Ontario CHP Program Succeeding Quietly

Ontario CHP Program Succeeding Quietly

Combined heat and power, known also as cogeneration, has experienced a modest period of growth in Ontario over the last two years. Although there has been relatively little media and public attention to these new projects, and despite taking years to come to fruition, they are benefitting from some well-honed, government-led forms of procurement that are producing results and well integrated with the needs of local utilities.

That said, it must be noted that the LTEP announced an end to the conservation incentive programs for behind the meter CHP fuelled by natural gas. The most important item from a CHP perspective is that applications for conservation incentives for fossil fuel based CHP will not be considered starting July 1, 2018. Ontario is somewhat unusual in that one of its primary forms of CHP procurement is “Conservation CHP,” in which local utilities count the electricity from new behind the meter CHP projects towards their regulatory obligations to meeting 6 year conservation targets.

A study prepared this year by Navigant for the IESO, “Conservation Behind the Meter Generation Potential,” identified 107 CHP projects, and three “waste energy recovery” (WER) projects already in operation in Ontario, representing about 1.1 gigawatts of existing behind the meter generation (BMG). By way of a sample, the installations range in size from 30 kW to 160MW. Seven out of the 107, or 6.5%, are transmission-connected. The top three industries represented (in number of projects) are light manufacturing, hospitals, food & beverage manufacturing. Thirty-four out of the 107 (32%) are administered by the IESO.

For its part, the IESO has released the number and capacity figures for existing and contracted but not yet in service BMG CHP and WER. Table 1 compares the figures from Navigant and the IESO’s most recent progress report. The larger number of projects identified by Navigant reflects projects installed under a number of programs, while the IESO figures refer specifically to its ongoing conservation CHP program. In addition, existing installations that Navigant were removed from its estimates before calculating the remaining potential.

Table 1: Behind the meter facilities, present and potential, 2017 and 2025

 

Navigant

IESO

 

capacity, MW

Number

 

capacity, MW

Number

In-service BMG projects

1,053.558 CHP

9.4 WER1

107

In-service, PSU2

In-service, IAP3

62.347 CHP

38.5 WER

20

Market potential, 2017

43 CHP

1 WER

-

Contracted, not yet in service

56.899 CCHP4

67.165 WER

5

Market potential, 2025

147 CHP

4 WER

-

-

-

-

Potential customers

-

27,000

-

-

-

1. Waste Energy Recovery
2. Process & Systems Upgrade program, distribution-connected and administered by the local distribution company. Capacity 500 kW to 10 MW
3. Industrial Accelerator Program, transmission-connected and administered by the IESO. Capacity to 20 MW.
4. Conservation Combined Heat and Power

Navigant went on to estimate, using some sophisticated modeling, the additional amount of BMG that could be put into service by the end of 2017 and by the end of 2025. That modeling exercise came up with several sets of numbers, under a successively restrictive set of real-world considerations: first, the technically possible; then the realistic market potential, then removing those projects that would be restricted by grid constraints. In addition, it calculated the likely effect of the price of carbon under Ontario’s greenhouse gas pricing system, concluding that the carbon price would reduce the market-achievable CHP would be reduced by about 20%, due to the carbon price being added to the cost of the natural gas that CHP facilities almost universally rely on.

The June issue of IPPSO FACTO carried a story (“CHP would reduce Ontario’s GHG emissions”) that predicted this would be the very effect of a price on carbon, and argued that an unintended consequence would be to remove the beneficial effect that CHP has on the efficiency of energy use in the grid.

To read the full article, please click here.

Published by APPrO
December 2017