Most Canadians from coast to coast look forward to Spring arrival as we get excited about warmer weather and watching mother nature show her stuff. Those Canadians living in Ontario however can be both happy and sad about Spring arrival as it has the bad habit of generating increased costs for one of life’s necessities which is energy with an emphasis on the cost of electricity.
Two recent happenings on March 19, 2023, bring the focus on the sad part of Spring arrival. The first is more sunshine which creates more energy from those solar panels which under the McGuinty led government received contacts at ridiculous guaranteed rates as high as 0.80/cents a kWh. Now apparently, they have embarked on more hits to our pocketbooks as the first six (6) hours of March 19th suggests they can now produce power even when the sun isn’t shining as this screenshot from IESO demonstrates!
Solar Panel Generation When the Sun isn’t Shining?
As if the foregoing wasn’t enough weird news, on the same day as solar power was generated in darkness, we note IESO data supplied more bad news. Normally at this time of year as the snow melts and water flows Ontario benefits from more generation from our hydro facilities which are also our cheapest and cleanest source of generation. As it turns out IESO data disclosed more bad news as the first three (3) hours of March 19th (two days before spring arrives ) those IWT (industrial wind turbines) generated more electricity than our hydro plants as evidenced in the following two screenshots.
Wind Generation Beats Hydro Generation!
To accentuate the foregoing those IWT did the same thing in the last three hours of the day as the following screenshots clearly show!
IWT Generation Hours 22, 23, 24!
Hydro Generation Hours 22, 23, 24!
Over the full 24 hours IWT generated a total of 92,447 MW or approximately 78.6% of their capacity and only slightly less than hydro which generated 94,511 MW but could have easily produced more. Ontario was busy selling off the unneeded power which we (logically) should attribute to IWT generation to our neighbours at an average price of $14.86/MWh. We exported 53,308 MW so generated revenue of around $792K while we paid $135/MWh for it, so it cost Ontarians about $6.4 million for unneeded power. We should also suspect IESO were busy telling OPG to spill hydro (we are obliged to also pay for) as demand was low and only peaked at 17,057 MW at hour 20.
The ups and downs of those intermittent IWT and solar panels are in the bad habit of generating lots of unneeded power during the spring and fall seasons when Ontario demand is low. They are the principal reason the Province of Ontario stiff taxpayers with annual additional costs of $6.5 billion in an attempt to hide the mess our electricity system is actually in.
Just one day’s data makes it obvious both of the foregoing sources of intermittent and unreliable electricity generation should be tossed in the garbage!
Just two days ago, on March 1, 2021 at Hour 22 (hour ending at 10 PM) Bruce Nuclear’s Unit G-3 with a capacity of 784 MW was shut down for major component replacements (MCR) and will not return to service until sometime in 2026. Daily that unit has been supplying enough generation for 12% (627,000) of Ontario households with (18,800 MWh) their electricity needs. The refurbishment of that unit brought down Ontario’s nuclear baseload to just under 8,000 MW so coupled with all of Ontario’s run of river hydro it is insufficient to meet our peak needs and we can’t count on Quebec to always be there to cover our shortfalls. The Society of United Professionals pointed out why we can’t count on Quebec to help us out in a February 2021 report in which they stated: “importing firm baseload power from Quebec is not as simple as signing a contract and flipping a switch. As a result of bottlenecks in Ontario’s transmission system, pressures on Quebec’s power supply and Ontario’s ongoing reliance on Quebec for summer peak power, there are multiple reasons that imports are not the simple solution they may seem.“
Likewise, even though Ontario has grid connected IWT (industrial wind turbines) with a reported connected capacity of about 4,900 MW (6 times the G-3 unit) their average annual generation is only in the 29/30% range. Further because of their intermittency they cannot be counted on to generate power when it is actually needed. March 2nd is a perfect example as over the full day they only generated 11.6% (13,619 MW) of their capacity with a peak at Hour 18 of 957 MW (19.5% of capacity) and a low of 275 MW (5.6% of capacity) at Hour 1.
Fortunately, yesterday was a relatively speaking; a mild winter day in Ontario and Quebec and peak demand came at hour 20 when it reached its high for the day at 18,579 MW and those IWT contributed only 2.6% (486 MW) of demand at that hour. Because it was a somewhat mild winter day Hydro Quebec was able to supply around 38,000 MWh while we were busy selling about 24,000 MWh to Michigan. Had it been a cold winter day Quebec would have needed the power they supplied Ontario via our intertie connections. As it turned out we were a net importer of power for twenty-two hours and a net exporter for only two hours of the day which is a big turnaround from when our nuclear baseload was higher in the 10,000 MW range only a month or so ago.
