Ontario’s IESO: keeping the lights on (and the champagne flowing for some)

Mild weather might mean lower power demand and savings for electricity customers … but not in Ontario

February 28, 2018

The IESO has responsibility for ensuring the electricity system in Ontario keeps the lights on. They must manage the flow of generated electricity and keep it within the confines of producing too much or too little which could lead to either brownouts or blackouts.

That task has become more difficult as frequent Energy Minister directives, mandating the acquisition of more and more intermittent and unreliable wind and solar power generation, have made reliability an issue of concern, particularly during times of low demand. They are concerned with “surplus base-load” which in the past generally meant nuclear and “must-run” hydro. Wind and solar generation joined that latter group under those mandated directives pushing the potential “must run” power generation much higher.

Higher base-load on low demand hours/days could cause the system to fail.   And, it’s obvious that managing the system today has a much higher cost.

Example: February 25, 2018

The 25th of February saw higher than normal temperatures in Ontario, resulting in lower demand.  Demand in one hour was only 12,716 MW and the average was 14,390 MW/per hour for the day according to IESO’s daily summary.  Total Ontario demand for the day was only 345,000 MWh.  The IESO summary discloses the market valued all generation (including surplus exports) on that day at “0” meaning our net exports (exports minus imports) of 48,000 MWh were sold at a substantial loss.

Another issue facing IESO on the 25th was the fact it was a windy day. The forecast was for wind turbines to generate 89,100 MWh.  But only 49,500 MWh were accepted into the grid and the balance (39,600 MWh) were curtailed (paid for but not used).  Ratepayers pick up the costs for both accepted and curtailed wind.  It is worth noting our net exports of 48,000 MWh for the day, were only slightly less than the grid-accepted wind power generation.

Because of low demand and excess wind power generation, OPG were no doubt spilling water at IESO’s instructions. IESO don’t disclose spilled water, but a reasonable estimate for this day would be 45,000 MWh — which ratepayers are obliged to pay for.

Yet another source of power would have been our gas plants which receive payment(s) for idling at a contracted amount (payable monthly per MW of capacity). As one would expect, they were not called on to produce any power for the day which would have been cheap (fuel costs plus a small markup). Gas plants are essentially the back-up for the approximately 7,700 MW of intermittent wind and solar capacity now either grid- or distributor-connected in the province.

So let’s look at what ratepayers paid just for wind power for the day:

 

One day’s cost for unreliable intermittent wind!

Wind accepted: 49.500 MWh at $135/MWh =                                      $ 6,682,500.

Wiind curtailed: 39,600 MWh at $120/MWh =                                    $ 4,752,000.

Total wind costs:                                                                                $ 11,434,500.

Spilled Water (estimated): 45,000 MWh at $45/MWh =            $   2,025,000

Gas plant idling costs (estimated):                                                       $   2,500,000

Gross wind costs:                                                                                $ 15,959,500

 

Less: Recovered from net exports (estimated):                                  $     720,000

            True net wind generation cost:                                                     $ 15,239,500

 

Cost per MWh: $15,239,500/49,500 = $307.87/MWh or 30.8 cents/kWh

 

If all the days in a year were like last Sunday, annual costs would be well over $5 billion for unneeded high priced generation from wind power projects.

This all just goes to show, Ontario ratepayers were filling the pockets of IWT developers so they could sip the champagne while IESO kept did its best to keep the lights on!

 

 

NB: All of the numbers above are rounded to the nearest hundred.

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Author: parkergallantenergyperspectivesblog

Retired international banker.

5 thoughts on “Ontario’s IESO: keeping the lights on (and the champagne flowing for some)”

  1. Parker, please no more stories about $0.30 / kWh wind. We pay a full $1 / kWh for renewable power, just like every other jurisdiction silly enough to adopt it.

    The total price for renewable power in Ontario is $1/kWh. It’s easy to calculate.

    Manitoba/Quebec price ~12c/kWh.

    Ontario price ~27c/kWh. 20% renewable.

    Mix it in, with renewable at $1/kWh…
    0.75*12c/kWh + 0.20*1.00/kWh = 27c/kWh. This equation works in Germany, California, Denmark, Germany, Spain, etc.

    It’s a simple fact, one that the renewable energy industry does not want you to know.

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  2. The estimate for the hydro generation that was constrained (as in we ran the water over the dam and wasted it) was 45,000 MW hours of hydro power generation that was run over the dam on Feb 25,2018 – just squandered!
    All the hydro generation is ‘green’ renewable energy – renewable energy that we waste to accommodate intermittent ‘green’ renewable wind and solar energy. To continue adding production of green energy to a system that is awash in overproduction is insane. To download this debt onto our children and grandchildren is financial irresponsible and borders on criminal behavior.
    The wind generation that was accepted onto the grid was 49,500 MW hours for the day so we could have used all the hydro generation that was wasted ( 45,000 MW hours ) and we would have needed an additional 4,500 MW hours of power for the day! Nuclear provided 10,194 MW/hr from a potential of 11,537 MW/hr so nuclear could have provided the extra 4,500 MW hours of power required to meet the Ontario power demand for Feb 25, 2018.
    What I am trying to say is that all other generation beyond nuclear and hydro was redundant. We did not need any energy produced from natural gas, or wind or solar or biofuels! We are paying for the production of energy that we do not need, energy that we pay generators not to produce, steaming off of nuclear and running water over the dam instead of through the turbines to produce hydro. We are not making much sense in the energy production in Ontario, but we are costing the ratepayers billions.

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