Winds Whips Hydro in Ontario or So It Appears

As December 1, 2021 drew to a close at Hour 22 on the IESO “Generators Output and Capability Report” wind generation suddenly passed hydro generation and stayed ahead of it for the following 20 hours, pausing at Hour 19 on December 2nd but passing hydro again for hours 20 and 21.  Over those 23 hours wind (as reported by IESO) reputedly out-produced Ontario’s hydro generation by almost 21,000 MWh.  Based on IESO data it appears about 2,700 MWh of wind generation was also curtailed. What IESO data doesn’t disclose is how much hydro was spilled over those 23 hours.

For wind and solar data IESO report it on three lines by hour; “Available Capacity, Forecast and Output”.  When hydro is “spilled” or nuclear is “steamed off” we won’t see that reported by IESO and are uninformed until financial reports from OPG or Bruce Power are released.  OPG’s 9-month financial report for September 30, 2021 indicates they spilled 1.7 TWh (terawatt hours) due to SBG (surplus baseload generation) to that point in the year.  Hydro spillage is paid for by ratepayers and so far, has added over $100 million to this year’s electricity bill. The 1.7 TWh is equivalent to (approximately) what 250,000 average households would have consumed over those 9 months.

The reasoning by IESO as to whether they will spill hydro or curtail wind (which we also pay for) is reputedly determined by the HOEP (hourly Ontario electricity price). Most contracted IWT (industrial wind turbines) are paid $135/MWh and $120/MWh if curtailed.  IESO in situations that create SBG will sell off the surplus (if the HOEP is high enough) before they spill hydro or steam off nuclear.  It has never been clear to many why the contracts awarded for either IWT or solar panels were granted “first to the grid” rights but both of those intermittent and unreliable generation sources were, so we must pay them even if the generation is unneeded!

A quick look at the costs for those 23 hours  

The 2,700 MWh (approximately) of curtailed wind meant generators were paid $120/MWh costing $324,000. Those same IWT generators were paid $135/MWh for the 98,800 MWh of accepted wind amounting to $13,338,000.  To top off the costs for the 23 hours favouring wind generation, OPG was paid $60/MWh for spilling hydro (minimally estimated at 21,000 MWh) adding $1,260.000 and bringing total costs to $14,922,000 for the 23 hours!                                        

The $14,922,000 represents a cost of $151/MWh for the 98,800 MWh of accepted wind generation but doesn’t include costs associated with the gas plant backups for wind and solar which would add another $3 million or so for the 23 hours nor does it include losses from selling power to our neighbours.

On the latter, IESO were selling off approximately 2,500 MW hourly to our neighbours in Michigan, NY etc. for the HOEP average price of about $30/MWh. Those 60,000 MWh therefore generated about $1.8 million reducing the total cost above to $13,122,000.  If we accept the fact those exports were IWT generated the remaining 38,800 MWh supplying local ratepayers cost $340/MWh.

Had OPG provided those 38,800 MWh the cost would have been $60/MWh ($2.3 million) saving Ontario ratepayers over $12 Million!

One should wonder why the McGuinty/Wynne government blessed those contracts and why the Ford led government has done nothing to fix it?

Events like those 23 hours clearly show wind whips Ontario’s ratepayers not it’s hydro generation!

NB: Over the days of December 1st and 2nd during one of the hours wind was generating almost 93% of its capacity and on another hour was generating only 15% demonstrating its intermittent and unreliable habit!

Open letter to the Honourable Todd Smith, Ontario Minister of Energy

Dear Minister Smith,

Re:  Oneida Battery Park Project

I recently note you sent a letter dated August 27, 2021, to Ms. Lesley Gallinger, President and CEO of the Independent Electricity System Operator (IESO) in respect to the captioned.  The letter instructed IESO to negotiate a “draft” contract with the parties proposing the 250 MW battery storage project.

I was pleased to observe you couched your directive with the following instructions:

I will not consider a directive to the IESO asking it to execute the drafted final contract until:

• National Resources Canada’s determination regarding the $50 million in funding under the Smart Renewables and Electrification Pathways Program is known; and

• The ownership of the project is fully clarified, including the equity participation of both NRStor and Six Nations of the Grand River Development Corp.”

Along the lines of your directive I sincerely hope you are aware of an article I penned January 23, 2021 partially analyzing the project when it was first announced in a press release from the Federal taxpayer owned Canada Infrastructure Bank (CIB).  The press release indicated the CIB would invest $170 million of our hard-earned tax dollars. My article attempted to point out the negative impact the project would have on Ontario ratepayers despite our tax dollars being thrown at the project.  It now appears another $50 million of our tax dollars may be slated to join the $170 million already committed!

