Embed Size (px)
Citation preview
Ontario Climate Change
policy & social housing
Dana Krechowicz
Senior Advisor
Environmental Commissioner of Ontario
• Impartial
• Officer of the Legislature
• environmental watchdog
• Since 1994
2
New Environmental Commissioner: as
of Dec. 1st, 2015
Dianne Saxe
• acclaimed environmental lawyer
• Ph.D. in environmental law
3
Ontario’s GHG emissions profile
Ontario’s GHG Footprint
Sources of Ontario’s GHGs
Building sector energy use
Insuite Heating Fuel Type: Ontario
Social Housing Buildings
Ontario climate change policy
GHG Reduction Targets
Brief timeline of highlights of
Ontario action on climate change
• 2006: Metrolinx founded (“The Big Move”)
• 2007: First climate change plan, sets targets
• 2008: Ontario joins WCI
• 2009: Green Energy Act
• 2011: Climate change adaptation plan
• 2014: End of coal-fired electricity generation
Recent developments
• 2015:
– April: Cap and trade announced
– November: Climate change strategy
– December: Updated reporting regulation
• 2016:
– May: Climate bill passed, cap and trade regulation
– June: Waste-Free Ontario Act
– June: Climate Change Action Plan
Impacts on social housing
Cap and Trade
• Will increase costs of fossil fuel based
products – e.g. natural gas (heating) and
electricity
Proceeds from cap and trade
– Dedicated funds for social housing retrofits
• $900 million over 4 years - $380-500 m for retrofits, $400 m for incentives for tech upgrades in private apts
– Estimated GHG reductions: some portion of 99,000 tonnes
– Beginning in 2017/18
Reducing GHGs in buildings
• Buildings are significant source of GHGs
– Social housing – 9% of building GHGs (older, more
inefficient)
• Wide variance in performance
Buildings are getting more efficient
Building Retrofits
• Save money on utility costs – win-win
• Gov’t has dedicated hundreds of millions to
social housing retrofits
• These will likely be delivered via the Green
Bank
Existing Programs
Green Bank
• Green Bank will be a one-stop shop –
connection to energy contractors for audits
and retrofits, financing options
• Will serve homeowners, businesses…social
housing sector too?
How to prepare?
• Engage w/Gov and/or (via industry
association) – use Enviro Registry
• Know your buildings’ energy profiles and
identify worst performers
• Identify energy efficiency projects
• Build relationships w/utilities and others in
retrofit/EE field
Changing Energy MarketsHSC 2016 Energy Forum
October 27, 2016
Ca
Topics
Who is ECNG?
Ontario Electricity CostsGeneration, Transmission/Distribution, Climate Change
Natural Gas Costs to/in Ontario Supply, Transportation, Distribution, Climate Change
Who We Are
Canada’s largest full service energy management consulting firm.
Established in 1987
Privately owned
Over 2,100 clients coast-to-coast (over 21,000 end-use meters)
Over $1.5 billion energy spend managed annually
Values:Independent and objective
Committed to excellence in Client Service
Continuously searching for new value added services
Distinguished by fairness, honesty, technical knowledge and sound analytical and management capabilities
Encourage and reward dedication to client interests, achievement of results, innovation and teamwork
Forward Looking Statements
Disclaimer The material in this presentation has been prepared by ECNG Energy L.P. (ECNG) and is general background
information about energy market activities current as at the date of this presentation. This information is given in
summary form and does not purport to be complete. Information in this presentation, including forecast financial
information, should not be considered as advice or a recommendation to investors or potential investors in relation to
holding, purchasing or selling securities or other financial products or instruments and does not take into account your
particular investment objectives, financial situation or needs. Before acting on any information you should consider the
appropriateness of the information having regard to these matters, any relevant offer document and in particular, you
should seek independent financial advice. All securities and financial product or instrument transactions involve risks,
which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in
international transactions, currency risk.
