Procurement Future for Repowered Facilities in Ontario

This bulletin was updated on April 21, 2026.

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).

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 3 TWs 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 May1, 2032, for LT2(e-2) and (c-2) facilities, the IESO intends that existing facilities with soon-to-be-expiring 20-year contracts will have successfully bid for a Medium-Term 2 (MT2) contract or to otherwise bid into the pending Medium-Term 3 (MT3) procurement. Upon completing 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.

Proponents must specify whether they intend to complete all repowering work after terminating their 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.

A 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.

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

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

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)
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: Latest Updates on Ontario's Long Lead-Time Request for Proposals)

Next Steps

Much of the repowered facilities stream for the LT2(e-2) and (c-2) is still in the design phase, including the scope and definition of repowering and potential early in-service incentives. We expect further developments 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 May 8, 2026.

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

For more information, please contact the authors or any other member of our Energy Regulatory or Power groups.