What Lies Ahead in Ontario and Quebec the Low Demand Future? Prepared for the CanWEA Spring Forum April 4, 2017

Low Demand Future – For How Long? CURRENT AND FORECASTED LANDSCAPE Low Demand Future – For How Long? “Hydro-Québec Anticipates Moderate Growth in Electricity Demand Over Next 10 Years” – November 2016 Hydro-Québec forecasts average yearly growth in energy needs of 0.4% from 2017 on. Yet changing energy habits and more efficient products have had an impact on energy demand forecasts. For 2017 to 2026, the Electricity Supply Plan forecasts a need for 58 TWh less than anticipated earlier. In Ontario, the Climate Change Action Plan and conversion of transportation and building heating sources to reliance electricity could have significant implications on our supply mix. This is compounded by the decommissioning and refurbishment schedule of Ontario’s nuclear fleet in the 2016-2030 period. Both markets see de-carbonization and electricity growth potential in the mid to long term, but a higher value being placed on capacity versus energy.

Quebec Energy and Capacity Growth CURRENT AND FORECASTED LANDSCAPE Quebec Energy and Capacity Growth

Ontario Energy and Capacity Growth CURRENT AND FORECASTED LANDSCAPE Ontario Energy and Capacity Growth In the Ontario Planning Outlook, the IESO derived a range of energy demand outlooks from 133 TWh to 197 TWh in 2035 compared to 143 TWh in 2015 All demand outlooks account for the Ontario Government’s Climate Change Action Plan (CCAP)

Recent Government Statements LANDSCAPE OVERVIEW Recent Government Statements “Ontario’s electricity sector is at an inflection point – and as a sector we are being challenged with fundamental questions. We can continue to procure capacity using systems designed in a previous century; or we can adapt to meet the dynamic needs of the future. We can cling to a decades-old utility model; or we can offer consumers the exciting new products and services they expect and deserve. We can embrace change, and at the same time take care to preserve the strengths of Ontario’s system. But, we must acknowledge that this evolution will be disruptive and iterative in its process. Driven by these customer demands, a fundamental rethink of the core regulated business and electricity system itself will be required.” (Minister Thibeault, November 2016) “Québec has positioned itself as a trustworthy partner in the field of renewable energy. It can offer an effective solution to help achieve greenhouse gas emission reduction targets…utilizing wind and hydro, the government through the 2030 Energy Policy hopes to increase its exports to neighbouring provinces.” (Minister Arcand, April 2016)

WHERE WE’RE HEADING Big Questions Remain How will Quebec and Ontario decision-makers value energy vs. capacity, flexibility and environmental attributes in the future? What about disruptive technologies at the distribution level, and what impact will they have to meet future needs? Will U.S. markets continue to see value in renewable energy, including imports from Canada, or does everyone now love coal and closed borders? Will cost pressures to induce new investment in wind not align with enhanced price sensitivity amongst politicians, policy-makers, and the general public? Will there by a temptation to do nothing in advance of election cycles, or will governments and system operators you press forward on planning for the future?

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