Procurement Future For Repowered Facilities In Ontario – LT2(2) And MT3

This is the latest on the integration of repowered facilities in the second window of the Independent Electricity System Operator’s (IESO) Long-Term 2 (LT2) Request for Proposals (RFP) and Medium-Term 3 (MT3) RFP.

Eligibility

In late 2025, the IESO advised that repowered facilities would be ineligible to participate in the first window of the LT2 RFP (i.e., LT2(e-1) and (c-1)), but that steps would be taken to integrate participation by repowered facilities in the second window of the LT2 RFP (i.e., LT2(e-2) and (c-2)).

The IESO has since announced it will indeed be offering an LT2(e-2) and (c-2) RFP stream for repowered facilities with a cap of 1 terawatt. This is in addition to the procurement target of 1 to 3 TWhs for new-build facilities, which will proceed by way of its own separate stream to ensure they remain competitive against the project development cost advantages that already existing facilities may have.

Non-market participant distribution-connected resources, and other resources with a nameplate capacity of less than 1 megawatt, continue to be ineligible to participate in the LT2 and are instead encouraged to participate in the IESO’s pending Local Generation Program.

The IESO expects the final LT2(c-2) contract will include an off-ramp for thermal generation facilities to exit LT2(c-2) contracts early if future legislation (e.g., Canada Electricity Regulations) prevents continued compliance.

Alignment

In order to align with what is now an expected milestone commercial operation date (MCOD) of May 1, 2032 for LT2(e-2) and (c-2) facilities, the IESO intends for already existing facilities with soon-to-be-expiring 20-year contracts to have successfully bid for an MT2 contract or to otherwise bid into the pending Medium-Term 3 (MT3) procurement (proposal submission in June/July 2027). Upon completion of the first three years of the applicable MT contracts, existing facilities may elect to compete as repowered bids in the LT2(e-2) and (c-2) RFP in parallel with the new-build facilities stream. Such proponents must specify whether they intend to complete all repowering work after terminating their respective MT contract, or otherwise complete some portion of the repowering work while still operating under the MT contract.

In other words, the IESO is seeking to extract more competitive pricing for existing facilities to continue operations until closer to their natural end-of-life before effectively reimbursing such facilities under LT2(e-2) and (c-2) contracts to undergo repowering.

In the alternative, existing uncontracted facilities may also be eligible to participate in the LT2(2) if they have been operating for at least 23 years by May 1, 2032, i.e., have an original in-service date of April 30, 2009 or earlier.

A further separate one-on-one commercial negotiation approach continues to exist for potential LT2(e-2) and (c-2) facilities that have never had an IESO procurement contract.

Mandatory Requirements

Recognizing that existing facilities are already sited and operational, the IESO intends to take a less prescriptive approach to certain regulatory approvals and permitting requirements under the LT2(e-2) and (c-2) stream for repowered facilities as compared to the new-build facilities stream. For instance, similar to the MT1 and MT2 procurements, repowered facilities competing in the LT2(e-2) and (c-2) may only be required to submit an independent engineer (IE) certificate confirming it is reasonable to assume there is at least an additional 20-year useful life for the repowered facility.

Notwithstanding, and subject to further government direction, LT2(e-1) and (c-1) municipal support and agricultural land use restrictions will continue to apply to the LT2(e-2) and (c-2) repowered facilities stream and to the new-build facilities stream.

Deliverability Guidance

Deliverability testing and assessment will be required for repowered facilities only where there is an increase in the original nameplate capacity, and for all new build facilities.

The IESO expects to issue deliverability guidance for the LT2(e-2) and (c-2) RFP in three phrases:

1. A list of transmission projects considered for LT2(e-2) and (c-2) available today.
2. Draft deliverability guidance to be issued by September 2026 that incorporates planned transmission upgrades as well as results from LT2(e-1) and (c-1). This includes the recently procured 640 MWs through the LT2(c-1) RFP and 2,370 GWh through the LT2(e-1) RFP.
3. Final deliverability guidance as early as possible in 2027 that builds on the initial draft by incorporating results from the IESO long-lead time (LLT) RFP (see our March 2026 Blakes Bulletin: Updates on Ontario’s Long Lead-Time Request for Proposals).

Design Incentives

The IESO expects the LT2(2) RFP to include domestic content incentives, including a Supply Design Disclosure Plan, similar to those introduced in the Long-Lead Time (LLT) RFP.

The IESO is also exploring possible locational rated criteria for projects sited in Northern Ontario and elsewhere.

Next Steps

We expect further developments concerning the above and other aspects as stakeholder engagement continues and before the final LT2(e-2) and (c-2) launch later this year. Stakeholders are invited to submit written feedback to the IESO by July 3, 2026.

Our team is closely monitoring developments related to the LT2(2) and MT(3) and will provide updates when more details are available.

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