What really stepped up to the plate for Ontario yesterday was our natural gas generation thanks to its flexibility and over the 24 hours it supplied us with 68,552 MWh or about what 2.3 million average Ontario households (45% of Ontario households) consume daily. At our peak hour it provided 3,957 MWh or 21.3% of demand and over eight times what those IWT generated. It should also be noted the abilities of natural gas generation to be so flexible presumably resulted in the HOEP (hourly Ontario energy price) remaining relatively stable throughout the day in the $30/MWh range.
The good news is Bruce Nuclear’s Unit 6, the first unit to be refurbished under the MCR project, is scheduled to return to service later in 2023 and its life cycle will be extended to the early 2060s! Perhaps by then politicians will have abandoned the concept of wind and solar being a reliable supply of electricity and the eco-warriors will have returned to their caves!
The below screenshot of IESO data for the past several days clearly demonstrates why Ontario needs the reliability of natural gas to fill in for when the sun’s not shining and/or the wind’s not blowing. At the bottom left of the screenshot the “Generation by Fuel Type – Hourly” highlights Ontario’s baseload capacity which is principally nuclear and hydro in the orange and blue colours. Most hydro is classified as baseload but part of it is considered as “variable” generation so is able to ramp up or down as needed when grid demand rises or falls. Nevertheless daily demand frequently is well above what those two sources are able to provide so natural gas plants need to be at the ready when those renewable energy sources are in the doldrums.
The foregoing is demonstrated by the large and small hourly generation from the green (industrial wind turbines or IWT) and yellow (solar) portions of the chart which at times generate as much as hydro and at other times very little! Simply looking at the daily peak demand hours it is readily apparent from the visual observation of the chart that wind and solar often are missing. Natural gas generation (dark blue) and its rammable ability are required to fill in the gaps as is obvious once again from just a quick glance.
Just looking at one days IESO data contained in the above chart clearly shows why we cannot live without natural gas plants and their ability to step up when needed. Looking at February 24th at peak hour 19 (hour ending at 7 PM) natural gas generated 4,907 MWh, hydro 6,088 MWh but solar was absent and those IWT only generated 715 MWh versus their peak generation of 2,516 MWh for the day at 3 AM when peak demand was at its low point for the full 24 hours.
The above is a clear demonstration of the unreliable nature of IWT and why natural gas generation is needed unless the objective is to create blackouts!
OPG recently announced they are buying GM Canada’s former head office building in Oshawa which GM indicated has been virtually empty since the start of the Covid-19 pandemic. OPG states the building will be refurbished before they move from 700 University Ave., Toronto late in 2024. Back on November 10, 2022, OPG released their 3rd Quarter results and they were quite favourable but not so much for ratepayers as revenue was up year over year for the nine months by $585 million (11.3%) despite generation only increasing by 2.4 TWh (4%). Net income increased by $199 million or 16% so more than double the inflation rate.
Hydro One
Hydro One recently released their year-end results and their revenue, net of purchased power (up by only 827 GWh or 2.7%), increased by $410 million (up 11.2%). Net profit was up by $91 million or 9.2% which also was 46% higher than Canada’s inflation rate of 6.3% for the year.
Despite the foregoing with OPG and Hydro One reporting results surpassing our inflation rate it is worth noting, the Ontario Energy Board’s “Vision” reputedly still is: “To be a trusted regulator who is recognized for enabling Ontario’s growing economy and improving the quality of life for the people of this province who deserve safe, reliable andaffordable energy.“
Melancthon Wind Contract Extended
For some unknown reason Ontario’s Minister of Energy issued a directive dated January 27,2022 to IESO instructing them to renew expiring contracts and IESO did; under the “Medium-Term Request for Proposals“ meaning the contract holder; TransAlta Renewables Inc were granted an extension to 2031. That particular IWT (industrial wind turbines) project has “a long and controversial history, due to hundreds of complaints of noise pollution from residents, so severe that some people abandoned their homes” and it was further stated: “Our own findings from documents received under Freedom of Information is that the Melancthon power project was number one in Ontario for noise complaints related to the turbines and a transformer.“ The foregoing happened despite the promise by the existing Minister to cancel IWT projects before his party gained power!
