Electric-vehicle manufacturing and the booming demand for artificial intelligence are set to reshape Ontario's electricity grid significantly. The Independent Electricity System Operator (IESO) has just released new forecasts expecting electricity demand to jump by 75 percent by the year 2050, which is surprisingly higher than the 60 percent increase projected just last year.
This steep rise is largely attributed to several developments across the province, particularly the influx of electric vehicle (EV) production facilities and the simultaneous emergence of numerous data centers driven by AI technologies. According to IESO officials, the industrial demand is projected to soar independently by 58 percent by 2035, which is like adding a city the size of Toronto to the grid.
Charles Farmer, the vice president of planning at the IESO, highlighted the rapid changes faced by system operators due to these developments, noting, “We’ve been caught off guard by how quickly this has happened.” He explained how data centers previously required less energy, but the new AI functionalities demand infinitely higher energy consumption.
The operator has pegged 13 percent of the looming electricity demand on at least 16 new data centers expected to begin operations by 2035, which reflects global trends applicable to AI proliferation.
Energy and Electrification Minister Stephen Lecce expressed optimism about the situation, remarking, “This is a significant opportunity, but it creates pressure on the grid.” He underscored the necessity of ensuring reliability for these facilities both for immediate energy needs and future economic growth.
The anticipated demand poses unique challenges for Ontario, as more energy is needed not just for consumers but also for the flourishing industrial sector, including battery plants and other associated manufacturing. The electric vehicle sector has fertile ground here, spurred by government investments aiming to reduce reliance on fossil fuels.
"We don't deter investment or jobs or innovation," Lecce stated, commenting on how the government plans to navigate the rising electricity demands. “AI and these data centers are very important when it grows our economy, diversifies our economy, and creates value-added jobs.” There’s also light at the end of the tunnel: the IESO assured the public existing power supplies would be adequate for the decade.
Still, the demand surge poses questions about the sustainability of the current electricity models. Ontario already engages heavily with nuclear power; plans are underway to extend the life of the Pickering nuclear plant, considering even more significant refurbishments to extend its operational potential long-term. There’s also contemplation around constructing new nuclear facilities at existing sites, and potentially introducing small modular reactors to supplement energy generation.
On the renewable front, the IESO is investigating new energy efficiency frameworks aimed at managing demand and conserving energy effectively. Further, Lecce is eyeing substantial procurement of additional megawatts for energy generation, ready to incorporate natural gas, hydroelectric, renewables, nuclear, and biomass.
Nevertheless, concerns loom about reliance on natural gas. Green Party Leader Mike Schreiner voiced his apprehensions earlier, fearing the government might overshoot efforts to meet electricity requirements with natural gas solutions, which he argues would tend to be more expensive and polluting, saying, “Wind, solar, battery storage and waterpower are cheaper, cleaner and can be deployed much faster.”
Interestingly, emissions levels from Ontario's electricity system have shifted noticeably, going from 94 percent emissions-free back down to 87 percent as natural gas generation increases to fill the gap. Since Lecce took over the energy portfolio, he justified natural gas use as necessary for reliability during peak periods.
“Natural gas is insurance,” he concluded, “and it's important for Ontario, particularly when we can’t deliver enough energy to industries and citizens.” Despite the worries over fuel reliance, Lecce remains convinced about the cleanliness of Ontario's grid, which he asserts is among the cleanest worldwide.
The broader picture sees increased collaboration and investment within the electric grid, driven by technological advancement and economic shifts. With all eyes on the future of energy consumption, Ontario appears to be at the crossroads between embracing innovation responsibly and ensuring the reliability of its electric grid.
