Ontario's purchase of natural gas plants will cost ratepayers and the environment, critics say

Ontario’s decision to spend $2.8 billion to buy natural gas plants during the climate crisis will hinder the province's climate goals and dent ratepayers’ wallets, critics and green advocates say.

Ontario Power Generation (OPG), which is owned by the provincial government, finalized a deal on April 29 to buy three natural gas assets from TC Energy, formerly known as TransCanada. But natural gas-fired power is more expensive than green alternatives, and relying on fossil fuels for electricity threatens to erase Ontario’s climate progress, said NDP energy and climate crisis critic Peter Tabuns.

“Why you would spend almost $3 billon buying fossil fuel plants in the 21st century during the climate crisis is beyond me,” he said. “It’s a big step backwards into the past.”

OPG is a for-profit business entity owned by the government that generates 50 per cent of the electricity used in Ontario. The gas plant sale, done through OPG sudsidiary Atura Power, was first announced in July but finalized last week.

The Progressive Conservative government has spent $231 million so far to cancel some 750 renewable energy projects, most of which went to the axed White Pines wind farm project in Milford, Ont. That total may eventually rise ⁠— in December, Premier Doug Ford’s government ordered the partially built Nation Rise wind farm to be cancelled and taken down, with the company behind it losing $230 million in sunk costs. (The company, EDP Renewables, has launched a court challenge of the decision.)

Meanwhile, the government has rebuffed an offer from Quebec to provide it with a long-term supply of cheap hydroelectric power. And greenhouse gas emissions from electricity generation in Ontario are set to nearly triple over the next decade as natural gas is increasingly used to make up for green energy cuts and planned nuclear refurbishment, the Independent Electricity Systems Operator (IESO), which operates Ontario’s energy market, said in January.

That could erase a third of the emissions cuts Ontario achieved when it phased out coal, said Jack Gibbons, chair of the Ontario Clean Air Alliance. It would also make it nearly impossible for Ontario to achieve its climate goals.

“This is a very bad investment, both from an economic perspective and climate perspective,” Gibbons said. “It’s a waste of $2.8 billion.”

In an emailed statement, OPG spokesperson Neal Kelly said the province was already using the natural gas-fired plants, and owning them puts the province in a better position. He also said natural gas gives the energy grid flexibility and reliability.

“This is simply a transfer of existing natural gas plants to a different owner, which benefits the province and customers,” Kelly said. “The GHG emissions will not change, regardless of who owns the facility.”

'Why does TC Energy want to sell them?'

Ontario Green party Leader Mike Schreiner said it’s “economically risky and environmentally irresponsible” to push forward with natural gas.

“Ontario is getting further away from its climate targets because this government continues to rip up clean energy projects and ramp up dirty ones,” he said in a statement.

Others say gas plants are necessary. IESO spokesperson John Cannella said in an emailed response to National Observer that the province needs a mix of several electricity sources.

“Wind and solar are intermittent sources of power, producing energy depending on how strong the wind blows and how bright the sun shines,” he said.

“When they aren’t able to generate the power needed because of changes in weather or other system conditions, natural gas is one of the flexible resources that can respond to those changing conditions and ramp up production to help address any gaps on the system.”

Sydney Stonier, a spokesperson for Energy Minister Greg Rickford, did not answer a question about why natural gas is a better choice than Quebec hydro. But in an email, she said natural gas gives the grid a reliable power supply.

“In comparison to alternative choices (e.g., renewables, imports), natural gas generation provides the needed flexibility to respond to changing conditions in the power system,” Stonier said.

Sarah Buchanan, who manages the clean energy program at Environmental Defence, said hydro power from Quebec would be a far cheaper and cleaner way to achieve the same thing. The gas plants also represent a risky investment in a time where many countries, Canada included, have announced plans to shift towards a low-carbon future, she added.

“Ratepayers now own what could become stranded assets,” she said. “You’ve got to ask the question: Why does TC Energy want to sell them?”

In its statement announcing the deal had been finalized, TC Energy said the transaction would leave the company in a better financial position.

In the United States, analysts have sounded alarms about the increasing risk that natural gas plants may need to be written down before their planned lifetimes are over as more jurisdictions push for clean energy options. And in 2017, the Sierra Club called gas plants a “superhighway to climate disaster.”

Napanee gas plant was central to Liberal government scandal

OPG’s deal with TC Energy includes three plants ⁠— one outside of Toronto in Halton Hills, one in Napanee, Ont., and a third, which OPG already owned 50 per cent of, in Toronto’s Port Lands.

OPG previously closed a deal for a fourth gas plant, in the Brighton Beach area of Windsor, Ont., in August 2019.

The Napanee facility has a history in Ontario politics: It was a central piece of the previous Liberal government’s gas plants scandal, which cost the province about $1 billion.

Before the 2011 provincial election, the government in power at the time axed two gas plants that had faced local opposition in ridings the Liberals needed to win to remain in power. One of those plants was a TC Energy facility in Oakville; the government had to take on the added costs of moving that plant to Napanee. In the end, the government had to pay not only for costs sunk in the original two plants and the cost of relocating them, but also for transmitting that electricity back to Toronto.

Tabuns said OPG’s purchase is similarly bad for Ontario.

“To shut down wind, to shut down conservation programs and to buy $3 billion of fossil fuel power plants shows this government has no interest in addressing the climate crisis,” Tabuns said.

“That’s not what the future is."

Editor's Note: This story was updated at 9:39 a.m. on May 7, 2020 to correct that OPG is a government-owned business, not a crown corporation, and that it produces 50 per cent of Ontario's energy.