Joe Oliver retiring as IESO Chair
It was with acute disappointment reading recently former Federal Minister of Finance, Joe Oliver was retiring as Chair of IESO’s Board of Directors as he was only appointed in March 2019! Mr. Oliver has certainly come across as a climate change skeptic recently having penned an article for the Financial Post wherein, he stated: “To justify enormous expenditures and punishing taxes Canadians are endlessly bombarded with apocalyptic climate scaremongering whose main effect is to terrify children and convince the credulous. Even though Canada cannot make a measurable difference to the global climate, the Liberals doggedly push a net-zero agenda that will cost $2 trillion by 2050.“ He reemphasized that point in another article in the FP in early February stating “Canadians are awakening to the terrible harm the government’s destructive climate initiatives inflict on their livelihoods and freedom, without achieving anything meaningful for the environment.“
Based on the very short press release from IESO should we suspect the Ford Government was not happy with what he said and perhaps asked him to retire as they are attempting to stay on the good side of PM Trudeau and his minions pushing the “Just Transition” agenda? We taxpayers should hope not but we should be suspicious!
Prince Edward Island
Back in late 2021 the PEI government announced they would provide free heat pumps for any island household with income of $35K or less and since then they have raised the household income level to $55K but its not working! Their reasoning was because electricity and oil costs (the two main sources of heating households in the province) were very high they would pay to have the pumps installed as PEI seeks to reach “net-zero energy consumption” by 2030! In a province with only 59,000 households, thousands of them indicate they have been waiting for the installations for a long time so the province has now increased the household income to $75K. It certainly appears their provincial politicians are working hard to increase the backlog. It’s becoming harder and harder to find any politicians in Canada or elsewhere that exhibit even a little common sense!
Down Under to Australia
Back in early 2019 the government of NSW (New South Wales) granted approval for a 2,000 MW proposed pumped storage facility at a then estimated cost of US$3.62 billion with commissioning expected in 2024. The approval was granted as the province sought to shut down their coal plants and move to zero emissions and the pumped storage capacity would reputedly be capable of generating 2,000 MW per hour for 175 hours. Sounds like a dream by the politicians in NSW and recent events have perhaps, highlighted their dreams have been shattered! Apparently, the initial costs have ballooned (some estimates are as high as US$9 billion) and the commissioning date in now anticipated to be December 2027 or even later. To make matters worse, recent news was the 2,400-ton boring machine has become stuck under a cave-in so has ground to a halt! Sure looks to be yet another group of politicians and bureaucrats with a shortage of common sense! It appears to be Australia’s version of Muskrat Falls!
Oil City battery energy storage project ‘dead in the water’: mayor
The captioned article in the Sarnia Observer a week ago could be construed as an “ironic” happening as it occurred near to where oil was first discovered in North America back in 1858 when James Miller Williams was drilling for water. The location of the well at that time was called Black Creek but was subsequently changed to Oil Springs and is located about 30 kms southeast of Sarnia, Ontario. Renewable Energy Systems Canada (they claim they are the world’s largest renewable energy company) asked for support from the local council as a requirement to seek a blessing from IESO for a proposed BESS (battery energy storage system) but the mayor and council declined to support them. Perhaps nostalgia played a role as those BESS units are seen as support for the unreliable and intermittent nature of renewable energy from wind and solar which our politicians seem to believe can replace fossil fuels. Nice to see some politicians have basic common-sense!
Over to Germany
It is worthwhile to visit a website titled “NoTricksZone” and a recent visit to the site had a short, sad, but true story about Germany’s electricity and gas prices in a revelation by P. Gosselin. The headline read: “My Household Electricity And Gas Prices Rise 87% And 178% Respectively!“ The article went on stating; “my own household had made a contract in 2021 that locked the heating gas and electricity prices for 2 years, our rates had stayed reasonably low. But that contract expires on April 1st, 2023, and last week we got the long-awaited letter announcing the new prices from our gas and electric utility.“ Many are aware Germany, under Angela Merkel, went full bore on what was labelled as “Energiewende“; simply defined as, “the ongoing transition by Germany to a low carbon, environmentally sound, reliable, and affordable energy supply“. As it turns out Energiewende has pretty well failed on all of its objectives due to their push for wind and solar, elimination of their nuclear baseload generation coupled with their shutdown of their variable coal generation plants. They have become the perfect example of what “not to do” but many countries have emulated them and are finding themselves in a similar situation with energy poverty climbing.
An article from October, 2022 stated: “One in four Germans are currently energy impoverished, up from one in six in 2018.“ Those are very dismal results and a reflection on how unconnected from society elected politicians and their bureaucrats have become in their push to achieve the “net-zero” emissions target. In the meantime China, India and many other countries have rejected the call to move in the same direction, so they are lifting many of their citizens out of energy poverty.