This presentation may contain forward looking statements including statements regarding our intent, belief or current
expectations with respect to ECNG’s businesses and operations, market conditions, results of operation and financial
condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place
undue reliance on these forward looking statements. ECNG does not undertake any obligation to publicly release the
result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to
reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information,
actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to
uncertainty and contingencies outside ECNG’s control. Past performance is nota reliable indication of future
performance.
Ontario Electricity CostsGeneration, Transmission/Distribution,
Climate Change
POWER GENERATION SOURCES
Since 2005:• Phase out of coal fired generation is complete• Renewables have moved from insignificant to nearly 10%• Natural gas has marginally grown but has taken the role of
coal fired generation to balance the market when the other sources are not enough
POWER GENERATION SUPPLY OUTLOOK TO 2025
• Nuclear Refurbishments– Darlington nuclear refurbishment (est cost of $12.8 B; 4 units each of
900MW) is scheduled to begin in late 2016 taking one unit off at a time. Total station refurbishment to take several years.
– Bruce nuclear refurbishment is delayed for ~4 years to maintain grid reliability with Darlington at reduced production.
– Pickering station unlikely to be refurbished as it has been least reliable
• Renewable Generation contracting– Added 455 MW from 16 renewable projects (5 Wind, 7 Solar, 4 Hydro
signed last winter)– Added 241 MW Feed-In-Tariff (FIT) 4 program signed 936 contracts
June 2016)– The latest tranche of renewable power purchases (LRP II, up to
1,000MW) was recently cancelled (valued at $3.8 B) siting excess capacity
– Last week Wynne announced 7 year deal with QC to provide 500 GWhto ON “on demand” by pumping water behind QC dams reducing 1 million tonnes of GHG emissions annually
For Ontario, abundant supply, nuclear likely to be all refurbished except for Pickering
POWER DEMAND
• Annual total consumption has declined in the past 10 years –mainly a result of two large industrial losses, numerous smaller manufacturing losses and successes in Conservation and Demand Management (CDM) programs
POWER DEMAND OUTLOOK
• Looking for a slow trend of growth as Climate Change Action Plan (CCAP) costs on gas slowly influence investment in electrified space heating solutions
• CHP (Combined Heat and Power) program slows growth • Industrial Demand struggling to grow; not keeping up with US
demand growth • Market growth from electric vehicles (EV) will be slow
– require infrastructure investment (plug in receptacles)– Needs further gains in battery technology for recharge time, travel
distance, cost of replacement– Gov’t rebates not enough to bridge gap of EV cost vs gasoline
• IESO Ontario Power Outlook “B” is similar
For Ontario, power demand will struggle to grow without significant incentive funding
REGULATED PRICE PLAN ELECTRICITY PRICING
RPP has steadily been rising to cover costs of:- Coal
retirements- Renewables - Gas Fired
Generation not running
- Incentive programs like CDM, DR
RPP is offered as Two-Tier or as TOU (Time of Use)
HOURLY ONTARIO ELECTRICITY PRICING- RPP prices are based on HOEP plus Global Adjustment (GA)
- HOEP prices are low due to excess generation and those prices are not recovering the total cost of generation
- GA captures the costs of generation and programs like CDM not covered in HOEP
Polar Vortex Winter
HOEP+GA PRICING OUTLOOK
• HOEP to stay low due to lack of demand (natural gas fired generation is setting market price less than 15% of the time
