IESO releases 18-month outlook

BNEF 2019 New Energy Outlook projects surging renewable energy demand, aggressive decarbonization, wind and solar cost declines, battery storage growth, coal phase-out, and power market reform to meet Paris Agreement targets through 2050.

Key Points

Bloomberg's NEO 2019 forecasts power demand, renewables growth, and decarbonization pathways through 2050.

✅ Predicts wind/solar to ~50% of global electricity by 2050

✅ Foresees coal decline; Asia transitions slower than Europe

✅ Calls for power market reform and battery integration

In a report that examines the ways in which renewable energy demand is expected to increase, Bloomberg New Energy Finance (BNEF) finds that “aggressive decarbonization” will be required beyond 2030 to meet the temperature goals of the Paris Agreement on climate change.

Focusing on electricity, BNEF’s 2019 New Energy Outlook (NEO) predicts a 62% increase in global power demand, leading to global generating capacity tripling between now and 2050, when wind and solar are expected to make up almost 50% of world electricity, as wind and solar gains indicate, due to decreasing costs.

The report concludes that coal will collapse everywhere except Asia, and, by 2032, there will be more wind and solar electricity than coal-fired electricity. It forecasts that coal’s role in the global power mix will decrease from 37% today, as renewables surpass 30% globally, to 12% by 2050 with the virtual elimination of oil as a power-generating source.

Highlighting regional differences, the report finds that:

Western European economies are already on a strong decarbonization path due to carbon pricing and strong policy support, with offshore wind costs dropping bolstering progress;

by 2040, renewables will comprise 90% of the electricity mix in Europe, with wind and solar accounting for 80%;

the US, with low-priced natural gas, and China, with its coal-fired plants, will transition more slowly even as 30% from wind and solar becomes feasible; and

China’s power sector emissions will peak in 2026 and then fall by more than half over the next 20 years, as solar PV growth accelerates, with wind and solar increasing from 8% to 48% of total electricity generation by 2050.

Power markets must be reformed to ensure wind, solar and batteries are properly remunerated for their contributions to the grid.

The 2019 report finds that wind and solar now represent the cheapest option for adding new power-generating capacity in much of the world, amid record-setting momentum, which is expected to attract USD 13.3 trillion in new investment. While solar, wind, batteries and other renewables are expected to attract USD 10 trillion in investment by 2050, the report warns that curbing emissions will require other technologies as well.

Speaking about the report, Matthias Kimmel, NEO 2019 lead analyst, said solar photovoltaic modules, wind turbines and lithium-ion batteries are set to continue on aggressive cost reduction curves of 28%, 14% and 18%, respectively, for every doubling in global installed capacity. He explained that by 2030, energy generated or stored and dispatched by these technologies will undercut electricity generated by existing coal and gas plants.

To achieve this level of transition and decarbonization, the report stresses, power markets must be reformed to ensure wind, solar and batteries are “properly remunerated for their contributions to the grid.”

Additionally, the 2019 NEO includes a number of updates such as:

• new scenarios on global warming of 2°C above preindustrial levels, electrified heat and road transport, and an updated coal phase-out scenario;
• new sections on coal and gas power technology, the future grid, energy access, and costs related to decarbonization technology such as carbon capture and storage (CCS), biogas, hydrogen fuel cells, nuclear and solar thermal;
• sub-national results for China;
• the addition of commercial electric vehicles;
• an expanded air-conditioning analysis; and
• modeling of Brazil, Mexico, Chile, Turkey and Southeast Asia in greater detail.

Every year, the NEO compares the costs of competing energy technologies, informing projections like US renewables at one-fourth in the near term. The 2019 report brought together 65 market and technology experts from 12 countries to provide their views on how the market might evolve.

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Enbridge Alberta CCS Project targets carbon capture and storage in Alberta, capturing emissions from industrial emitters to advance net-zero goals, leveraging carbon pricing, regulatory support, and a hub model despite a key partner's exit.

Key Points

A proposed Alberta carbon capture hub by Enbridge to store industrial emissions and support net-zero targets.

