Solar power: how much does it cost Ontario?

Solar: it costs plenty, too and has environmental "downsides" [Photo: IESO]
Solar: it costs plenty, too and has environmental “downsides” [Photo: IESO]
December 12, 2016

Earlier I deal with the question: “How much is wind power really costing Ontario?” Since then many have asked the same question about solar.

The actual generation of solar power is much harder to pin down on an hourly, daily, weekly or monthly basis as most of it is LDC (local distribution company) connected (DX), and the IESO (Independent Electricity System Operator) doesn’t report it.

There appears to be only a single report, “Ontario’s System-Wide Electricity Supply Mix: 2015 Datawhere one can find solar information. That report is from the Ontario Energy Board and only produced annually. The OEB report for 2015 (dated July 21, 2016) doesn’t provide actual generation; instead it gives a percentage of its contribution (grid-connected and LDC-embedded) to total generation which then can be utilized to determine solar contribution to the supply mix. First, one must determine, via IESO, what actual generation was from all sources in Ontario.

The OEB report for 2015 indicates solar (grid-connected plus embedded) contributed 1.9% to Ontario’s total generation of 153.7 terrawatts (TWh). The 1.9% noted by the OEB would suggest combined generation for grid and LDC connected solar was 2.92 TWh for 2015.

The average price paid for solar (roof-top and ground mounted) is approximately $448.00/MWh or $448 million per TWh — that means the 2.92 TWh generated in 2015 cost ratepayers about $1.3 billion.

Not environmentally perfect

Unlike wind power projects, solar installations don’t appear to suffer a requirement to ensure either their decommissioning or recycling; the cost of either (or both) will presumably be a burden that eventually falls to taxpayers. A National Geographic article from November 2014, “How green are those solar panels, really?” had this to say: “As the world seeks cleaner power, solar energy capacity has increased sixfold in the past five years. Yet manufacturing all those solar panels, a Tuesday report shows, can have environmental downsides.”

When Energy Minister Glenn Thibeault recently suspended LRP II (the second phase of Large Renewable Procurement), trade association CanSIA (Canadian Solar Industries Association) expressed their disappointment: “…it represents a significant back-step from previously committed renewables procurement in the Province that we believe will be required to deal with supply and GHG emission risks, such as delayed nuclear refurbishment schedules, un-met conservation targets, or increased demand as a result of electrification to meet the province’s climate change targets.”

Needless to say, Ontario’s ratepayers were not disappointed. We would like to see Minister Thibeault fully “cancel” both LRP II and contracts awarded under LRP I, and any other contracts that have missed their agreed start dates.

13% of the costs for 1.9% of the power

The $1.3 billion for 1.9% of solar generation represents approximately 13% of the 2015 total Global Adjustment pot of $9,962.6 million and drives electricity costs up by almost $1 billion annually.

Further installations of solar generation in the latter part of 2015 and throughout 2016 such as the 100-MW Kingston Solar on 1,000 acres of land will add to the generation costs, increase our surplus generation, and further drive up the cost of electricity for ratepayers.

Parker Gallant

How to get those electricity bills down

(Or not make them worse)

In my volunteer work with Wind Concerns Ontario, a coalition of community groups, individuals and families concerned about the impact of industrial-scale wind power generation in Ontario, I was pleased to be asked by Global TV News to provide an opinion on what needs to be done to help the citizens of this province with their electricity bills.

Here is our contribution to the feature, published on Global’s website:

The following is by both Parker Gallant, a retired banker who now analyses Ontario’s energy sector and is the author of the blog “Energy Perspectives” as well as Jane Wilson, the president of Wind Concerns Ontario.

The Ontario government undertook its program to add renewable power without proper cost-benefit or impact analysis.

Now we have electricity bills that are the fastest rising in North America. The rich contracts awarded to huge corporate wind power developers are a factor.

Here’s what we suggest:

Immediately cancel Large Renewable Procurement (LRP) II that is currently “suspended.” With its target of acquiring 1,000 megawatts (MW) of more renewable capacity — it’s not needed and will further add to consumers’ power bills.

Cancel the five wind power contracts awarded in 2016 under LRP I and save electricity customers about $65 million annually or $1.3 billion over 20 years. Cancellation costs will amount to a small fraction of the annual cost. Cancelling approved but not yet built wind power projects and the new FIT 5.0 program will also save money.

Cancel “conservation” spending of $400 million annually. Ontario has already cut back on power use by more than 12 per cent since 2005 when consumption was 157 tWh to 2015 when it had fallen to 137 tWh. Do this and save immediately on electricity bills.

What’s in your hydro bill? November-December dates

Since the Premier of Ontario has admitted her government has made a “mistake” and she is now concerned about rising electricity bills in Ontario, there is a lot of attention being paid to these bills.

