Overview of Market Renewal
What is the Scope of Market Renewal?
Market Renewal includes a set of five initiatives that will enable the province to more efficiently meet demand over the near and longer terms. Market Renewal includes the following changes:
- Introduce a Day-Ahead Market based on a Single Schedule Market to provide greater certainty to market participants and lower the cost of producing electricity.
- Reduce the cost of scheduling and dispatching resources to meet demand as it changes from hour to hour and minute to minute through Enhanced Real-Time Unit Commitment.
- More efficiently manage unexpected short-term changes on the system by enabling More Frequent Intertie Scheduling.
- Improve the way Ontario procures resources to meet our longer-term supply needs by implementing an Incremental Capacity Auction.
How Can Stakeholders Participate?
The IESO has been working with the stakeholder community on Market Renewal for quite some time, launching the Market Renewal Stakeholder Engagement in spring 2016. The scale and scope of the changes being proposed require extensive engagement approaches, with new forums working alongside existing bodies. The IESO has developed an enhanced stakeholder engagement framework to ensure alignment and collaboration with our stakeholders. The framework includes:
- Stakeholder engagements for each design initiative that will serve as the primary vehicles for design discussions
- Technical sub-committees, if and when needed, for focused discussion on specific issues
- The Market Renewal Working Group (MRWG) to address overarching strategic and policy issues and to resolve contentious design discussions
- The CEO Roundtable to share information, issues and create alignment at the executive level
The IESO will work closely and collaboratively with our stakeholders to develop the design for Ontario’s renewed market. Therefore, all stakeholders are invited to participate in the stakeholder engagement process and stakeholders are encouraged to follow the upcoming meetings and events calendar above in order to identify opportunities to participate.
The IESO and stakeholders have begun work to develop high-level designs for each of the initiatives within Market Renewal. The high-level designs will be public documents that record design decisions arrived at by stakeholders and the IESO. They will also identify high-level impacts on IESO business processes and IT systems. These documents will form the foundation on which market rules and manuals will be developed and they will be developed through extensive stakeholdering.
Mission and Principles
The IESO and its stakeholders have worked closely together to establish a mission and set of guiding principles for Market Renewal. Together the mission and principles provide a shared view for the sector on where we are heading and how we will get there.
Market Renewal will deliver a more efficient, stable marketplace with competitive and transparent mechanisms that meet system and participant needs at lowest cost.
Efficiency - lower out-of-market payments and focus on delivering efficient outcomes to reduce system costs
Competition - provide open, fair, non-discriminatory competitive opportunities for participants to help meet evolving system needs
Implementability - work together with our stakeholders to evolve the market in a feasible and practical manner
Certainty - establish stable, enduring market-based mechanisms that send clear, efficient price signals
Transparency - accurate, timely and relevant information is available and accessible to market participants to enable their effective participation in the market
While the mission and principles for Market Renewal are specific to the program, they fall within the IESO’s broader mandate. As with all of the IESO’s work, Market Renewal will ensure that we continue to deliver reliable electricity to Ontarians. It will also provide a resilient set of market based tools to deliver on the policy framework established by government.
From the summer of 2016 to early 2017, the IESO worked closely together with expert consultants and our stakeholders to produce an assessment of the potential costs and benefits of Market Renewal. The benefits case was developed by the Brattle Group and draws upon past Ontario studies, the experience of other jurisdictions which have made comparable market changes, and extensive stakeholder consultation. Key findings from the benefits case are:
- The estimated province-wide efficiency and customer benefits of Market Renewal significantly outweigh estimated implementation costs, with a ten-year present value of net benefits ranging from $2.2 billion to $5.2 billion. These province-wide benefits are shared by customers and suppliers.
- The benefits from Market Renewal are likely to grow over time as Ontario’s electricity sector continues to decarbonize, as contracts expire, and as the sector becomes more distributed in nature.
- Market Renewal will better prepare Ontario for the future by creating a competitive framework for effectively incorporating new and emerging technologies.
- The IESO and stakeholders have substantial opportunities to enhance the benefit-cost ratio of Market Renewal by learning from the experiences of other jurisdictions and applying them to Ontario’s unique context.
Read the Benefits Case.
Learn more about the evolution of electricity markets in Ontario.