✅ Seeks emitters across power, oil and gas, and heavy industry

✅ Backed by carbon pricing, regulation, and net-zero mandates

✅ Faces high capex, storage risk, and anchor-tenant uncertainty

Enbridge Inc., a Canadian energy giant, is digging its heels in on its proposed carbon capture and storage (CCS) project in Alberta. This comes despite the recent withdrawal of Capital Power, a major potential emitter that was expected to utilize the CCS technology. Enbridge maintains the project remains viable, but questions linger about its future viability without a cornerstone anchor.

The CCS project, envisioned as a major carbon capture hub in Alberta, aimed to capture emissions from industrial facilities and permanently store them underground. This technology has the potential to play a significant role in reducing greenhouse gas emissions and mitigating the effects of climate change, alongside grid solutions like bridging the Alberta-B.C. electricity gap that can complement decarbonization efforts.

Capital Power's decision to shelve its $2.4 billion Genesee Generating Station project, which was designed to integrate with the CCS hub, threw a wrench into Enbridge's plans. The Genesee project was expected to be a key source of emissions for capture and storage, and its status is being weighed as Ottawa advances the federal coal plan to phase out unabated coal.

Enbridge, however, remains optimistic. The company cites ongoing discussions with other potential emitters interested in utilizing the CCS technology, amid new funding signals such as the U.S. DOE's $110M for CCUS that highlight momentum. They believe the project holds significant value despite Capital Power's departure.

"We are confident in the long-term viability of the project and continue to actively engage with potential customers," said Enbridge spokesperson Rachel Giroux. "Carbon capture and storage is a critical technology for achieving net-zero emissions, and we believe there is a strong business case for our CCS project."

Enbridge's confidence hinges on several factors. Firstly, they believe there is a growing appetite for CCS technology amongst industrial facilities facing increasing pressure to reduce their carbon footprint. Regulations and carbon pricing mechanisms, including new U.S. EPA power plant rules that test CCS readiness, could further incentivize companies to adopt CCS solutions.

Secondly, Enbridge highlights the potential for capturing emissions from not just power plants but also from other industrial sectors like oil and gas production and clean hydrogen projects in Canada, where reforming processes can generate CO2. This broader application could significantly increase the captured carbon volume and strengthen the project's economic viability.

However, skepticism remains. Critics point to the high upfront costs associated with CCS development and the nascent stage of the technology. They argue that without a guaranteed stream of captured emissions, the project might not be financially sound. Additionally, the long-term safety and effectiveness of large-scale carbon storage solutions remain under scrutiny.

The success of Enbridge's CCS project hinges on attracting new emitters. Replacing Capital Power's contribution will be a significant challenge. Enbridge will need to demonstrate the project's economic viability and navigate the complex regulatory landscape surrounding CCS technology.

The Alberta government's position on CCS is crucial. While the government has expressed support for the technology, the level of financial and regulatory incentives offered will significantly impact investor confidence, especially as the IEA net-zero outlook underscores Canada's need for much more electricity. A clear and stable policy framework will be essential for attracting emitters to the project.

The future of Enbridge's CCS project remains uncertain. Capital Power's withdrawal is a setback, but Enbridge's continued commitment suggests they believe the technology holds promise. Whether they can find enough emitters to justify the project's development will be a critical test. The outcome will have significant implications for the future of CCS technology in Alberta and Canada's broader efforts to achieve net-zero emissions, including Canada-Germany clean energy cooperation that seeks to scale low-carbon fuels.

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COVID-19 Impact on Electricity Demand, per IEA data, shows 15% global load drop from lockdowns, with residential use up, industrial and service sectors down; fossil fuel generation fell as renewables and photovoltaics gained share.

Key Points

An overview of how lockdowns cut global power demand, boosted residential use, and increased the renewable share.

✅ IEA review shows at least 15% dip in daily global electricity load

✅ Lockdowns cut commercial and industrial demand; homes used more

✅ Fossil fuels fell as renewables and PV generation gained share

The daily demand for electricity dipped at least 15 per cent across the globe, according to Global Energy Review 2020: The impacts of the COVID-19 crisis on global energy demand and CO2 emissions, a report published by the International Energy Agency (IEA) in April 2020, even as global power demand surged above pre-pandemic levels.

The report collated data from 30 countries, including India and China, that showed partial and full lockdown measures adopted by them were responsible for this decrease.

Full lockdowns in countries — including France, Italy, India, Spain, the United Kingdom where daily demand fell about 10% and the midwest region of the United States (US) — reduced this demand for electricity.

