Most Canadians love Spring simply because the snow is melting and that signals the summer is coming.
Ontario’s wind power developers love Spring, too! They know the wind will blow much stronger than in the hot summer weather and that means, their generation output will climb.
The fact the wind power lobby negotiated “first to the grid” rights with the Ontario government under Premier Dalton McGuinty means most of them will be paid 13.5 cents/kWh for whatever they produce, whether it is needed or not.
For example, May 8 was a day when the breezes were brisk throughout Ontario and the industrial-scale or utility-scale wind turbines were busy generating lots of power. The IESO (Independent Electricity System Operator) reports hourly on both the forecast for wind generation, as well as the actual output. That day, wind could have provided as much as 26% of total Ontario demand for power. But here’s the important fact: the total Ontario demand on an early May spring day is not what it is in the heat of summer or the cold of winter and that was the case on May 8. Total Ontario demand was only 322,000 MWh for the day.
Money for nothing
Because of the low demand, about 36% (30,400 MWh) of IESO’s forecast for wind power generation looks as though it was probably curtailed (paid for but not used) and the wind power operators were paid $120/MWh. That means, Ontario’s electricity ratepayers paid almost $3.7 million for nothing. Zero.
The output actually accepted into the grid was just over 54,000 MWh, which cost ratepayers about $7.3 million. Coupled with the curtailment costs, that meant each kWh of wind “grid-accepted” cost 20.3 cents/kWh.
We should also assume that Ontario was probably spilling hydro or steaming off nuclear due to low demand, which would further drive up that price.
As if this information isn’t enough of a downer on a nice spring day, the HOEP (Hourly Ontario Energy Price), or what is referred to as the “market price,” was noted in their daily summary at an average of $1.75/MWh.
And the very next day …
Ontario’s demand was so low so we didn’t need any wind generation May 9, so IESO had to sell it off at the market price to U.S. and other grid-connected operators. The surplus demand of just under 44,000 MWh (81% of grid-accepted wind generation) was sold at $1.75/MWh generating total revenue of $77,000 but cost ratepayers in the order of $6 million.
This all simply demonstrates why the Global Adjustment charge keeps climbing. If the loss of $6 million daily for just the cost of exporting our surplus energy occurred every day of the year, it would represent in excess of $2.1 billion annually as a cost to Ontario ratepayers.
The time has come to fix this weird situation created by the former Ontario government.