The other issue which I would point out is in respect to what recently occurred to a similar project in Southeast Australia.  An article on August 5, 2021 on the CNBC website was headlined: “Tesla Megapack fire highlights issues to be solved for utility ‘big batteries”.  The article noted: “There have been around 40 known fires that have occurred within large-scale, lithium-ion battery energy storage systems,” which should be considered; if this project is allowed to proceed.

What I wish to reiterate to you and IESO is; you must recall the Green Energy and Green Economy Act caused Ontario’s electricity rates to spike by well over 100%.  Projects such as this will add further costs to the system and negatively impact ratepayers including small and medium sized companies.  The effects will be a reduction in employment, drive manufacturers and other businesses elsewhere and create further energy poverty.

The possibility of fires on large-scale lithium-ion battery energy storage systems also cannot be ignored.  A fire such as happened in 40 cases would simply serve to increase emissions as would the mega batteries relatively short life span and their eventual disposal.

I sincerely hope the Ontario Ministry of Energy and IESO will bear the foregoing in mind before any approval is granted to proceed!

Your very truly,

Parker Gallant,

Parker Gallant Energy Perspectives

The Niagara Independent

The captioned on-line news outlet is a great source of truthful news and excellent opinion articles and they reached out to me to seek my blessing to run one of my articles. I ageed and it is posted on their site today. You can find it here:

The Niagara Independent also frequently posts articles by Catherine Swift, former CEO of the CFIB (Canadian Federation of Independent Business). Co-incidently one of her articles was also posted today and is definitely worth a read as it covers a lot of ground. Find it here:

Comparing Ontario Covid-19 Lockdowns in Reducing Electricity Demand

Earlier this year IESO released their 2020 stats and noted Ontario’s electricity demand fell 2.1% (down 2.9 terawatt hours [TWh]) from 2019 or about what 325,000 average households would consume in a year.

In 2020 the first full lockdowns in Ontario started in late March and basically stayed in place until late June/early July when some relief was allowed.  The current year’s lockdown looks very similar!  So, did the 2021 lockdowns result in further consumption reductions compared to the same quarter in 2020?

As it turns out consumption in the current April, May, June quarter saw a jump of 1.4 TWh compared to the same three months of 2020. That 1.4 TWh increase (up 4.7%) represents what 625.000 average Ontario households would consume in three months.  Ontario’s ratepayers consumed 29.724 TWh in the three months of 2020 and in 2021 consumption jumped to 31.130 TWh.

The GA (global adjustment) for 2021 totaled $2.687 billion and adding the average of the HOEP (hourly Ontario energy price) of $15.50/MWh for the three months brings the total cost to Ontario’s ratepayers and taxpayers (taxpayers are now picking up a large portion of the electricity costs) to $3.169,5 billion! The latter total indicates an average cost of approximately 10.2 cents/kWh (kilowatt hour) with the math simply being: $3.169,5 billion divided by consumption of 31.130 TWh.

The GA for 2020 was considerably higher as the Ford government capped the GA at $115/MWh (megawatt hour) due to the concern it would spike, so it totaled $3.825,7 billion and coupled with the average HOEP (average $8.10/MWh for the three months) brought the total cost to $4.066,4 billion.  That means the cost per kWh in 2020 for the same three months looks to be about 13.7 cents/kWh.

So, one should wonder, why the drop in average costs if consumption increased 4.7%?  

Well as it turns out our net exports (exports minus imports) declined 2.9 TWh so in 2021 that decline saved Ontarians about $425 million for those three months as we didn’t have to eat the GA of $115/MWh and the average HOEP (the sale price) was higher (up $7.40/MWh) so in 2021 we got a little more for each MWh we sold.  Additionally, curtailed wind declined by 183K MWh* saving us another $22 million.  I suspect we also didn’t spill as much hydro or steam-off nuclear which would also have reduced 2021 costs but that information is not disclosed as yet.  Less solar generation in 2021 may also have played a role at reducing costs.

It becomes obvious Ontario’s grid; supplied principally with nuclear and hydro supplemented by gas generation would produce lower costs. For all of 2020 nuclear and hydro supplied 94.3% of Ontario demand and cheap and reliable gas easily supplied the balance.  The intermittent and unreliable supply of wind and solar at the exorbitant contracted 20-year rates does nothing to reduce emissions while burdening ratepayers and taxpayers with much higher costs. 

