As IESO recently released their March 2020 Monthly Market Summary it is perhaps time to review the electricity sector’s first quarter of the current year and compare it with the 2019 first quarter to see the effects on it emanating from the early stages of the Covid-19 lock-down!
Reviewing the two quarters indicates Ontario demand dropped from 36,725 GWh (gigawatt hours) to 35,408 GWh over the comparable three months. The drop of 1,320 GWh or 3.6% is about what 585,000 average Ontario households would consume in three months and represents around 12% of all households in the province.
Logically a drop in consumption would signal a drop in costs for ratepayers based on the principal of “supply and demand” but the way Ontario contracted for power supply means it doesn’t! The “must take” contracts awarded for wind and solar signed by the McGuinty/Wynne led Ontario Liberal Governments requires us to either accept it or pay for its curtailment.
What happened with wind generation in 2019 and 2020 is not readily available from IESO (Independent Electricity System Operator) despite their claim of “transparency”! Thanks to my friend, Scott Luft however, it is; via data he downloads from IESO on a regular basis in respect to TX (transmission connected) industrial wind turbines (IWT) and his accurate estimates of IWT generation connected to the DX (distribution connected) grid of local distribution companies.
Wind Generation’s Value:
Based on Scott’s IWT data, generation accepted to the TX and DX grids in the first three months of 2020 was 4,336 GWh with another 437 GWh curtailed. For 2019 the accepted IWT generation was 4,449 GWh with 218 GWh curtailed. Scott also tracks the hourly value of IWT generation when it is delivered to the grid noting the HOEP (Hourly Ontario Energy Price) market price. The latter is consistently under the average monthly HOEP value(s) signaling its bad habit of generating during low demand causing it to be sold for pennies compared to its actual cost. In 2019 the price was 17% below the average HOEP monthly average and in 2020 the price was 31% lower. The HOEP in 2019 valued all of wind’s generation over the three months at $102.6 million but in 2020 it was valued at only $49.8 million.
Wind Generation’s Cost:
On the other side of the ledger the total costs of the 2019 IWT generation over the three months hit the ratepayers for at least* $626.9 million versus $637.8 million in 2020 and allowing for the “HOEP” value, net costs were $524.2 million for 2019 and $587.9 in 2020 for an increase of $63.7million (+12.2%).
While wind was generating surplus power, IESO were busy selling it (and other surplus power) at the cheap prices noted above to our neighbours; in New York, Michigan, Quebec etc. In 2019 we sold 4,784 GWh or 107.5% of grid accepted wind and in 2020 we sold 4,449 GWh or 126.8% of grid accepted wind, clearly demonstrating we didn’t need IWT generation! At the same time OPG were spilling water (300 GWh in 2019’s 1st Quarter), and IESO were paying idling gas plants and possibly had Bruce Power steam-off nuclear. All of the foregoing adds to the costs of electricity for Ontario’s ratepayers but IESO don’t disclose that information!
Wind Energy’s Annual Burden:
As one can readily discern, Ontario’s electricity sector has been severely compromised! Based on the foregoing it indicates IWT generation alone, is a burden of over $2 billion annually! Ontario’s ratepayers and taxpayers must endure those costs until the contracts finally expire unless the Ford government enacts legislation to stop the bleeding of ratepayer and taxpayer dollars.
*The bulk of the IWT contracts pay $135/MWh plus up to a 20% Cost of Living allowance meaning they are paid north of that price and additionally should they be forced to curtail their energy they receive $120/MWh.