4 reasons Ontario’s green and cost-effective power mix bolsters EV production

Province’s auto tech strengths amplified by clean energy advantage

Greater adoption of electric vehicles presents one of the best opportunities to reduce greenhouse gas emissions and protect our environment. As global automakers transition more of their production to EVs, they want to know that the inputs throughout the supply chain are as green as the technology intensive vehicles rolling off the production line.

With 94% of Ontario’s electricity generated from non-emitting sources in 2020, the province offers one of the cleanest energy systems among manufacturing jurisdictions. In addition, with the province’s rate mitigation programs, Ontario’s industrial electricity rates are lower or in-line with many U.S. competitor states, as reported by the U.S. Energy Information Administration (EIA).

Clean and cost-effective energy, alongside Ontario’s comprehensive strengths in automotive technologies, has driven recent landmark industry investments of almost $6 billion, including more than $4 billion in transformative investments in electric vehicle production.

Here we delve deeper into the role of Ontario’s green and cost-effective power mix in making the province the best place to develop and manufacture the next generation of zero-emissions vehicles and build a battery supply chain:

1. Coal-free pioneer – In 2014, Ontario became the first North American jurisdiction to phase out coal power, paving the way for a cleaner, greener electricity system. Meanwhile many of Ontario’s competitors, including U.S. states, Germany and Japan, continue to rely on coal for a significant portion of their generation needs.
2. Cost-competitive – Ontario’s Renewables Cost Shift initiative is reducing rates by around 15% for large industrial consumers and by around 16% for small industrial and commercial consumers. This positions Ontario very competitively among manufacturing jurisdictions. An industrial consumer would pay on average 7.9 cents per kWh, much lower than pricing in many competing U.S. states, Germany and Japan.

   Comparing industrial electricity rates and percentage of clean energy in different jurisdictions

   Jurisdiction (Dec. YTD 2020)	Cost (Canadian Cents per kWh)	Total Clean Energy (%)
   Japan	21.8	33
   Germany	13.3 – 27.3	44
   Michigan	9.6	36
   Indiana	8.7	7
   Illinois	8.9	63
   Ohio	7.9	17
   Ontario	7.9	94
   Texas	8.4	28
   Kentucky	7.1	6
   Notes: Prices correspond to the following time periods: Ontario (2021), Germany (2nd half 2020), Japan (2019). Exchange rate: 1 US$ = 1.25 C$. Share of clean energy ratios reflects 2020 data. Source: U.S. Energy Information Administration, IESO (year-to-date August), Eurostat, International Energy Agency.

3. More renewables – While 94% of Ontario’s electricity is from clean sources, 36% is from hydro, wind and solar in 2020. This is more than any other auto manufacturing jurisdiction in North America and also spurs Ontario’s cleantech sector, the largest in Canada.
4. System reliability – Ontario has prioritized a reliable power grid as a foundation for safety, security and the predictable and efficient operation of businesses and services. The province’s electricity sector regulators and operators work together to ensure robust power system planning and forecasting. Ontario’s Independent Electricity System Operator (IESO) operates the electricity market and grid to ensure supply meets demand for electricity.

Driving force in EV production

The pivot to electric vehicle production is already well underway in Ontario with major investments from global automakers:

• Ford is investing $1.8 billion to produce 5 new EV models and EV batteries
• Stellantis is investing $1.5 billion to upgrade its assembly plant and build EVs
• GM is investing $1 billion to produce the Brightdrop all-electric van, the first produced by a mainstream automaker in Canada.

Ontario is collaborating across the EV ecosystem to secure further production mandates and develop a comprehensive battery supply chain. In addition to its clean energy advantages, the province offers a unique combination of skillsets supporting EV innovation:

Technology convergence – Ontario ranks as the second leading vehicle producer in North America, the continent’s second-largest IT cluster and has Canada’s largest cleantech sector.

Critical minerals – the province has an abundance of the minerals required for batteries for electric vehicles as well as energy storage systems. Examples include nickel, cobalt, lithium, and graphite.

Comprehensive supply chain – Ontario is the only region in North America with five major global automotive assemblers – Ford, General Motors, Honda, Stellantis and Toyota – as well as truck manufacturer Hino. These assembly operations are supported by over 700 parts suppliers and more than 500 tool, die and mold makers.

Skilled workforce supports quality – each year, Ontario’s universities and colleges produce nearly 55,000 STEM graduates, placing the province in the top five STEM-producers in North America. The province’s skilled labour has been key to Ontario vehicle assembly plants winning about one-third (34) of all J.D. Power Awards for initial assembly quality in North America over the past decade.

Market access – the new Canada-United States-Mexico Agreement (CUSMA) preserves and enhances the integrated auto manufacturing cluster that Canada and the U.S. developed under NAFTA.

Supportive government – a new Invest Ontario Fund commits $400 million to secure anchor projects in sectors including advanced manufacturing and technology. The Ontario Vehicle Innovation Network (OVIN) connects the province's world-leading automotive and technology sectors, high-quality post-secondary institutions, first-class talent and regional infrastructure. The network is fostering the next generation of electric, connected and autonomous vehicle and mobility technologies.