• As a result GA price continues to grow covering cost of renewables, DR & CDM programs plus capacity payments for idle natural gas fired plants
• Current total price signals pushing customers to use less electricity
• “Class A” qualifying customers (5MW to 3MW to 1MW?) may lead to 1,000 end locations having the opportunity for reduced GA allocation
– the cost benefit to those moving to Class A (1 MW < Customer < 3MW) proposed to be limited to 34%
– this will put more GA costs spread amongst less demand for Class B consumers
Without market design changes or higher overall demand, RPP and HOEP+GA prices for Residential and all other non-Class A customers to continue to go up
TOTAL RESIDENTIAL POWER COST ESTIMATE- Commodity cost (HOEP) growing modestly as excess generation is reduced- GA steadily increases due to legacy fixed costs plus new costs recovered from less demand- Distribution cost growth at 2% CAGR
- Climate Change Action Plan cost of Carbon at $50/tonne by 2025 starts to become significant
Natural Gas to/in Ontario
Supply, Transportation, Distribution,
Climate Change
NATURAL GAS US, CDN PRICING
Natural gas is a true commodity in NA- ‘90s excess supply lead to increased demand and lack of investment in supply- 2000’s short supply lead to investment in supply (LNG imports, Shale gas investment) - 2010’s excess supply has lead to power gen demand and LNG exports
Great RecessionShale Gas
Short Supply
LNG ImportsExcess Supply
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
1-J
an
-10
1-A
pr-
10
1-J
ul-
10
1-O
ct-
10
1-J
an
-11
1-A
pr-
11
1-J
ul-
11
1-O
ct-
11
1-J
an
-12
1-A
pr-
12
1-J
ul-
12
1-O
ct-
12
1-J
an
-13
1-A
pr-
13
1-J
ul-
13
1-O
ct-
13
1-J
an
-14
1-A
pr-
14
1-J
ul-
14
1-O
ct-
14
1-J
an
-15
1-A
pr-
15
1-J
ul-
15
1-O
ct-
15
1-J
an
-16
1-A
pr-
16
1-J
ul-
16
1-O
ct-
16
$U
SD
/MM
Btu
Natural Gas Futures - Prompt Month
Natural Gas Prompt
NATURAL GAS FUTURES – Weather Impacts
Extreme winters in the last 4 years have resulted in strong price variations.
Price corrections in each case took 6-9 months to normalize
Mild Winter
Mild Winter
Cold Winter
NATURAL GAS RESOURCES
- Marcellus/Utica shale gas deposits have become as abundant as US Gulf Coast- 300km from Dawn HUB- AECO HUB supply 3,000 km away - Development has
just begun and will be limited by pipeline
- total NA reserves will last 40+ years
Source: Union Gas Customer Meetings June 2015
NATURAL GAS SUPPLY OUTLOOK
• NA reserves supply from Shale is substantial and can supply the growth in demand due to advances in horizontal drilling
• Supply production has slowed down due to low prices and has resulted in less investment
• Imports to US of Liquefied Natural Gas (LNG) no longer needed since the discovery of shale gas. World LNG prices have fallen due to shale development in places like Australia and will continue.
• For Ontario abundant low cost supplies are readily available in NA
NATURAL GAS DEMAND OUTLOOK
• US Power Generation – Will continue to grow replacing retiring coal and nuclear plus backstopping renewables
• US Industrial Demand – Fairly steady US demand increases forecast for the next 2 years (2.7% in 2016, 2.2% in 2017);
• US LNG Exports – Will be significant out of Gulf of Mexico predominantly with Panama Canal widening; BC very slow
• Mexico – U.S. exports to Mexico for power generation growth
• Natural Gas used for transportation in US not as significant
For Ontario, natural gas demand is flat (unlike above) and will grow due to power generation with resistance from CCAP
• Shale gas deposits are abundant, in NA and in the world putting downward pressure on NA prices and world LNG prices
• Growth in US gas demand will continue in power generation, industrial markets, Mexican and LNG exports
