July 5-12, 2004

Ontario issues second clean energy RFP

The Ontario government has issued its second Request for Proposals (RFP) for new electricity generation capacity from cleaner sources. The RFP is seeking up to 2,500 megawatts (MW) of new capacity and/or conservation measures, to be in place as early as 2005. This represents one-third of the province's commitment to replace coal-fired generation through cleaner sources of energy or conservation.

Prospective proponents will be required to submit a summary of qualifications, which will be due by 3:00 p.m. on August 3, 2004. Final contracts relating to the RFP will be released on August 30 and proposals will be due by 3:00 p.m. on November 1, 2004. Plans call for the proponents to be announced February 1, 2005. Full details may be viewed on the RFP Web site, www.ontarioelectricityrfp.ca.

"This RFP is an important step towards keeping our commitment to replace coal-fired generation, and to ensure a reliable, sustainable and diverse supply of competitively priced power for the people of Ontario," said Energy Minister Dwight Duncan. "Not only are we looking for new generation capacity, we are also looking for projects that conserve electricity, and we will treat them equally," he added.

An initial RFP for 300 MW of new renewable energy capacity was issued on April 28, opening the door for newer and cleaner sources of power. Duncan reported that to date, 90 proponents have expressed an interest in the renewables RFP, representing approximately 4,400 MW of potential renewable energy capacity. The deadline for this RFP is August 25, 2004. It is expected that successful projects could be announced before the end of the year, with new electricity on-line as early as 2006.

"We have received expressions of interest that would total approximately 4,400 megawatts of renewable supply, including wind, solar, water, biomass and landfill gas - that's almost 15 times the amount of clean, green electricity we're currently seeking," Duncan said. "I am extremely encouraged by the industry's positive response to this initiative. This is a solid indication that we can meet our renewable energy targets, and improve the quality of our air with greener sources of power."

The Ministry of Energy has chosen NERA Economic Consulting to act as the technical advisor for both RFPs. In this capacity, the firm will oversee the competitive contracting process, assisting the Ministry in the development, implementation and oversight of a competitive bidding process aimed at ensuring that urgent capacity needs are met in the most cost-effective way possible. NERA is an international economic consulting firm specializing in issues related to industry restructuring, regulation, business strategy and public policy. The company will draw on staff from its offices in Cambridge, Massachusetts, Washington D.C. and New York City to establish a project team for this assignment.

The Ontario government has set a target of generating 5% (1,350 MW) of the province's total energy capacity from renewable sources by 2007, and 10% (2,700 MW) by 2010. Non-hydro renewable electricity sources currently make up less than 1% per cent of Ontario's overall supply mix.

In related activities, Duncan announced that the province has endorsed a plan to expand power generation in the Niagara region through the Niagara Tunnel project.

"The Niagara Tunnel project is economically feasible, and we are pleased to endorse Ontario Power Generation's recommendation to initiate the project immediately," he said, noting that "this undertaking is the single biggest construction project for the Niagara region since the Beck 2 Generating Station was built 50 years ago."

The Niagara Tunnel project will divert and carry additional water from above Niagara Falls to existing turbines at the Sir Adam Beck Generating Station at Queenston Heights.

"Under the existing international treaty we are able to better utilize the water in the Niagara River for electricity generation, while not detracting in any way from the beauty of the Falls," said OPG chairman Jake Epp. "When completed, the Niagara Tunnel will deliver enough additional water to increase generation output from the Beck Complex by about 1.6 terawatt-hours of clean, renewable electricity every year - enough electricity to more than meet the annual needs of a city about twice the size of Niagara Falls."

In August 2003, the government retained Klohn Crippen was retained by the government to conduct an independent economic and technical study on the feasibility of the Beck 3 project, which would have seen a third generating station constructed. The report found that there is not enough water on the Canadian side of the Niagara River to justify the economics of the Beck 3 project. The Report on the Economic Feasibility and Means for Financing Study of the Beck 3 Generating Station may be viewed on the Ministry Web site, www.energy.gov.on.ca.

Having received the government's endorsement, OPG will initiate an open, competitive and international RFP process to select a builder for the 10.5-kilometre tunnel. The successful bidder will be required to construct the tunnel as a turnkey project. The tunnel will pass under the city of Niagara Falls. During construction, steps will be taken to minimize disruption on the community and tourism in the area. Construction of the tunnel could begin as early as next year, with completion of the project expected in 2009.

More information on this project is available on OPG's Web site, www.opg.com.

Table of Contents  | Top of Page


  Ecolog Network