More enlightening facts from the Lennox gas plant, and how billions have been wasted
My earlier article briefly described my recent tour of the Lennox natural gas power facility in Bath, Ontario, and also provided the costs of wind power generation—including what was “curtailed” (wasted; paid for but not used).
The period covered was nine years (2009 to 2017) during which grid-delivered wind power generation was 53.1 TWh* (terawatt hours) and its costs (including 6.9 TWh curtailed) were approximately $8 billion.
What I didn’t note earlier was, as we were paying for power generated by wind turbines and curtailed power, we were also paying for spilled hydro and steamed-off nuclear which added additional costs to the GA (Global Adjustment) pot, driving up electricity costs. We started paying for “spilled hydro” in 2011 when the OEB (Ontario Energy Board) allowed OPG to establish a “variance” account. Since that time 18.7 TWh have been spilled by OPG and the cost of $875 million (4.7 cents/kWh) was placed in the GA and paid for by Ontario ratepayers.
Likewise, the cost of 2 TWh of steamed-off nuclear was (about) $140 million (7 cents/kWh) and also became part of the GA. Adding that to the $8 billion costs of wind power in those nine years brings the total to slightly more than $9 billion, as the hydro spilled and nuclear steam-off were due to “surplus baseload generation” (SBG)!
In 95 percent plus of the surplus events, SBG conditions were caused by wind power generation because it is granted “first to the grid” rights.
So, you might ask on reading this, is, how does/could Lennox fit into this situation?
Well, the fact is Lennox is treated as “the leper” in generation sources within the province and is called on only when something untoward or unusual happens, despite its ability to generate power at relatively low cost. Examples of Lennox doing more than idling include this past summer’s Lake Ontario algae problem which caused the shutdown of a Pickering nuclear unit (the water intake was clogged) and the winter of 2014 when we experienced the “polar vortex” causing gas prices to spike. As it happens, wind wasn’t there for either event and Lennox was called on to provide the power necessary to keep our electricity system functioning. (Wind turbines cannot be turned on when demand suddenly increases when the wind isn’t blowing.)
Ontario without wind
If the then Liberal Ontario government had decided not to proceed with the GEA (Green Energy Act) which focused on wind and solar sources, one could justififably wonder how the cost of electricity might have been affected. If we had instead focused on reliability and reasonable costs, Lennox coupled with our other sources, could have easily replaced the intermittent and unreliable generation from wind turbines.
The math: Taking the wind power generation of 53.1 TWh over the nine years out of the picture would have meant those 18.7 TWh of spilled hydro and the 2 TWh of steamed-off nuclear could have reduced the net contribution of wind to 32.4 TWh. That would have saved ratepayers $1.8 billion i.e., (cost of 20.7 TWh of IWT generation @ $135 million/TWh = $2.8 billion, less the cost of 18.7 TWh of spilled hydro @ $46 million/TWh [$875 million] and less the cost of 2 TWh steamed off nuclear @ $70 million/TWh [$140 million])
The remaining 32.4 TWh of wind power generation could have been provided by generation from the OPG Lennox plant (capacity of 2,100 MW). It would have eliminated the $800 million cost of the 6.9 TWh of curtailed wind as it would have produced power only when needed. Now if it ran at only 20 percent of its capacity (gas or oil,) it could have easily generated the remaining 32.4 TWh generated by IWY and accepted into the grid.
Note: No doubt much of that 32.4 TWh wind power generation was presented at times IESO were forced to export it at a substantial loss. For the sake of this calculation we will assume Ontario demand would have required it.
More math: As noted in the earlier article “idling” ** costs for Lennox are fixed at $4.200 per MW per month, making the annual idling costs about $106 million or $8.8 million per month. Running at 20 percent of capacity would result in idling costs per MWh of generation of about $30/MWh.
Adding fuel costs*** of about $40/MWh would result in total costs (on average) of approximately $70/MWh or 7 cents/kWh. Generation at 300,000 MWh per month on average would have generated 32.4 TWh over those nine years (2009–2017). The cost of that generation would be approximately $2.3 billion whereas the 32.4 TWh generated by IWT in those same nine years cost ratepayers about $4.4 billion.
So, without any wind power generation at a cost of $8 billion over the nine years, Ontario ratepayers would have saved almost $4.9 billion:
- $1.8 billion using spilled hydro
- $200 million using steamed-off nuclear
- $800 million paying for curtailed IWT generation and
- $2.1 billion by utilizing Lennox
Beyond the dollar savings, the lack of subsidized wind power would also have other effects like:
- zero (0) noise complaints, instead of the thousands reported,
- elimination of the slaughter of thousands of birds, bats and butterflies
- prevented the possible disturbance/contamination of well water
Again, that cost-benefit study might have proved useful!
*1 TWh is about the amount of energy 110,000 average households in Ontario consume annually.
**Idling costs of the TransCanada gas plant next door to Lennox is $15,200 per month per MW or 3.7 times more costly than Lennox.
***Lennox has the ability to generate electricity using either natural gas or oil meaning if a fuel priced spikes, as natural gas did during the “polar vortex” in 2014, Lennox can shift to the cheaper fuel.