The three-month comparison highlights the mess created by the previous Liberal Government(s) under the leadership of the McGuinty/Wynne terms as Premiers of the Province and their enactment of the Green Energy Act coupled with those contracts signed with wind and solar generators during their time in power.

*Thanks to Scott Luft for tracking industrial wind generation and curtailment monthly.

Ontario gifts Michigan cheap energy as US state threatens Line 5

I was on Sauga Radio 960 AM at the invitation of Marc Patrone for his morning show on May 19, 2021. Our discussion was related to the cheap power we have been exporting to Michigan and other locations and Michigan’s threat to shut down Line 5.

You can listen to our chat starting at 1:22.18 of his show on the podcast here:

Podcasts

You can also listen to our discussions at NEWSTALK CANADA if you are a subscriber here:

https://newstalkcanada.com/?page_id=2527

Greenpeace Canada, York University Professor and OCAA Chair attack the Ford Government

The Doug Ford led Ontario government took almost three years since they were given the mandate to govern the province (decimating the Wynne led government) to recognize “renewable energy” is given preferential treatment by IESO (Independent Electricity System Operator)!  What they recently did was to state they would “repeal sections of the Electricity Act, 1998 and the Ontario Energy Board Act, 1998 that were introduced under the Green Energy and Green Economy Act, 2009 to promote and prioritize the development or renewable energy.”  They opened the comment time for 40 days commencing April 15, 2021.

The takeaway of the proposed changes was focused as: “Prioritizing renewable generation is no longer appropriate. Going forward, Ontario will ensure value for ratepayers by allowing all resources to compete to meet system needs.”  

As one would expect pushback from the eco-warriors started and Keith Stewart, Senior energy strategist at Greenpeace Canada (Stewart worked for Gerald Butts at WWF as Director, Climate Change) jumped! He was ticked with the proposed changes in regulations and expressed his distain via twitter:

Keith Stewart@climatekeithDoug Ford isn’t only screwing up the pandemic response. His latest climate move: Proposal to Eliminate Renewable Energy Requirements for Ontario’s electricity system#onpoli https://ero.ontario.ca/notice/019-3471 9:48 AM · Apr 25,

Many will recall Greenpeace lost it’s charitable status in 1999 after having operated as a charity since 1976. Revenue Canada “refused to recognize the new Greenpeace Environmental Foundation as a charity, saying its activities have “no public benefit” and that lobbying to shut down industries could send people “into poverty.” It appears Greenpeace continue wishing to “send people into poverty”, ignoring the governments proposed changes are specifically focused to;  “ensure value for ratepayers”.  

An interesting aside! Greenpeace Canada has evolved and created a new entity having charitable status from the Canada Revenue Agency with an “Effective date of status: 2020-09-02”. The new entity is Greenpeace Canada Education Fund (GCEF).

They claim GECF is: “Separate from the campaigning arm of Greenpeace, the Greenpeace Canada Education Fund invests in scientific research, education, and other activities aimed at raising awareness of the environmental issues that affect people in Canada and around the world.” It goes on to state; ”To maintain our independence and integrity, we never take money from governments or corporations. That means the Greenpeace Canada Education Fund relies on donations from individuals, foundations and other non-profit organizations to achieve our goals.” The foregoing echo the words from Greenpeace Canada’s website but a simple search noted Greenpeace Canada got two grants totaling $100K from the Impact Assessment Agency of Canada a division of the Ministry of the Environment and Climate Change so it appears they will take money from governments!

It is also worth noting the new charity and Greenpeace Canada have the same address at 33 Cecil St., Toronto. The December 31, 2019 annual report for Greenpeace Canada claims they spent over $760K on “Public outreach and education” and almost $3 million on fundraising.  They must feel using the new entity will help them reduce “fundraising” expenses due to their ability to issue tax receipts meaning, taxpayers will pick up a good portion of the fundraising costs in the future. 

One should wonder why the CRA changed its mind?      

The other individual who jumped on the bandwagon to condemn the Ford government’s initiative was none other then Mark Winfield*, a York U Professor and former Program Director at Pembina. Joining him with “quotes” in an article posted on “The Energy Mix” was Keith Stewart and Jack Gibbons** of the OCAA (Ontario Clean Air Alliance). The article headline is capitalized and scarily states: “Ontario Creates ‘Innovation Wasteland’ with Latest Renewables Rollback, Critic Warns”.  Some of the scarier quotes from the three individuals in the article are: “allergy to renewable energy”, “evidence-free decision making”, “a political vendetta”, “a program of extermination”, etc. etc. Their concerns seem over the top and aimed at scaring the reader.