• Canadian Gas demand growth is modest (including Ontario) with LNG exports from BC the largest potential with lots of opposition
Natural gas prices overall rise modestly (not to the levels seen in the mid 2000s)
NATURAL GAS PRICING OUTLOOK
UPSTREAM TRANSPORTATION TO ONTARIO
Source: Union Gas Customer Meetings June 2016
UPSTREAM TRANSPORTATION TO DAWN
TCs competing proposal move BC/AB shale gas to Dawn- Using existing unused pipe capacity at a discount to current approved tolls of ~$1/GJ- This could replace the need for Nexus, Rover projects to Dawn for the next decade- 1.5 to 2.0 Bcf/d
UPSTREAM TRANSPORTATION TO ONTARIO
Source: Enbridge Gas Distribution Presentation to
OEB December 3, 2015
UPSTREAM TRANSPORTATION TO ONTARIO
Source: Union Gas Customer Meetings June 2015
- TCs Energy East to influence legacy gas costs in Eastern ON- TC converts 42” dia. pipeline across Canada to oil- Repurposing Empress to NBay reduces tolls across Canada by ~$0.9B- NB to Mtl must be
replaced (with ½ capacity) at an increased cost of over $1.5B in Eastern ON only- TC offered $0.5B
UPSTREAM TRANSPORTATION OUTLOOK
• Access to Dawn through longhaul to shorthaul conversion of TransCanada contracts provides:
– opportunity for flexibility for Ontario buyers– reduces upstream transport demand charges – increases costs to move gas around Ontario
• Bringing more gas to Dawn is a necessary by-product– competing projects are good for buyers– Dawn gas prices are higher
• Energy East (albeit good for Canada) leads to higher legacy costs for Ontario (post 2020, probability seems low)
– Less resulting capacity at a higher rate base
• Abandonment Charges (NEB approved) have also begun
For Ontario, access to supply will be improved at the expense of higher combined gas and upstream transportation costs
GAS DISTRIBUTION IN ONTARIO
Greenhouse Market growth in Leamington and Windsor leads to an expansion project
- First major distribution project since Cap & Trade
- OEB requested rates to be made using 20 year depreciation instead of 40 year
- Significant rate increases expected for Union South franchise
Source: Union Gas Customer Meetings June 2016
GAS DISTRIBUTION OUTLOOK (Res/Comm)
Ontario Gas distribution rates to rise, major drivers are:
• Ongoing recovery of OEB mandated efficiency or Demand Side Management programs
• Less throughput (from better efficiency, loss of industry) leads to higher rates to recover fixed legacy costs
• CCAP may lead to shorter depreciation terms in rate design for new projects
– eg. Union Panhandle, Enbridge GTA Reinforcement??
• CCAP “low emitters” 3.3 cents/m3 ($17/tonne CO2e) recovered in rates (Jan 2017) could grow to 10 cents /m3 ($50/tonne CO2e by 2020!) recent PM Trudeau comment to Provinces to get going on their carbon reduction plans
TOTAL RESIDENTIAL GAS COST ESTIMATE- Commodity cost up due to Dawn location includes upstream transport and high
- Transport drops as it becomes “Transport In Ontario”
- Distribution cost growth at 4% CAGR due to accelerated legacy cost recovery
- Cost of carbon at $50/tonne by 2025; current rates set at $17/tonne
Thank you!
Questions
ECNG ENERGY L.P. Contacts
Dave Duggan
Director, Energy Supply & Market Strategy
ECNG ENERGY L.P.
5575 North Service Road,
Suite 400 Burlington, ON L7L 6M1
t. 905-635-3289
c. 905-580-3289
f. 905-635-3298
www.ecng.com
Angelo Fantuz P.Eng., MBA
Director, Client Services
ECNG ENERGY L.P.
880 Richmond Street,
Chatham, ON N7M 5J5
t. 905-635-3294
f. 905-635-3294
c. 519-564-0130
www.ecng.com
ECNG is not a vendor, retailer or Energy Marketer.
ECNG does not hold a financial interest in supply or transmission functions, meaning we do not take title to any commodity
Unlike many of today’s Marketers and Retailers, ECNG works for YOU our client, not the supplier.
Independent and Objective
Why Partner with ECNG?
