Tracking Ontario’s Ruinous Green Energy Experiment

Ontarians will no doubt recall the 2008 Great Recession and how Canada emerged from it better off than most of the G7 and G20 countries. In Ontario we faired pretty well to the point where the McGuinty led Liberal government decided to usher in the Green Energy and Green Economy Act (GEA) in 2009 under the guidance of the then Minister of Energy, George Smitherman. Smitherman promised us electricity rates would only increase 1%!  He suggested wind and solar contracts under the GEA were the way to reduce emissions while keeping electricity price increases low!

From the foregoing perspective it is interesting to look back at the electricity sector in the province to see what has emerged since enactment of the GEA to see how we ratepayers/taxpayers have been affected and how Smitherman’s forecast worked out.  My friend, Scott Luft, makes the foregoing task relatively easy by downloading data from IESO on a regular basis.  His update to the end of 2020 below can also be found on his twitter page!

What is initially evident (adjusted for exports/imports) is consumption was down 1.6 TW (terawatts) in 2020 compared to 2019. The Covid-19 pandemic presumably was the cause however, costs increased by $381 million meaning the average cost of generation per kWh went up from 10.6 cents/kWh to 11.7 cents/kWh. In Ontario using less electricity somehow always costs more!

Eleven years after the GEA clicked in

It has now been over eleven years since the GEA received third reading in Ontario’s legislature and most of the 20-year large wind and solar contracts to (mainly foreign) companies were signed shortly after it was passed.  Scott Luft’s chart provides an opportunity to look at the figures at the end of 2009 and compare them to 2020 to see the effect on our electricity costs.

The chart indicates the cost of electricity delivered to both the TX (transmission grid) and the DX (distribution grid) in 2009 cost us $8.965 billion and in 2020 it was $15.459 billion, an increase of $6.494 billion or 72.4%.  The increase in consumption (adjusted for imports/exports) was 3.2 TWh more as Ontario’s population increased 1.6 million from 2009.  The result was, the average generation cost of a kWh went from 6.34 cents/kWh to 11.07 cents/kWh or 74.6%.

The burden of those increased costs played out differently depending on rate class, with those labelled Class A paying less and Class B ratepayers (residential and small/medium businesses) paying more.  Needless to say; “energy poverty” has increased.

Cost increase drivers

So, after noting the huge increase in annual costs of $6.5 billion since 2009 it is worth examining why those costs jumped:

First wind and solar generation in 2020 was 17.5 TWh (2.9 TWh less than our gross exports) with an additional 2.4 TWh curtailed and together their combined costs were $215.9 million per grid accepted TWh (21.6 cents/kWh) adding about $3.8 billion in costs. In 2009 it was 2.5 TWh at a cost of $246 million.

 Secondly hydro costs shot up by $800 million** and while accepted generation indicated a decrease of 0.62 TWh it doesn’t include the 4 TWh OPG was forced to spill in 2020.  Hydro’s grid accepted cost came in at 5.38 cents/kWh in 2020 with inclusion of the spilled hydro and 3.7 cents/kWh in 2009. 

Finally, nuclear generation costs were also up considerably by $2.9 billion*** as both generation and per kWh costs increased.  In 2009 nuclear generation supplied 55.28% of all generation (including net exports) * and that increased to 56.71% in 2020. The per TWh cost in 2009 was $58.2 million (5.82 cents/kWh) and $87.5 million per TWh (8.75 cents/kWh) in 2020. 

The above three costs total $7.5 billion. If one deducts the cost of coal generation in 2009 of $750 million the net increase becomes $6.75 billion which is close to the increase noted above of $6.5 billion.

Reviewing Scott Luft’s chart highlights the fact wind and solar were the principal culprits in driving up Ontario’s electricity costs.  The McGunity/Wynne led governing Ontario Liberal Party handed out the contracts at above market rates with “first to the grid” rights despite the unreliable and intermittent nature of wind and solar generation.  The combined per kilowatt cost (21.6 cents/kWh) of those two sources of generation is two to three times the cost of non-emitting clean energy such as nuclear or hydro which together have the ability to supply Ontario with well over 95% of its electricity needs.