The above short stories hopefully highlight the apparent disregard most of our elected politicians have for all but the elites in our democratic countries but it is time to call them out. Join the fight and let them know how they are failing the majority of voters and in the process are causing energy poverty.
There is nothing “just” about the “Just Transition”!
Yesterday, Ontario’s IWT (industrial wind turbines) were humming and supplied the Ontario grid with 81,736 MW despite IESO appearing to have curtailed another 5,600 MW of their potential generation!
Due to the fact it was a Sunday with businesses shut for the weekend coupled with a mild winter day, demand was light so the peak reached at Hour 19 was only 16,478 MW. Because of those factors, IESO were busy selling off our surplus power to our neighbours in Michigan, New York and Quebec for pennies of its cost to Ontarians. Total exports were 69,070 MWh or 84.5% of the accepted IWT generation and the sale price averaged $5.45/MWh or just over a half a cent per kWh (kilowatt hour).
To put the foregoing in perspective the 69,070 MWh is about what 2.4 million Ontario households consume daily and represents around 46% of all Ontario households.
Based on the foregoing data from IESO it is obvious that generation by the IWT were fully responsible for the 69,070 MW that was exported. What that illustrates is with the guaranteed contracted prices of $135/MWh that generation cost Ontario ratepayers/taxpayers $9.324 million and adding the cost of the 5,600 MW of curtailed generation (at a cost of $120/MWh) it brings the additional costs to $9.996 million.
Oh yes, and we exported those 69,070 MW for the HOEP market price of $5.45/MWh, so we earned $376K (3.8% of their costs) reducing the overall costs to $9.620 million.
So one might ask, so how much did it cost us per MWh for the 12,666 MWh we didn’t export, and they would be shocked to find out it works out to $759.51/MWh or 0.76 cents/KWh.
Going “green” sure hurts the ratepayers and taxpayers in Ontario but our neighbours are surely delighted we are providing them with our highly subsidized “emissions free” electricity!
Now, try to imagine if we did the foregoing every day of the year and shake your head at the $3.5 billion it would cost us!
In fact, the taxpayers in Ontario are actually burdened with an annual cost of $6.274 billion for “Electricity Cost Relief Programs” associated with those renewable energy contracts as outlined in the very recent 2022-2023 Third Quarter Finances update from the Provincial Ministry of Finance.
From the Update:
Now try to imagine how that money could have benefited our health sector or built out some needed infrastructure!
Southern Ontario is currently experiencing what the eco-warriors would call “global warming” with lots of wind so it led to a IESO DATA look and it was a bit shocking to see what was going on. The wind was doing a great job at generating intermittent and unneeded IWT (industrial wind turbines) generation that wasn’t needed but with their “first-to-the-grid” rights IESO were forced to accept both lots of it on February 14th and 15th as the following highlights.
As a co-incidence a Provincial press release about the provinces 2022-2023 finances hit the in-box and in in it they disclose the province was projecting a deficit of $6.5 billion for the year. In a quick look at the financial information it was interesting to note that $6.6 billion in expenses for the Energy base ($327.6 million) plus $6.274 billion allocated for “Electricity Cost Relief Programs” brought the total to the $6.6 billion of expenses in the press release. Imagine, without the latter the province would be forecasting a small surplus of $100 million and that would have been something to brag about!
As many Ontarians may not know the Electricity Cost Relief Programs were established by the Ford led government to absorb the above market costs of the pricy wind and solar contracts signed by the McGuinty/Wynne governments. Those governments; in the push to “green” the electricity sector; was what they bought into when eco-warriors were demanding the world must stop using fossil fuels due to the “global warming” (now referenced as “climate change”) scare.
The IWT generation for all of Tuesday and part of today (Wednesday) makes it obvious why the almost $6.3 billion of costs for the “Relief Programs” exists!
February 14, 2023
IESO’s wind generation forecast for the full 24 hours was 44,037 MWh but they cut the output to 41,251 MWh suggesting about 2,700 MWh were curtailed. That resulted in a total cost for the IWT generation and curtailment of $6.279 million for the day ($135/MWh for accepted generation and $120/MWh for curtailed). Total exports to our neighbours throughout the day were 46,938 MWh so one could easily suggest all of it was either IWT generation or caused by it! The average market price (HOEP) over those 24 hours was $10.74/MWh meaning it earned a miserly $504K reducing the cost of IWT generation to $5.775 million.
