During the Ontario Progressive Conservative leadership race, candidate Tanya Granic Allen declared “I’m going to rip those turbines out of the ground!” Many folks in rural communities suffering from health effects caused by those industrial wind turbines (IWT), and people who have trouble paying their electricity bills probably cheered that statement. They might have wondered what doing that would cost.
Let’s ponder that question and try to put a dollar figure on it!
The capital cost of IWT suggested by AWEA (American Wind Energy Association) was approximately US $1.3 million per megawatt (MW) which equates to about CDN $1.7 million/MW. IESO’s recently released 18th month Outlook Report (July 2018 to December 2019) indicates we have 4,400 MW (rounded) installed “grid connected” IWT and 600 MW of “embedded” IWT wind generation. What that suggests is, the total capital cost of grid and embedded IWTs is in the neighbourhood of $6.5 billion. In addition, there are outstanding contracts for another 375 MW.
Looking at the current installed capacity of 5,000 MW and a capacity factor of 30% those 5,000 MW should generate 13,140,000 MWh yearly. Now, assuming the average price paid for IWT-generated power is $135/MWh* (megawatt hour), those 5,000 MW would earn annual revenue of approximately $1.8 billion. Over the 20-year term of the contracts they would result in revenue of about $36 billion.
Because of the unreliability of wind power** it must be backed up with natural gas plants. E.ON Netz Gmbh claimed in a 2005 Wind Report that a “back-up provision of 90% of the wind would be necessary”. What that means is, the 5,000 MW of IWT require the back-up of 4,500 MW of natural gas plants. Those gas contracts call for payment when idling in order to amortize the capital costs over the 20-year term of the contracts. The approximate cost to ratepayers is $10,000/MW of capacity per month. That back-up annual cost is approximately $600 million and over 20 years $12 billion.
That brings the annual cost of the 5,000 MW of IWT and its back-up of gas plants to about $2.4 billion. Not included in that $2.4 billion are costs for spilled hydro (6 TWh in 2017) or curtailed wind (3.3 TWh in 2017) which were spilled/curtailed due to wind generation presenting itself when unneeded. The latter two add another $650 million to the costs of IWT generation bringing the costs of the 9.2 TWh of IWT generation in 2017 to $3.050 billion. Grid accepted wind in 2017 was 9.2 TWh and gas generation was 5.9 TWh meaning collectively those 15.1 TWh cost ratepayers $202 million per/TWh or 20.2 cents/kWh (kilowatt hour)!
Based on the above, “ripping those turbines out of the ground” would mean spilled hydro alone could replace 65% of the grid accepted IWT generation. The remaining 9.1 TWh (wind + gas) could have been easily supplied by gas generation at a nominal cost of approximately $300 million. The annual savings would be $1.5 billion without the IWT generation! What that means is the IWT capital costs ($6.5 billion) could be repaid in under 4.5 years without considering the fact that many of them have depreciated in value since installation.
So, just maybe, this is an idea worth consideration. Rip the turbines out and pay the developers the capital costs, and refinance the monies over five years via our electricity bills. I would suggest we call it the SDRC (Smitherman Debt Retirement Charge) to recognize the Ontario Minister of Energy who created the Green Energy Act.
The biggest obstacle to ripping the turbines out of the ground is the knowledge the contracts were written in favour of wind developers, not ratepayers. So, you could expect “ripping them out” would result in a myriad of lawsuits seeking full restitution for the remaining terms of the contracts, meaning the developers would seek to be paid the $36 billion noted above.
My recommendations are simple:
- Cancel the wind power projects in process (375 MW) awaiting the REA from the MOECC or those being fought before the ERT (Environment Review Tribunal) and the Ontario court system and
- Tax the hell out of those already up and running.
*The average cost is actually higher as all of the FIT contracts contain escalation clauses allowing for annual increases equal to the cost of living escalation to a maximum of 20% or $27.per MWh.
**IESO’s 18th Month Outlook report forecasts IWT capacity at peak demand periods at only 13.8% and a peer reviewed paper by Marc Brouillette indicates IWT only produce power of value to the grid 35% of the time they are generating power.