The Green Energy Experiment has cost Ontarians dearly!

* Net exports is total exports minus total imports.

**OPG spent $1.5 billion on two large hydro projects which were Big Becky and another $2.6 billion on expansion of the hydro available from the Mattagami River which collectively added about 500 MW of additional capacity

***Nuclear cost increases were mainly related to refurbishments of Bruce (two units), Darlington (one unit) and extension costs associated with maintenance upgrades at Pickering.

Author: parkergallantenergyperspectivesblog

Retired international banker.

13 thoughts on “Tracking Ontario’s Ruinous Green Energy Experiment”

  1. Happy New Year to you Parker, and those reading your blog – who should know how much I appreciate you’re communicating the work I’ve now mostly automated and don’t explain in my own writing as frequently as I used to.

    I’ve dropped the views from my really big spreadsheet that I tweeted out, and you’ve shown in this post, into a google sheet which will be more legible (and can be copied) -hopefully these comments allow me to offer a link for:

    I’ve added some lines at the bottom to explain many of the components going into the summary view shown are estimates: costs, distributed supply, and curtailment are all estimates based on a variety of data sources and research.

    Liked by 2 people

  2. Should the first million in “adding about $3.8 million in costs. In 2009 it was 2.5 TWh at a cost of $246 million” be billion?


      1. Understood, I’m referencing the “added $3.8 million in costs” figure, as you note it was $215.9 million per TWh, which, not including the 2.4TWh of curtailment, yields a cost of $3.8 billion based on the 17.5TWh figure.

        I was thinking that the million was supposed to be billion.


  3. Scott Luft is a provincial treasure, who does invaluable work (unpaid, it must be noted) to help inform the residents of Ontario about the costs that they are being forced to pay as a result of a long series of poorly advised and administered government electricity and climate policies. The numbers he has produced illustrate the magnitude of what should be a major scandal, but of course things only become a “scandal” when the media take notice of it and report on it in such a way that requires a response from politicians. A $6.5 billion annual increase in costs for 3 TWh in increased electricity consumption! 4 TWh in potential generation spilled by OPG! With all respect to Scott’s and Parker’s reporting of this on social media, it does not make up for what should be a continuing series of reports and calls for reform in the media and in the legislature. Perhaps we have reached the point due to massive over-spending and incompetence by all orders of government that the wasting of $6.5 billion a year is only greeted with a “Ho Hum” from a jaded public. Shame.

    Liked by 3 people

  4. Thanks very much for all of your efforts in providing all of this cost-related information.

    Is anyone keeping a similar “score card” for CO2? I saw a report by the Auditor General a few years back that said, in essence, that CO2 reductions were much, much less than the GEA had anticipated to that point in time. One of the reasons related to the requirement for gas-fired stations to continue to operate even when the wind is blowing and the sun is shining.


  5. The water spilled in 2020 could have supplied 444,111 homes/month while curtailed wind power could have supplied 260,667 homes/month for a total of 704,778 homes/month. Never underestimate the propensity of a politicain to do something stupid and force you to pay for it.

    Liked by 1 person

  6. Regarding the Green Energy Act, I believe that what Ontario Lawyer Alan Whitely wanted to expose about how the Green Energy Act was orchestrated, in this recently published paper -
    – is what Robert Kennedy Jr and Dr. David Martin are discussing with Canada’s Constitutional lawyer, Rocco Gallati at the 1 hour 10 minute mark of the livestream video below.

    Livestream Video Download: (click “download” under the video)

    Full Transcript PDF Download:

    Is ‘regulatory capture’ the correct term to describe the subversion of the democratic rights of rural residents?

    Liked by 1 person

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