February 15, 2023
IESO DATA for the first 18 hours disclosed they forecast generation of 75,648 MWh but the output recorded was 54,881 MWh meaning 20,767 MWh were curtailed. That suggests the first 18 hours of the day cost $9.901 million and as the average HOEP over those 18 hours was a tiny $2.22/MWh the exports of 49,095 MW returned only $109K of those costs paid to the owners of the IWT.
Results
The taxpayers/ratepayers of Ontario were forced to absorb $15.567 million to provide our neighbours in NY, Michigan and Quebec with those 93,255 MWh over those 42 hours. Those MW we basically gave away is about what 3,2 million average Ontario households would consume in one day!
Conclusion:
Hopefully the foregoing brings to light why the Ford government allocates the $6.274 billion for “Electricity Cost Relief Programs”. It also suggests we should all wonder why they haven’t cancelled those IWT contracts instead of now indicating they will extend their contracts. They recently extended the Transalta Melancthon 200 MW IWT development near Shelbourne, Ontario which stands out for having a long and controversial history.
We should wonder as taxpayers if that $6.274 billion cost will only get larger in the future as the past 42 hours suggests it won’t diminish!
The Ford led government had a chance to balance the budget but instead seems content with burdening Ontario taxpayers in supporting our neighbour’s electricity costs! Not sure how that will attract jobs to the province?
It is apparent no one noticed from Hour 9 to Hour 11 on February 11, 2013 Ontario’s baseload power decreased by 814 MW of capacity as Bruce Power’s G-8 nuclear reactor was tripped off. It’s not clear why it was tripped, but in terms of security to avoid blackouts in the province; that baseload power would generate over 7 TWh (terawatt hours) over a full year or about what 800,000 average Ontario households consume.
The above should be of concern to the Ontario Ministry of Energy but so far, they haven’t noticed! The Ministry are instead excited about the recent announcement triggered by a November 24, 2022, Ministerial directive from Ontario’s Minister of Energy, Todd Smith to IESO. That directive instructed them to complete negotiations with the proponents of the Oneida Energy Storage Project, a 250 MW BESS (battery energy storage system).
Needless to say when the announcement was finally made the Ontario Conservative Party were excited and Global News reported in a February 10, 2023 article, Premier Ford stating; “It’s equivalent to taking 643,000 cars off the road,”. The article went on to note the project “is being supported by the Canada Infrastructure Bank which has earmarked some $170 million to the initiative.“ The CIB’s press release contained slightly different information than the Ford quote claiming: “The Oneida Energy storage project is expected to reduce emissions by between 2.2 to 4.1 million tonnes, equivalent to taking up to 40,000 cars off the road.“
Hmm, the foregoing suggests someone’s math is askew as taking 643,000 cars off the road is a multiple of 16 times what the CIB said was 40,000 cars! Who should we taxpayers believe?
The CIB’s press release had numerous quotes in it from both federal and provincial government politicians as well as the partners; Northland Power Inc., NRStor, Aecon*NB: and Six Nations of the Grand River Development Corporation (SNGRDC).
As an example of the excitement displayed, here is what Jonathan Wilkinson, Canada’s Minister of Natural Resources had to say: “The Government of Canada is pleased to collaborate with partners to unlock the energy storage solutions needed to store clean energy while meeting increasing electricity demands,” and he went on further stating: “The Oneida Energy storage project represents a significant Indigenous-led development that will create good jobs for Canadians while reducing emissions. The Government of Canada is pleased to invest $50 million in building this project with Indigenous partners — resulting in one of the world’s largest battery storage projects.“
Premier Ford said: “I’m thrilled to see so many great partners come together to build this world-class project that will provide affordable, clean energy for generations to come,”.
The other quote, in my mind, that stood out, was from Mike Crawley of Northland Power Inc. as Crawley was reputedly the former Ontario President of the Liberal Party and following that served as President of the Liberal Party of Canada.
Crawley’s quote was: “The Oneida Energy Storage Project is a milestone for Ontario’s burgeoning energy storage sector. It will make the province’s electricity grid more efficient, stable and reliable. For Northland, this project marks our first storage investment. We recognize the Government of Ontario and the Government of Canada for their continued support of energy storage initiatives. Finally, we look forward to continuing to work in partnership with NRStor and the Six Nations of the Grand River Development Corporation, without whom this project would not have been possible.”