Ontarians, who have experienced huge electricity cost increases since the advent of the GEA however, seems oblivious to the unidentified author of the article and the three individuals quoted! Perhaps someone else pays their electricity bills or they have solar panels on their roof or simply, facts don’t matter to them! 

The facts were formerly presented by  Ontario’s Auditor General, Bonnie Lysyk in her December 2, 2015 report which stated: “Between 2004 and 2014, the Ministry issued two policy plans and 93 ministerial directives or directions that did not fully consider the state of the electricity market, did not take long-term effects fully into account and sometimes went against the OPA’s advice.”  The report further described the costs to Ontario’s ratepayers as follows! “In particular, the Global Adjustment fees, covering the excess payments to generators over the market price, cost consumers $37 billion during that period, and are projected to cost another $133 billion from 2015 to 2032.

Those eco-warriors who are dependent on our tax dollars are totally unconcerned about the plan to “ensure value for ratepayers” and instead are hell-bent on further destroying the Ontario and Canadian economies and the well-being of all Canadians!

The time has come to remove the charitable status of them all (including University Foundations)*** unless they dismiss the professors demonizing fossil fuels so they can appreciate what those in the private sector are burdened with!

* For more on Winfield and York University check out this article!

**More on Gibbons and the OCAA here!

***York University Foundation’s (registered charity) April 30, 2020 annual report indicates total revenue of $1.268 billion and a claim that $1.095 billion of that was spent on “charitable activities”.

What Caught my Eye this Past Week or so!

Not sure if it’s the lock-down or just a normal week but a few things caught my eye because they seemed out of place and interesting.  Here they are!

Russia to Offer Carbon Credits With Far East Digital Forest Platform

I happened to read an article in the Moscow Times (credited to Bloomberg) claiming, “Russia is creating a digital platform to collect satellite and drone data on its vast forests in the Far East with the aim of offering them on the carbon offset market.” What that implies iswhen it launches later in 2021, will allow the government to lease sections of forest to enterprises, which can then invest in planting new trees or protecting existing ones.” 

What came to mind after reading the article is the opportunity something similar could do for Prime Minister, Justin Trudeau who promised that young Swedish “climate change” warrior, Greta Thunberg, he would plant 2 billion trees. The answer to his prayers perhaps, as he has been far too busy at his Rideau cottage to actually plant anything since the pandemic broke. He could also unleash the same concept on Canadian businesses to do what the Russian’s propose as between the Federal and Provincial governments about 89% of the land (almost 8.9 million square kilometers) in Canada is owned by either the Federal or Provincial governments.  He will just have to tell them where to plant the trees.

The other thing that struck me was as Canada’s forests are the 2nd largest (347 million hectares versus Russia’s 763 million) in the world why not make the same claim they did!  Russia claims their forests absorb 38% of their emissions so, based on that premise; Canada’s forests would be absorbing about 140 million tonnes which would bring us very close to our 2030 emissions target.  The Trudeau led government has increased the carbon tax imposed on all Canadians to $170/tonne by the time 2030 arrives so, adopting Russia’s concept would allow them to cancel future “carbon tax” increases.  Yahoo!

IESO Board Determination on a Market Rule Amendment

The second thing that caught my eye came from Ontario’s IESO (Independent Electricity System Operator).  IESO manage Ontario’s electricity grid doing what they can to ensure we are not impacted by brownouts or blackouts as Texas recently experienced. IESO announced: “A market rule amendment proposal to limit the IESO indemnity to losses caused by gross negligence, subject to the current limitations on recoverable damages, was adopted by the IESO Board of Directors and is currently planned to take effect on May 3, 2021.”  

Outward appearances suggest should events (blackouts) similar to what happened in Texas occur in Ontario, IESO want to limit potential lawsuits to actions proving “gross negligence” only!  ERCOT, the Texas grid operator is facing many huge lawsuits due to the winter storm the week of February 14, 2021 so presumably this is what inspired IESO to amend this Market Rule.

 Ontario should follow the recent Texas lead

Texas’s political leaders have reflected on the recent blackout and about two weeks ago, the Texas Senateunanimously approved a bill that would slap fines of up to $1 million a day against electricity and natural gas companies that balk at weatherizing facilities and would set up a system for warning the public about the risk of impending blackouts similar to one now used for hurricanes.”

As one would expect the renewable energy crowd, big tech and the financial institutions are upset about the bill but it appears to be a great idea following the review on the causes of the blackout. 

