Back on July 2, 2020, the Ontario Government implemented an Industrial Conservation Initiative (ICI) peak hiatus for ICI participants. This allowed commercial and industrial (C&I) businesses to focus their efforts on recovering from the COVID-19 pandemic.
Ultimately, many C&I businesses have suffered economic hardship over the course of the last two years. Last July’s announcement was welcome and meant that Class A customers no longer needed to anticipate and reduce their electricity demand during peak hours. As many C&I businesses attempted to return to full levels of operation, they were able to concentrate on what mattered most – ramping up production.
This Demand Power (“DPGI”) blog takes a deeper dive into the Industrial Conservation Initiative and what it entails. It also reflects on the impact of the peak hiatus, and what your business can do to navigate the high cost of peak demand.
WHAT IS THE INDUSTRIAL CONSERVATION INITIATIVE (ICI)?
Class A customers in Ontario, Canada are part of the IESO Industrial Conservation Initiative (ICI). Outside the hiatus, they have the ability to lower their Global Adjustment (GA) exposure during the top 5 IESO Coincident Peaks (CP). In other words, this allows them to lower their power bill in the next billing year. Typically, Coincident Peaks occur in summertime during late afternoons. However, the pandemic meant that peaks had become more unpredictable than ever.
Usually, most participating ICI companies reduce their load during these periods. They achieve this by shutting down some processes or entire facilities. However, this disrupts daily operations. Because the peak shifts, the likely number of occurrences to reduce load in order to hit the CPs can average around 20 days for at least 3 hours a day.
HOW DID THE PEAK HIATUS COME ABOUT?
The so-called Industrial Conservation Initiative peak hiatus was proposed by some of Ontario’s largest manufacturers and power consumers.
Their main objective was to send a loud and clear message to every C&I business within the province. The message was that the time is now to ramp up production, hire new staff, and continue delivering products to customers, considering the pandemic.
THE IMPACT OF THE INDUSTRIAL CONSERVATION INITIATIVE PEAK HIATUS
Firstly, and crucially, the Industrial Conservation Initiative peak hiatus worked! In short, Ontario saw summer power consumption peaks that had not been seen since 2013. This was years before the ICI program was widely adopted.
To sum up, the peak hiatus meant increased economic activity, and potentially, the avoidance of a sustained post-pandemic recession.
All five Coincident Peaks (the 5 highest of summer 2020 to winter 2021) were above 24 000 MWh. The number one peak, on July 9, 2020, was 25 110 MWh. Peaks like these had not been witnessed in over eight years and the top peak had not reached 25 GWh in over a decade.
In summary, the top five peaks were 11.3% higher than the previous year and 9.5% higher than the average of the previous five years. It is important to note, the peaks were also impacted by higher home HVAC usage due to work-from-home policies.
NEGATIVE CONSEQUENCES OF THE PEAK HIATUS
The peak hiatus wasn’t without negative consequences. In short, the higher peaks seriously strained the Ontario grid and its infrastructure. Ultimately, it resulted in an Emergency Demand Response (DR) call. This asks Ontario manufacturers enrolled in the program to curtail, take less power, and help the grid survive the increased demand. This was the first time in the history of the DR program that an emergency call was enacted.
As a point of comparison, companies can plan for the ICI program unlike an Emergency Demand Response call where companies are only advised one day ahead. This short-term warning has a large impact on production, scheduling and ultimately getting your product into the hands of a satisfied end-user.
Higher peaks also meant that a weary Ontario grid had to turn on seldom-used peaker plants to meet high demand. These particular power facilities are almost exclusively fossil fuel generators and have a negative impact on the environment.
WHAT ABOUT THE IESO ICI PROGRAM NOW?
The Industrial Conservation Initiative (ICI) program has returned for the summer 2021 to winter 2022 season.
So far, Ontario manufacturers have not voiced any concerns. Ultimately, this is because the program works. Customers that have the ability to curtail on peak days have adjusted and modernized their business to make the necessary accommodations.
For customers that cannot curtail due to continuous 24/7 production schedules, they have turned to companies like Demand Power (“DPGI”). Why? Because we provide innovative energy storage solutions that help them navigate the high cost of peak demand.
To sum up, the ICI program is good for the grid, good for Ontario, and good for the environment. Even though the economic value of each peak has dropped, we expect ICI participation to remain robust, which bodes well for the future.
DON’T GET LEFT BEHIND! CONTACT DEMAND POWER (“DPGI”) TODAY.
Can your business really afford to stand still? If you have a continuous 24/7 production schedule, contact Demand Power (“DPGI”) today and discover how we can help you navigate the high cost of peak demand. If you have any questions, please call 855-336-2638 and the Demand Power (“DPGI”) team will be happy to field them.