We should suspect Crawley’s attribution to “Ontario’s burgeoning energy storage sector” is a subtle call for support (financial and regulatory) from the CIB and the Ford government to grant approval for a storage project Northland Power have been chasing for over a decade. That project is the Marmora pumped storage project utilizing the abandoned iron mine in Marmora, Ontario. Crawley has somehow managed to entice OPG into joining Northland in their pursuit of that contract perhaps believing it will convince Ontario’s Energy Minister, he must give it his blessing.
Mike Crawley was called out by Bob Runciman, a Conservative MPP, who sat as a member of Ontario’s parliament for 29 years and in 2004 was opposition leader. The Hansard report indicates in Runciman’s examination of the then Minister of Energy, Dwight Duncan in 2004, he raised “conflict issues” about Crawley and his position as President of AIM PowerGen while being the Ontario President of the Liberal Party of Canada. The issue was in respect to a $475 million contract awarded to Erie Shores Wind Farm owned by AIM PowerGen. According to the Hansard records Crawley was also President of the Canadian Wind Energy Association at the time. Needless to say nothing came of the issue raised by MPP Runciman when he asked Duncan to “put the contract on hold” pending an investigation by the Ontario Integrity Commission. Duncan refused! Crawley still maintains influence with the Liberal Party and his influence seems to now also involve the Ontario Conservative Party.
Mr. Crawley is registered as a Lobbyist with the Federal government and in June of last year he met with Jonathan Wilkinson who stated the Government of Canada “invested $50 million” in the project. We should wonder if the $50 million investment came about as a result of Crawley’s lobbying efforts?
Looking quickly at the Six Nations of the Grand River Development Corporation (SNGRDC) it is difficult to find complete information related to their “green energy portfolio” other than the claim; “itis capable of producing over 1000MW of clean energy through involvement in 18 solar or wind projects either directly (Equity Interests) or indirectly (Community Benefit Agreements). Their website identifies their portfolio’s capacity as 297 MW of “wind” and 145 MW of “solar”! They recently announced they were upset the Lake Erie Connector Project had been suspended for which the CIB had planned to “invest up to $655 million or up to 40% of the project cost. ITC, a subsidiary of Fortis Inc., and private sector lenders will invest up to $1.05 billion, the balance of the project’s capital cost.“
As if the furore from the proponents along with provincial and federal politicians wasn’t enough the Federal Minister of Finance and Deputy PM, Chrystia Freeland rang out with her rants on twitter about the project and how “it will create good jobs, help build Ontario’s 21st century electricity grid, and make electricity more affordable for Ontario families.”
As Minister of Finance she should recognize handing out $220 million of our (Federal) tax dollars for a project destined to raise the cost of electricity and create a few jobs to occasionally power homes or businesses for a few hours annually is not the panacea she hyperventilates about.
The time has come for all of Canada’s politicians to cease the madness of their “net-zero” targets and recognize how eliminating the 6% to 7% of emissions from the electricity sector will have no impact on Canada’s fossil fuel reduction but will result in the loss of well-paying jobs throughout our economy.
Time for sanity to return to our elected politicians!
*Aecon has been awarded a $141 million Engineering, Procurement and Construction (EPC) contract by Oneida LP.
NB: One of my contacts informed me John Beck CEO and President of Aecon is a big supporter of the WEF where our Finance Minister Freeland also hangs her hat! I went to the WEF website and searched his name and it popped up many times and he sits on one of their “Steering Committees. We should all wonder what in hell is going on!
The past couple of days in Ontario have demonstrated the ups and downs of energy demand both from those of us in Ontario and our neighbours tied to us via the intertie grids.
February 2, 2023
Starting with February 2, 2023, examining IESO data, clearly demonstrates the ups and downs of demand for electricity coupled with the market price variation (HOEP) of overproduction of IWT (industrial wind turbines). The wind was blowing hard all through the day but with baseload nuclear and hydro providing most of the demand what wasn’t needed was most of the power being generated by IWT. IESO forecast IWT would generate 94,503 MW over the full day (80.3% of capacity) but it wasn’t needed. Recorded output was 72,115 MW (61.3% of capacity) meaning IESO instructed IWT owners to curtail almost 22,400 MW. As most Ontario ratepayers know the IWT contracts provides them with “first-to-the-grid” rights and also pays for curtailed power at the rate of $120/MWh and $135/MWh for the accepted power. For the full 24 hours on the day the price allocated for accepted and curtailed IWT generation amounted to over $12.4 million in costs to Ontario’s ratepayers/taxpayers and about $172/MWh in costs for the accepted power.