Reduction in electricity demand after lockdown measures (weather corrected)

Source: Global Energy Review 2020: The impacts of the COVID-19 crisis on global energy demand and CO2 emissions, IEA

Drivers of the fall

There was, however, a spike in residential demand for electricity as a result of people staying and working from home. This increase in residential demand, though, was not enough to compensate for reduced demand from industrial and commercial operations.

The extent of reduction depended not only on the duration and stringency of the lockdown, but also on the nature of the economy of the countries — predominantly service- or industry-based — the IEA report said.

A higher decline in electricity demand was noted in countries where the service sector — including retail, hospitality, education, tourism — was dominant, compared to countries that had industrial economies.

The US, for example — where industry forms only 20 per cent of the economy — saw larger reductions in electricity demand, compared to China, where power demand dropped as the industry accounts for more than 60 per cent of the economy.

Italy — the worst-affected country from COVID-19 — saw a decline greater than 25 per cent when compared to figures from last year, even as power demand held firm in parts of Europe during later lockdowns.

The report said the shutting down of the hospitality and tourism sectors in the country — major components of the Italian economy — were said to have had a higher impact, than any other factor, for this fall.

Reduced fossil fuel dependency

Almost all of the reduction in demand was reportedly because of the shutting down of fossil fuel-based power generation, according to the report. Instead, the share of electricity supply from renewables in the entire portfolio of energy sources, increased during the pandemic, reflecting low-carbon electricity lessons observed during COVID-19.

This was due to a natural increase in wind and photovoltaic power generation compared to 2019 along with a drop in overall electricity demand that forced electricity producers from non-renewable sources to decrease their supplies, before surging electricity demand began to strain power systems worldwide.

The Power System Operation Corporation of India also reported that electricity production from coal — India’s primary source of electricity — fell by 32.2 per cent to 1.91 billion units (kilowatt-hours) per day, in line with India's electricity demand decline reported during the pandemic, compared to the 2019 levels.

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Western Denmark Negative Electricity Prices stem from wind energy oversupply, grid congestion, and limited interconnector capacity via Nord Pool and TenneT, underscoring electrification needs, renewable integration, special regulation, and system flexibility.

Key Points

They are sub-zero power prices from wind oversupply, weak interconnectors, low demand, and balancing needs.

✅ Caused by high wind output, low demand, and export bottlenecks

✅ Limited Nord Pool interconnector capacity depresses prices

✅ Special regulation and district heating absorb excess power

A downturn in the cable connection to Norway and Sweden, together with low electricity consumption and high electricity production, has pushed down European electricity prices to a negative level in Western Denmark.

A sign that the electrification of society is urgently needed, says Soren Klinge, head of electricity market at Wind Denmark today.

The heavy winds during the first weekend of July, unlike periods when cheap wind power wanes in the UK, have not only had consequences for the Danes who had otherwise been looking forward to spending their first days at home in the garden or at the beach. It has also pushed down prices in the electricity market to a negative level, which especially the West Danish wind turbine owners have had to notice.

'The electricity market is currently affected by an unfortunate coincidence of various factors that have a negative impact on the electricity price: a reduced export capacity to the other Nordic countries, a low electricity consumption and a high electricity generation, reflecting broader concerns over dispatchable power shortages in Europe today. Unfortunately, the coincidence of these three factors means that the price base falls completely out of the market. This is another sign that the electrification of society is urgently needed, 'explains Soren Klinge, electricity market manager at Wind Denmark.

According to the European power exchange Nord Pool Spot, where UK peak power prices are also tracked, the cable connection to Sweden is expected to return to full capacity from 19 July. The connection between Jutland and Norway is only expected to return to full capacity in early September.

2000 MWh / hour in special regulation

During the windy weather on Monday morning, July 6, up to 2000 MWh / hour was activated at national level in the form of so-called special regulation. Special regulation is the designation that the German system operator TenneT switches off Danish electricity generation at cogeneration plants and wind turbines in order to help with the balancing of the German power system during such events. In addition, electric boilers at the cogeneration plants also contribute by using the electricity from the electricity grid and converting it to district heating for the benefit of Danish homes and businesses.

