Ontario's Independent Electricity System Operator Releases Draft

By - David
22.11.21 11:02 AM

On November 2, 2021, Ontario's Independent Electricity System Operator (“IESO”) posted a draft of its Medium-Term RFP (the “Draft RFP") under it's Resource Adequacy Framework.


The Draft RFP intends to acquire capacity services to meet systems needs from existing Electricity generation or storage resources. The Medium-Term RFP represents the IESO's transition to a reliability product/service based acquisition framework, establishing the processes and criteria in which the IESO proposes to procure up to 750 MW of year-round capacity services (The “Target Capacity”).


Successful proponents will be awarded contracts for a three year commitment period starting May 1, 2026 and ending on April 30, 2029. There is an optional two year extension period ending April 30, 3031 (the “Commitment Period”).



Purpose of the Medium-Term RFP


Ontario has recognized the necessity to address in a timely, cost-effective and flexible manner, the emerging electricity system needs, driven by increasing demand, the retirement of the Pickering nuclear plant, the refurbishment of other nuclear generating units, as well as expiring contracts for existing facilities.


Compared to the pending Long-Term RFP, potentially beginning in 2022, which aims to procure at least 1,000 MW of new and incremental capacity from existing and new-build resources (that can enter service between 2026-2028 for a seven-to ten-year period), the Draft RFP is geared toward addressing a specific forecasted capacity need limited primarily to already connected resources with or without expiring contractors.



The Draft RFP


This is some key information about the Draft RFP:


1.        Eligibility Requirements

This Medium-Term RFP process is only open to those Proponents qualified as “Qualified Applicants”. Qualified Applicants are the legal and documented owners of one or more “Qualified Facilitates”, being existing and operating Electricity generation or storage facilities that:

i.        have the ability to deliver capacity services in accordance with the terms of the Medium-Term Capacity Contract; and

ii.        connect to the Ontario grid as of the proposal submission deadline; and

iii.        currently or previously the subject of an IESO contract that has or will expire by April 30, 2016, or is otherwise registered with the IESO and not under contract.

Any and all other parties who are not Qualified Applicants are not eligible to participate in this Medium-Term RFP. Proponents must be a single legal Person and may not be an unincorporated joint venture of multiple Persons. Each Proposal must be specific to an individual Qualified Facility.


2.        Medium-Term Capacity Contract

The Medium-Term Capacity Contract will be a capacity-style contract, and will pay suppliers a fixed monthly capacity payment. The Medium-Term Capacity Contract will have two categories of Qualified Facilities, each with a corresponding system reliability-based performance requirement.

Each Qualified Facility will be categorized as either:

i.        a registered facility under the Market Rules and that is not variable generation, or a self-scheduling generation facility and is thus required to meet the Must-Offer Obligation (a “Must-Offer QF”); or

ii.        a Qualified Facility which is not a Must-Offer QF, and is subject to a Facility Capacity Factor Obligation (a “FCF QF”).

3.        Process Overview

Below is a schedule relating to this Medium-Term RFP process


The IESO reserves the right to accelerate, postpone, add, eliminate, or re-order any of these dates. The IESO may amend the Schedule from time to time by Addendum.


4.        Proposal Evaluation

The evaluation of Proposals will be conducted by the IESO in four distinct stages :

i.        Stage 1 – Completeness Requirements : Pass or fail depending on whether the Proposal is complete and contains all documents, forms and declarations.


ii.        Stage 2 – Mandatory Criteria : The proponent should be a Qualified Applicant,
with a Qualified Facility, and the Qualified Facility’s Nameplate Capacity provided during the registration process is substantially accurate.


iii.        Stage 3 – Rated Criteria Scoring : The successful proposals will be evaluated by the IESO and receive a maximum of 11 points based on the criteria of: location, dispatchability, operating reserve and duration.


iv.        Stage 4 – Proposal Price Ranking by Evaluated Proposal Price : All Proposals whose Rated Criteria has been evaluated in Stage 3 and whose Proposal Price is below the Reserve Price, shall have their Proposal Price evaluated using the Rated Criteria Points to calculate the “Evaluated Proposal Price”, those above the reserve price will be automatically disqualified and rejected.


More information about the Draft RFP can be found here.



Final remarks


The lack of any mandator scoring or criteria related to emissions reduction in the Draft DFP demonstrates the need for clear guidance and direction from the provincial government, the IESO, and the Ontario Energy Board. However, there is still an opportunity to further integrate emissions-related criteria in the Medium-Term (and Long-Term) RFP. This will be critical to meet and develop and achievable pathway to the zero emissions the electricity sector.


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