We would say:National Presence & Experience
Proven Methodology
Diverse range of experience throughout our team:
Buyers, Producers, Marketers
Utilities, ESCOs, Capital Markets
Natural Gas, Electricity, Alternate Fuels,
Roster of very high quality suppliers and strategic business partners
Our Clients have said:Honest and Transparent
Respectful, Flexible and easy to work with
Professional, Reliable and Committed
Image source: Allen McGregor, Flickr
GHGs, Energy and RenewalAligning Priorities for Market Transformation in Social Housing
The Toronto 2030 District is a catalyst for collective action on climate change in Downtown Toronto.
Connect | Inform | Quantify | Collaborate
What is the goal?
What does this mean for buildings?
What can we do today?
What systemic barriers are stopping us?
100%
-15%
-37%
-80%
0
50
100
150
200
250
1980 1990 2000 2010 2020 2030 2040 2050 2060
MT
CO
2E
GHG Reductions in Ontario
Ontario GHG Target Ontario GHG Actual
100%
-15%
-37%
-80%
0
5
10
15
20
25
0
50
100
150
200
250
1980 1990 2000 2010 2020 2030 2040 2050 2060
PO
PU
LAT
ION
MIL
LIO
NS
MT
CO
2E
GHG Reductions in Ontario
Ontario GHG Target Ontario GHG Actual Ontario Population
1990, 100%
2020, -40%
2030, -60%
2050, -89%
2005, -5%
2014, -30%
0
2
4
6
8
10
12
14
16
18
20
TO
NN
ES
CO
2E
PE
R C
AP
ITA
1990-2050
Ontario GHG Per Capita Targets
GHG EMISSIONS TARGET - HOUSING
11%BY2050
$-
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
2009 2010 2011 2012 2013 2014 2015 2016
Co
st P
er
ekW
hEmissions Per Unit of Heating
Gas GHGs/ekWh
Electric GHGs/ekWh
o Better Windows
o High Efficiency Heating Plant
o Heat-Recovery Ventilators
o Water Efficiency
o Drain Water Heat Recovery
�
�
�
o Ground-Source or Cold Weather Air-
Source Heat Pump for space
heating/cooling and domestic hot water
�
�
�
$-
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
2009 2010 2011 2012 2013 2014 2015 2016
Co
st P
er
ekW
hEmissions Per Unit of Heating
Gas GHGs/ekWh
Electric GHGs/ekWh
Heat Pump GHGs/ekWh
Heating and Cooling Requirements
REQUIRES HEATING
365
REQUIRES COOLING
Heating and Cooling Requirements
365
REQUIRES HEATING
REQUIRES COOLING
http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=b8170744ee0e1410VgnVCM10000071d60f89RCRD
http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=b8170744ee0e1410VgnVCM10000071d60f89RCRD
GRG Building Consultants Inc.
Market Transformation requires SUSTAINED
and ALIGNED action across a number
activity areas to create positive feedback
loops.
Mutually Reinforcing Activities
1. MEASUREMENT Frameworks, tools and institutions to assess performance
2. DESIGN & DELIVERY Technologies, processes, best practices
3. FINANCE Financial tools and methods
4. ENGAGEMENT Behaviour change, public awareness, demand, and capability
5. INDUSTRY CAPACITY BUILDING Industry training and promotion
6. POLICY Political leadership, objectives and regulation
7. LEGAL Legal processes and contractual frameworks
8. INFRASTRUCTURE INTEGRATION Power, water and transportation infrastructure
9. PROCUREMENT Markets, Supply chains, and purchasing
10. MOBILIZATION & LEADERSHIP Coordination, promotion, and mobilization
GHG Targets
Energy Conservation
Funding
Building Codes
Energy Prices
Energy Disclosure
Policy Enforcement
Alignment of programs/regulation to
include GHGs
Improve GHGs on the Utility Side
Stronger price signals
LAST THOUGHTS…
� Benchmark your building > include carbon
� Less consumption is always a good start
� Controls, controls, controls
� Think at least 20 years ahead – will a major change you
make today still work in the future?
� Look for double wins – i.e. recladding + structural
restoration, peak shaving + back-up power
� Don’t forget about resilience