'The Danish wind turbines are probably the source of most of the special regulation, because there are very few cogeneration units to down-regulate electricity generation. Of course, it is positive to see that we have a high degree of flexibility in the wind-based power system at home. That being said, Denmark does not really get ahead with the green transition, even as its largest energy company plans to stop using coal by 2023, until we are able to raise electricity consumption based on renewable energy.

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France Nuclear Heatwave Restrictions signal reduced nuclear power along the Rhone River as EDF imposes output limits due to high water temperatures, grid needs, with minimal price impact amid strong solar and exports.

Key Points

Temporary EDF output limits at Rhone River reactors due to hot water, protecting ecosystems and grid reliability.

✅ EDF expects halved output at Bugey and Saint Alban.

✅ Cuts align with water temperature and discharge rules.

✅ Weekend midday curtailments offset by solar supply.

The high temperature warning has come early this year but will affect fewer nuclear power plants. High temperatures could halve nuclear power production, with river temperature limits at plants along France's Rhone River this week. 

Output restrictions are expected at two nuclear plants in eastern France due to high temperature forecasts, nuclear operator EDF said. It comes several days ahead of a similar warning that was made last year but will affect fewer plants, and follows a period when power demand has held firm during lockdowns across Europe.

The hot weather is likely to halve the available power supply from the 3.6 GW Bugey plant from 13 July and the 2.6 GW Saint Alban plant from 16 July, the operator said.

However, production will be at least 1.8 GW at Bugey and 1.3 GW at Saint Alban to meet grid requirements, and may change according to grid needs, the operator said.

Kpler analyst Emeric de Vigan said the restrictions were likely to have little effect on output in practice. Cuts are likely only at the weekend or midday when solar output was at its peak so the impact on power prices would be slim.

He said the situation would need monitoring in the coming weeks, however, noting it was unusually early in the summer for nuclear-powered France to see such restrictions imposed.

Water temperatures at the Bugey plant already eclipsed the initial threshold for restrictions on 9 July, as European power hits records during the heatwave. They are currently forecast to peak next week and then drop again, Refinitiv data showed.

"France is currently net exporting large amounts of power – and, despite a nuclear power dispute with Germany, single nuclear units' supply restrictions will not have the same effect as last year," Refinitiv analyst Nathalie Gerl said.

The Garonne River in southern France has the highest potential for critical levels of warming, but its Golfech plant is currently offline for maintenance until mid-August, as Europe faces nuclear losses, the data showed.

"(The restrictions were) to be expected and it will probably occur more often," Greenpeace campaigner Roger Spautz said.

"The authorities must stick to existing regulations for water discharges. Otherwise, the ecosystems will be even more affected," he added.

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Goreway Power Station Overbilling exposed by Ontario Energy Board shows IESO oversight failures, GCG gaming, and $100M in inappropriate payments at the Brampton natural gas plant, penalized with fines and repayments impacting Ontario ratepayers.

Key Points

Goreway exploited IESO GCG flaws, causing about $100M in improper payouts and fines.

✅ OEB probe flagged $89M in ineligible start-up O&M charges

✅ IESO fined Goreway $10M; majority of excess costs recovered

✅ Audit found $200M in overbilling across nine generators

Hydro customers shelled out about $100 million in "inappropriate" payments to a natural gas plant that exploited flaws in how Ontario manages its private electricity generators, according to the Ontario Energy Board.

The company operating the Goreway Power Station in Brampton "gamed" the system for at least three years, according to an investigation by the provincial energy regulator. 

The investigation also delivers stinging criticism of the provincial government's Independent Electricity System Operator (IESO), slamming it for a lack of oversight. The probe by the Ontario Energy Board's market surveillance panel was completed nearly a year ago, but was only made public in November because it was buried on its website without a news release. CBC News is the first media outlet to report on the investigation.  

The excess payments to Goreway Power Station included:

• $89 million in ineligible expenses billed as the costs of firing up power production. 
• $5.6 million paid in three months from a flaw in how IESO calculated top-ups for the company committing to generate power a day in advance.   
• Of $11.2 million paid to compensate the company for IESO ordering it to start or stop generating power, the investigation concluded "a substantial portion ... was the result of gaming."  

