June 7, 2021 and 3.6MW on June 28, 2021). This was the first time in Canada that DERs secured through a local capacity auction were used to help reduce local peak demand.
During the six-month period in the summer of 2021, the project saw eight activations that coincided with the hottest days of the year. “The IESO NWA Demonstration Project has proven the potential for using local solutions as a cost-effective alternative to traditional electricity infrastructure,” says Brian Bentz, President and CEO of the Alectra Inc, the participating utility.
The project successfully reduced peak demand at the local grid-level, helping to ensure the reliability of the system wide-grid and potentially helping defer the need for traditional infrastructure. The participants benefitted too, earning an average of $125,000 per MW of DER capacity; 65 per cent of this sum for making their DERs available during the commitment period, and 35 per cent for using their DERs to meet local energy needs during peak demand.
Summer of 2021
In year two of the project, the local capacity auction (which concluded in October 2021) was expanded allowing participants with “reserve-capable” DERs – participants who have the capability of delivering supply or reducing their consumption within 30 minutes – to help manage the grid during peak periods caused by unexpected events. A total of 15 MW of capacity (of which 6.8 MW is ‘reserve-capable’) was procured with a clearing price of $0.40/ kilowatt-day, lower than last year’s cost of $0.64/ kilowatt-day.
“As Ontario electricity demand is forecast to increase this decade, we’re actively exploring the integration of DERs into local and provincial electricity systems,” said Lesley Gallinger, President and CEO of IESO. “Lessons learned from this demonstration project show us how local supply options can help keep the grid reliable and affordable.”
The project is already being recognized for its contributions to the industry's best practices and inspiring innovative thinking. In July 2021, the project was accorded “Beyond Energy Efficiency” award by the Association of Energy Services Professionals (AESP).
In the context of the energy sector’s rapid evolution, it is great to see the IESO, NRCan and Alectra Utilities demonstrating the power of locally owned DERs in managing communities’ energy needs. Projects like IESO York Region Non-Wires Alternatives Demonstration Project show that there is enormous potential for energy transformation in tandem with local communities, and how innovation and collaboration can help power the energy landscape of the future. More information on the project can be found here: https://www.alectra.com/nwa.