Building the Electricity Marketplace of Tomorrow

- By Sarah Roger -

Senior Communications Advisor, Market Renewal Program, Independent Electricity System Operator, (IESO)

Updating the operating system on our smartphones may be a minor hassle, but it presents longer-term benefits. We update our smartphone’s operating system to enjoy new features, enhance performance and fix bugs. If we don’t perform the updates, we would miss out on those new features and our smartphone may begin to operate sluggishly and have costly repairs over time.

The same goes for Ontario’s electricity markets. They need to be updated to better align with other jurisdictions, address known inefficiencies and lay the foundation to integrate future technologies.

The wholesale electricity markets are nearly 20 years old and while important design improvements have been made over the years, more foundational changes are now required.

Back in 2002, electricity was mostly generated from a combination of coal, hydro and nuclear, and consumers did not have many tools or technologies to understand or manage their use of this resource. Since then, new technologies have emerged, more competitors have entered the market, the use of coal has been eliminated, the pace of change has increased, demand is harder to predict and customers are more engaged.

Just like smartphones, electricity markets need to keep up with dramatic sector-wide developments to ensure we are meeting the needs of those operating in the sector and maximizing value for consumers. This is precisely IESO’s goal with the multi-year Market Renewal Program. Designed to achieve significant operational efficiencies and support the grid of the future, implementing the program will deliver substantial value to the system and Ontario ratepayers – an expected $800 million in benefits in the first 10 years alone. For instance, one of these efficiencies will come from the introduction of a day-ahead market, where participants submit day-ahead bids and offers, better preparing everyone for realtime operations – a new feature for Ontario but already seen in most other North American markets. Better scheduling and commitment of resources is expected to deliver the bulk of the efficiencies amounting in over $500 million in savings alone.

Renewing Ontario’s electricity markets will create a more efficient and flexible platform that allows Ontario to better utilize its existing assets. The changes will also enable existing and future market participants to anticipate future needs and incentivize innovative solutions to meet emerging challenges.

Market renewal will also reduce out-of-market actions and payments, meaning costs will flow through the market in a more transparent manner. Increased transparency and operational certainty will create clearer investment signals for existing and new market participants.

Stakeholder input has been central to design the updated electricity markets and has resulted in us incorporating additional reporting, enhanced processes and greater flexibility for how energy is provided. The IESO continues to work transparently across a variety of forums with stakeholders to ensure market renewal will deliver solutions that work for the sector and consumers.

The IESO is always looking for more voices at the table. If you’re interested in learning more about what opportunities these efforts bring to you, get involved by visiting ieso.ca/market-renewal.