While Ontario’s electricity system is fully weatherized, the precedents of the Texas bill do open up an interesting possible act here in Ontario.  What is suggested is an act to reduce our costs of electricity!  Our Minister of Energy, Northern Development and Mines, Greg Rickford should consider an act penalizing renewable energy generating surplus electricity during low demand times such as the middle of the night or on weekends.  That surplus energy creates huge losses as IESO are forced to sell or curtail our surpluses (to avoid blackouts) to NY, Michigan, etc. at very low rates which are subsidized by Ontario ratepayers. Those events cause Ontario’s ratepayers to pay considerably more than $1 million a day. Here is an opportunity to reduce those ratepayer/taxpayer costs but let’s up the costs to generators to $5 million per day!

The time has come for Minister Rickford to act and deliver on the promise to reduce electricity rates by the 12% we were told would happen should the Ford led OPC party be elected. Here is the chance for them to prove they meant what they promised to those who voted for them!

Some good news on electricity costs

The foregoing title is a little deceptive as when Marc Patrone and I were speaking this morning on his show at Sauga Radio 960 AM we also covered a fair amount of other ground. Some of the other topics discussed were short spurts about pipelines, China, Russia’s forests and even briefly about housing costs. You can listen to our full discussion on the podcast starting at 41:10 and ending at 58:00 here:

or if you are a subscriber to NEWSTALK CANADA you can listen here:

https://newstalkcanada.com/?page_id=2527

Tom and guest Parker Gallant discuss the economics of “green” energy

Tom Harris invited me on his Exploratory Journeys podcast on i Heart radio and we spent about 1/2 hour discussing the economics related to “green” energy. We cover a fair amount of ground related to the electricity sector in Ontario particularly on the costs of renewable energy.

You can listen to the podcast with Tom Harris here but please note there are a couple of commercials before our chat:

Wow! January and February 2021 show declining Ontario electricity costs!

For the first time in a decade Ontario experienced a reduction in the costs of grid generated electricity for two months in a row so the question should be; who should we thank?

As it turns out the Ontario demand for electricity in the first two months of 2021 were actually up slightly (1.3%) from 2020 or just under 300,000 MWh (megawatt hours) and about what 200,000 average households would have consumed in two months.  The costs of generation for January 2021 including both the HOEP (hourly Ontario energy price) plus the GA (Global Adjustment) dropped from $116.24/MWh to $99.83/MWh and for February it dropped from $127.31/MWh to $82.94/MWh.

So, why did costs decline?                                                                                                                                              

Was it because the Ford led Government took action and passed an Act to reduce the rates paid to wind or solar* generators or the OEB (Ontario Energy Board) decreed they would reduce rates or because IESO (Independent Electricity System Operator) suddenly contracted for low-cost generation?

The answer is none of the above!  As it turns out we can thank “Mother Nature” for a big part of the cost reduction as wind generation fell by 17.2% or almost 438,000 MWh (what almost 300,000 households would consume in two month). That drop in output by those IWT (industrial wind turbines) saved $60 million in costs alone and additionally the slight increase in consumption noted above coupled with the fact that one of the Darlington nuclear units was shut down for refurbishment meant we had much less surplus generation that had to be sold to our neighbours in NY or Michigan.  Our net exports (exports less imports) sold in 2021 were only 1.007 TWh (terawatt hours) versus 2.694 TWh in 2020. The drop in sales of the surplus power of 1.687 TWh was also sold for a higher price (less suplus generation results in higher prices) which resulted in a reduction in our loss on those sales of $221.2 million year over year.  In 2020 the cost of our exports added $289.8 million to the costs of electricity but that cost dropped to $68.6 million in 2021 for those two comparative months.

To account for the reduced wind and nuclear generation Ontario’s natural gas plants stepped up to meet our needs generating an additional 522,000 MWh at prices reflecting only fuel costs and a small margin.  Most of those gas plants were added to ensure our grid reliability after the Green Energy Act was legislated back in 2009 and the OPA (Ontario Power Authority), since merged with IESO; contracted wind and solar generation they knew required backup due to their intermittent and unreliable nature.

No doubt the eco-warriors will be up in arms when they notice natural gas generation increased in January and February 2021.  Those eco-warriors should take a few moments to reflect on the fact that without electricity from natural gas generators many Ontarians may have died from the cold.

This is just another demonstration of the wasted cost Ontarians are continually forced to pay due to the GEA (Green Energy Act) and the contracts granted to wind and solar generators.

*Solar produces little power during the Ontario winter months and 2021 saw generation of only 0.071 TWh in January and February 2021 but it’s cost added about $32 million for very little generation.