Coupled with the foregoing; as demand was low for most of the day, the market price (HOEP) averaged $3.12/MWh so IESO were busy disposing of unneeded power for pennies of its costs. Even at the daily peak hour (Hour 19) the HOEP was only $5.18/MWh. For the full day exported power was 41,911 MW representing 58.1% of the generation IESO accepted from IWT. If one assumes the unneeded power from IWT represented all of the exported power or caused it, the cost added to the 30,200 MW of IWT generation consumed by Ontario ratepayers is another $7.1 million bringing the cost of the 30,200 MWh, added to the grid, to $11.2 million or $370/MWh (.37cents/kWh).
The happenings on February 2nd once again demonstrate how we Ontarians continue to provide cheap power to our neighbours. We do that by absorbing the costs of those intermittent and unreliable IWT sprinkled throughout the province allowing our neighbours to buy our surplus energy for pennies on the dollar while we eat the costs.
February 3, 2023
February 3, 2023, turned out to be a “Top 10” Ontario peak demand day reaching 21,388 MW and 24,821 MW for the “market peak” at Hour 19! The result was the HOEP for the full day averaged about $41.70/MWh. While that represents a large jump from the prior day those IWT were still costing us a lot more then the aforementioned HOEP average.
To put the foregoing in context, IESO data in the first 5 hours forecast IWT generation would be 18,795 MW but they only accepted 13,838 MW meaning about 5,150 MW were curtailed and the HOEP over those 5 hours was a piddly 0.62 cents/MWh. If one, then calculates the HOEP for the remaining 19 hours in the day it becomes $56.60/MWh so, much higher than the first 5 hours! Continuing to look at those 5 hours it becomes apparent we Ontarians absorbed the costs of almost $2.5 million to generate those 13,715 MW. Hopefully our neighbours in NY, Michigan and Quebec appreciate our generosity for those MW which was very close to the IESO accepted IWT generation.
Looking at the full day, IWT were forecast by IESO to generate 69,174 MW but their output was 62,940 MW meaning we paid for around 6,200 MW of curtailed generation but as noted in the preceding paragraph only about 1,000 MW more were curtailed in the following nineteen hours. Over the day IESO were busy selling off approximately 87,000 MW to our neighbours in Michigan, NY and Quebec with the latter taking well over a third of them. The last point should be no surprise as Quebec is a winter peaking province and on February 2nd Hydro Quebec asked their customers to reduce their electricity consumption due to the anticipated cold starting late Thursday night.
The other interesting happening related to generation on February 3rd was how much gas generation there was over the day. Ontario’s natural gas plants produced 88,172 MW which coincidently was only slightly higher than our total exports. It is worth pointing out when a MWh of natural gas is generated ratepayers are only paying the raw costs of the natural gas plus a small markup as the capital costs and the approved ROA (return on assets) have been included in the price of electricity since those plants were originally commissioned. In other words once a gas plant is operating it generates power that is very much cheaper compared to both wind and solar.
Quebec Support
About 60% of households in Quebec heat with electric furnaces or electric baseboards so are dependent on electricity to stay warm during cold winter days. For that reason we should suspect Ontario’s natural gas plants may have played a key role in ensuring those Quebecers were able to avoid a blackout on the recent very cold days we have just experienced.
The other thing Ontario’s natural gas plants may well be doing is allowing Quebec EV owners to recharge their EV batteries. Approximately 10% of all new cars registered in Quebec* are EV possibly due to the large $8,000. grant the province provides to purchase them. Interestingly, while Hydro Quebec tells households to turn down their heat and avoid using certain appliances during peak hours, they say nothing about when you should or shouldn’t charge your EV.
The generosity of Ontarians is astounding due to the treatment of IWT and the contracts in place providing those “first-to-the-grid” rights. On top of that, if we are subsidizing the sales of our IWT surplus power to other markets where it may be used to charge EV it just doesn’t seem quite right!
Maybe the Ford Government should ask Quebec to provide Ontario with carbon credits to offset the “emissions” of our natural gas plants that keep their people warm in the winter!
*A September 22, 2022 New York Times article stated the following about EV in Quebec: “Quebec has 150,000 electric vehicles on the road, compared with 113,000 in New York State, an indication of how ubiquitous charging can encourage ownership.“
Those IWT in Ontario were in full swing showing off their unreliable and intermittent nature on January 24th and the 25th during the first seven (7) hours (from 12 AM to 7 AM) of each day.