Most privately-owned natural gas-fired plants in the province do not generate electricity constantly, but start and stop production in response to fluctuating market demand, even as the energy minister has requested an halt to natural gas generation across the grid.  IESO pays them a premium for the costs of firing up production, through what it calls "generation cost guarantee" programs. 

But the investigation found IESO did little checking into the details of Goreway Power Station's billings. 

Goreway Power Station, located near Highway 407 in Brampton, Ont., is an 875 megawatt natural gas power plant. (Goreway)

"Conservatively, at least $89 million of Goreway's submissions were clearly ineligible by any reasonable measure," concludes the report.

"Goreway routinely submitted what were obviously inappropriate expenses to be reimbursed by the IESO, and ultimately borne by Ontario ratepayers,"

The investigation panel found an "extraordinary pattern" to these billings by Goreway Power Station, suggesting the IESO should have caught on sooner. The company submitted more than $100 million in start-up operating and maintenance costs during the three-year period investigated — more than all other gas-fired generators in the province combined. The company's costs per start-up were more than double the next most expensive power generator. 

"Goreway repeatedly exploited defects in the GCG (generation cost guarantee) program, and in doing so received at least $89 million in gamed GCG payments." 

Company fined $10M

The investigation covered a three-year period from when Goreway Power Station began generating power in June 2009. Investigators said that delays in releasing documents slowed down their probe, and they only obtained all the records they needed in April 2016.

The investigating panel does not have the power to impose penalties on companies it found broke the rules. 

The IESO fined Goreway Power Station $10 million. The company has also repaid IESO "a substantial portion" of the excess payments it received during its first six years of operating, but the exact figure is blacked out in the investigation report that was made public. 

The control room from which the provincial government's Independent Electricity System Operator manages Ontario's power supply. The agency is also responsible for managing contracts with private power producers.(IESO)

"Goreway does not agree with many of the draft report's findings and conclusions, including any suggestion that Goreway engaged in gaming or that it deliberately misled the IESO," writes lawyer George Vegh on behalf of the company in a response to the investigation report, dated Aug. 1.

"Goreway has implemented initiatives designed to ensure that compliance is a chief operating principle."     

The power station, located near Highway 407 in Brampton, is a joint venture between Toyota Tsusho Corp. and JERA Co. Inc. During the period under scrutiny, the project was run by Toyota Tsusho and Chubu Electric Power Inc., both headquartered in Japan. 

Investigators fear 'same situation' exists today

The report blames the provincially-controlled IESO for creating a system with defects that allowed the over-billing. 

"Goreway was able to — and repeatedly did — exploit these defects," says the investigation report. It goes on to explain the flaws "have created opportunities for exploitation, to the serious financial disadvantage of Ontario's ratepayers," even as greening Ontario's grid could entail massive costs.

The investigation suggests IESO hasn't made adequate changes to ensure it won't happen again, at a time when an analysis of a dirtier grid is raising concerns.   

"Goreway stands as a clear example of how generators are able to exploit the generation costs guarantee regime," says the report.

"The Panel is concerned that the same situation remains in place today." 

PC energy critic Todd Smith raised CBC News' report on the Goreway Power Station in Tuesday's question period. (Ontario Legislature)

After CBC News broke the story Tuesday, the provincial government was forced to respond in question period, amid a broader push for new gas plants to boost electricity production. 

"Here we have yet another gas plant scandal in Peel region that's costing electricity customers over $100 million," said PC energy critic Todd Smith. He slammed "the incompetence of a government that once again failed to look out for electricity customers." 

Economic Development Minister Brad Duguid said: "There is no excuse for any company in this province to ever game the system."

Nine companies overbilled $200M: audit 

The IESO found out about the overbilling "some time ago," said Duguid.

"They fully investigated, they've recovered most of the cost, they delivered a $10 million fine — the biggest fine on record."

The program that Goreway exploited became the subject of an audit that the IESO launched in 2011. The agency uncovered $200 million in ineligible billings by nine power producers, wrote the IESO vice president for policy Terry Young in an email to CBC News.

The IESO has recovered up to 85 per cent of those ineligible costs, Young noted.

Reforms to the design of the the program have removed the potential for overpayments and made it more efficient, he said, even as Ontario weighs embracing clean power more broadly. Last year, its total annual costs dropped to $23 million, down from $61 million in 2014.

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