2018
Aug
17
The Value of Electricity Conservation

Over the last decade, electricity conservation has benefitted Ontarians in many ways: lowering electricity bills, protecting the environment, and improving living standards. Critics often question whether electricity conservation is needed when the province has surplus electricity. The answer is, yes. The ECO’s Making Connections report explains that during hours of peak demand, Ontario has very little electricity to spare, especially during hot summers like the one the province is having this year.

Electricity conservation is still needed, though Ontario can do more to make it more effective at reducing system and environmental costs. Conservation should be focused more on times of peak demand – when Ontario’s electricity relies on its natural gas plants, which emit greenhouse gases that contribute to climate change. In the near future, more electricity conservation will be needed at all times of the day as Ontario’s current surplus will not last long; more electric vehicles and heating systems will increase electricity demand, while retiring one of Ontario’s nuclear plants will decrease supply.

Benefits of Electricity Conservation

Current province-wide electricity conservation programs offer financial incentives to homes, businesses, schools, office buildings and industries to encourage participation.

Customers can save money when purchasing energy-efficient equipment and devices, and on their electricity bills once the equipment is running. For low-income and Indigenous customers, these programs are offered at little or no cost, reducing financial stress while increasing living comfort, and health and safety.

“Many homes in vulnerable communities are electrically heated. The benefits from improved thermal comfort, and reduction in heat- and cold-related and financial stress can be significant for conservation measures targeting the building envelope or heating or cooling systems.” – Making Connections, page 307

Investment in conservation has also had economic benefits for companies. Local companies have developed new technologies such as evaluation software and reporting tools to track conservation programs. Contractors have hired and trained employees to deliver conservation programs across the province, and specialized jobs like energy managers have become more common.

Electricity conservation has significant environmental and financial benefits:

  1. More conservation means less generation that emits greenhouse gases.

This is more important when demand is high, and to meet that demand, Ontario must turn to expensive gas generation plants that release greenhouse gases into the atmosphere. Investing in conservation means the province saves on the operational and fuel costs of running gas plants.

  1. Electricity savings from conservation often last for several years.

Today’s programs help delay or eliminate the need to build expensive new electricity generating plants, or improve transmission and distribution equipment. This can save the province money now and in the future.

How much does electricity conservation cost?

To date, conservation remains the most cost-effective way to increase electricity supply in the province (see Figure 19.3 of the ECO’s Making Connections report, and below). In addition, it has no negative environmental impact. All electricity conservation programs are required to be cost-effective, meaning the benefits must outweigh the costs to be eligible for delivery. This includes programs for low-income and/or Indigenous communities that must form part of a cost-effective portfolio. The ECO has noted before, however, that this cost-effectiveness test can be further improved (see Chapter 19 in Making Connections report), and the province committed to work on this.

Graph of estimated minimum cost of new electricity generation in Ontario in 2016.

Minimum cost estimates of new electricity generation in Ontario, 2016. Source: Independent Electricity System Operator, information provided in response to ECO inquiry (31 January 2018).

How much electricity has the province saved?

Since 2006, electricity conservation programs run by utilities have saved Ontario 68 billion kWh of electricity. This translates to about 2.5 years’ worth of electricity consumption in the Toronto area. Figure 19.2 in our Making Connections report shows the amount of continuing electricity savings from province-wide conservation programs since 2006. Without electricity conservation programs, Ontario’s electricity use would have been 5% higher in 2016. These savings will last for years to come.

Under the current framework alone, 50 million energy-efficient devices have been bought across the province. As well, 12 local/regional programs and over 20 conservation pilots have been launched by local distribution companies (LDCs) and local companies.

In Chapter 19 of our Making Connections report, the ECO noted there are still more opportunities for the province to expand electricity conservation and save even more money.

Graph of 2006-2016 electricity savings from IESO/LDC conservation programs.

Persistent electricity savings from IESO/LDC conservation programs, 2006-2016. Source: Independent Electricity System Operator, information provided in response to ECO inquiry (31 January 2018). Note: this figure tracks persistent savings from IESO-LDC delivered conservation programs only, and not savings from other policies and initiatives that led to electricity savings, which is discussed in more detail in Chapter 3 of the ECO’s Making Connections report.

Conclusion

Electricity conservation has been a critical part of Ontario’s electricity system, and will become even more important in the coming years. The ECO has a mandate to monitor and report on progress on electricity conservation, as well as the conservation of other fuels. Read the ECO’s latest reports on energy conservation on our website.

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