On the 24th over the first seven hours those IWT were humming and IESO forecast they would generate 27,980 MWh which would represent 81.6% of their capacity but IESO scaled back what they actually delivered by curtailing about 2,000 MWh as they were obviously not needed in the middle of the night when nuclear and must-run hydro were pretty well supplying all our needs. The result was our net exports (exports minus imports) over that 7 hours were 22,934 MWh or 88% of what was accepted from those IWT. The average HOEP (hourly Ontario energy price) during the 7 hours was $8.13/MWh so their sale generated $186,453. If we logically assume the bulk of them were either all IWT generated power or caused by their excess generation; the cost to us Ontarians was $3.096 million ($430K per hour) for what they generated plus another $240K for what IESO curtailed. Their frequent habit of generating unneeded power with us taxpayers/ratepayers forced to pay them for it at ridiculous prices continues!
Now if we traverse to the first 7 hours on the 25th, IESO forecast they would generate 4,526 MWh (13.2% of capacity) but they actually accepted 3,591 MWh meaning approximately 1,000 MWh were curtailed. The good news: for those 7 hours they kind of acted as they would if they were rammable power (similar to our gas plants and hydro). As a result the average HOEP was $32.16 for the net exports of 9,636 MWh we sold to our neighbours meaning the costs for us Ontario taxpayers was only about $500K for the IWT generated power.
To put the above in perspective the 27,980 MWh those IWT were forecast to supply on the 24th is about equal to the daily average consumption of 930,000 Ontario households whereas the 4,526 MWh forecast on the 25th is only enough to power 150,000 households for one day.
What the foregoing suggests:
1.Without the 11,433 MWh our natural gas generators supplied during those 7 hours on the 25th we may well have experienced a blackout, and
2.Without natural gas supply EV owners would have been unable to charge their batteries meaning they may have been unable to use them to go to work the following day!
Full electrification is a pipedream but based on a letter from Ontario Energy Minister, Todd Smith, our politicians fail to detect the flaws!
Minister Smith’s letter to the OEB dated October 21, 2022, carried the following message: “The government has a vision for the energy system in which Ontario leverages its clean energy grid to promote electrification and job creation while continually enhancing reliability, resiliency and customer choice.“
We should all expect the “vision” will fail in many ways including; electrification, job creation, reliability and resiliency!
PS: No solar generation to report from 1 AM to 7 AM on either day.
Those IWT (industrial wind turbines) along with solar panels once again demonstrated their inability to provide Ontarians with reliable power when it’s actually needed!
Peak hour on January 18th came at Hour 18 (hour ending at 6 PM) when Ontario’s peak demand reached 19,250 MW and those 4,900 MW of grid connected IWT managed to only generate 218 MWh or 1.1% of peak demand and 4.4% of their capacity. At that hour the sun wasn’t shining so no solar generation occurred. Our natural gas plants however, filled in the gap providing 4,038 MWh or 21% of peak demand while the balance came from our nuclear and hydro generation sources.
If one travels back in the day and notes what IWT were doing, they once again demonstrated their nasty trait of generating unneeded power. From Hour 1 to Hour 13, IESO forecast they would generate 29,859 MW (46.8% of their capacity) but accepted only 25,040 MW meaning just over 4,900 MW were presumably curtailed. Due to the “first-to-the-grid” rights and the generous contracts granted the owners of those IWT we taxpayers and ratepayers paid for both the accepted and curtailed power.
Over those same 13 hours our net exports (exports minus imports) were 19,827 MW (79.2% of accepted IWT generation) and the intertie price only averaged $17.47/MWh or 1.7 cents/kWh over those hours. As IESO were selling the surplus power off we were paying $135/MW for the IWT accepted power and $120/MW for what was curtailed. The foregoing suggests it cost us (ratepayers/taxpayers) about $3.5 million for that unneeded IWT generation over those 13 hours.
While natural gas stepped up when needed in Ontario, we should also understand it’s importance by simply seeing what most of Europe is experiencing without natural gas. Many households are suffering from the lack of reliable electricity generation due to their various government’s endorsement of wind and solar while exiting fossil fuel generation except for a little bit of natural gas. That push coupled with Russia’s curtailment of natural gas sales into Europe has driven up their costs of power and is even creating energy poverty for many “middle class” households! In some instances rationing of electricity is happening as charging EV and running your heat pumps could cause the electricity grid to collapse.
We Ontarians should take a moment to thank Alberta for providing us with natural gas which in addition to helping keep the lights on and power our businesses also provides heat for over 60% of all our households in the province.
Parker Gallant Energy Perspectives 