Demonstration Project to Test Ontario’s First Local Electricity Market

The Independent Electricity System Operator (IESO) is launching Ontario’s first ever local electricity market in the York Region, with support from Alectra Utilities and Natural Resources Canada, in an effort to save costs and find affordable alternatives to building new transmission infrastructure.
Demonstration Project to Test Ontario’s First Local Electricity Market

The local electricity market will allow resources like solar panels, energy storage, and consumers capable of reducing their electricity use to compete to be available during periods of high demand. Leveraging existing local resources could help avoid the need to invest in new transmission lines and stations, while competition will drive down costs.

“When we’re out talking to communities, one common theme we hear is a desire to have more choice in how their electricity needs are met,” said Terry Young, Vice-President of Policy, Engagement and Innovation at the IESO. “This pilot will help us learn if we can enable that choice while also reducing costs for Ontarians”.

Resources connected to local distribution networks, known as distributed energy resources (DERs), are increasing across North America and currently make up about 10 percent of Ontario’s electricity capacity. This is changing the dynamic of power systems, which have traditionally relied on large generators transmitting power across long distances into communities and homes.

Electricity demand in the York Region is expected to grow and exceed system capability in the next 10 years, making it an ideal location to test how DERs can provide affordable alternatives to building new transmission infrastructure.

A key learning from this pilot will be how local electricity markets can be integrated with the provincial electricity market. Ontario’s provincial electricity market is currently being renewed to increase competition, including through the use of capacity auctions beginning in December.

Funding for the demonstration comes from the IESO’s Grid Innovation Fund and Natural Resources Canada’s Smart Grid Program. Alectra will help deliver the pilot program, which is expected to launch in the second quarter of  2020.

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