I have been invited to speak at two Town Hall events coming up in the next few weeks.

• Saturday, Dec. 3: 10 a.m. to noon at the Kinburn Community Centre, 3045 Kinburn Side Rd., Kinburn.

• Saturday, Dec. 3: 2 to 4 p.m. at the Intercultural Dialogue Institute, 335 Michael Cowpland Dr. unit 112, Kanata.

Here is a news story about last week’s event.

parkergallanttownhall-metrolandpic

The waste of power in Ontario is a scandal

The Wynne government is selling off surplus power at bargain rates … and yet, has contracted for more power produced out-of-phase with demand. Time to reverse engines.

LRP I contracts awarded this year, the LRP II, and contracts for any unbuilt wind power projects should get the axe
LRP I contracts awarded this year, the LRP II, and contracts for any unbuilt wind power projects should get the axe

November 14, 2016

Ontario’s Independent Electricity System Operator (IESO) has responsibility for running the “market” referred to as the HOEP (Hourly Ontario Electricity Price). That is defined as “the average of the twelve market clearing prices in each hour.” IESO also says the HOEP is  “a real-time market, meaning purchases of electricity are made as they are needed. There are occasions, when the best-priced energy may not be available due to limitations on the transmission lines. In this case, that generator’s offer is still used to help set the price, but another generator may be asked to provide the electricity.”

Since the beginning of 2016, the “real-time market” has valued a traded megawatt (MWh) at an average of about $16.00 or 1.6 cents a kilowatt (kWh). Compare that to what households and small businesses pay, an average price of 11.1 cents a kWh or almost seven times the market rate.

What the HOEP market is telling Ontario’s Minister of Energy Glenn Thibeault: the value you get ratepayers to pay for unreliable and intermittent renewable energy in the form of wind and solar generation has absolutely no relationship to its actual worth!

The data my friend Scott Luft posts highlights just how much the feed-in-tariff (FIT) program, with their above market rate contracts for intermittent wind and solar have distorted the HOEP.

Scott’s data source is the IESO although for reasons best known to them they don’t post DX (local distributed FIT and MicroFIT contracted generation) connected wind or solar generation. Scott estimates these in his spreadsheet and his estimates have so far proven to be conservative when the DX results are posted many months later.

Let’s examine the data. The TX (transmission connected) wind generation for the first 10 months of the current year (January 1st to October 31st) was (rounded) 6,966,000 MWh, and the DX connected are estimated at 1,079,000 MWh.  Curtailed wind generation is estimated at 1,804,000 MWh bringing total wind (generated and curtailed) to 9,849,000 MWh.. Those 9.8 TWh (terawatt hours) could have supplied approximately 1.3 million “average” households with electricity if it was delivered when needed.

It wasn’t.

So what that means is, 26% of the available energy from TX connected wind power developments was curtailed. Combining TX and DX curtailed wind MWh represents 18.3% of available energy from that source!

Power sold at a fraction of the contract price

At the same time as wind turbines were delivering or curtailing those megawatts of power, IESO was exporting surplus generation to our neighbours in New York, Michigan, Quebec, etc., selling it for a fraction of the FIT contracted price. Referring again to Scott Luft’s data it should be noted he actually includes the average HOEP price as of the hour(s) of generation or curtailment.   That price averaged about $9.50 per MWh for the 10 months using his data!   The sale price is a far cry from the FIT and MicroFIT contracted value for wind of $135.00/MWh plus as much as 20% for cost of living (COL) increases and an estimated $120.00/MWh for curtailed generation.

What we can calculate from the pricing information is that wind power generated and curtailed for the 10 months cost ratepayers almost $1.3 billion. If all the 9.8 TWh were included in the exported surpluses the net cost to ratepayers after recovering almost $100 million (9.8 TWh X $9.5 per TWh = $93.1 million) from its sale value is $1.2 billion. That’s about the same as moving two gas plants.

Cost: $300 a year for each electricity customer

The monthly cost of $120 million adds over $300 annually to the average ratepayer’s bill — and that doesn’t include the additional costs of the wasted power from other sources such as spilled hydro, steamed-off nuclear or the idling gas plants.

While we can’t say for sure the exported surplus generation sold to our neighbours came from industrial wind power developments, it is worth noting exports to the end of October were about 18.2 TWh or almost twice the amount of generated and curtailed wind produced in the same time-frame. Was wind-generated electricity a large part of those exports or did it cause other, cheaper, power to be exported? It is extremely likely.

Energy Minister Thibeault needs to recognize he needs to permanently cancel LRP I and LRP II along with any remaining unbuilt wind and solar projects in order to stop the upward pressure on electricity rates.   As noted in the press release from the Ministry September 27, 2016, “Ontario will benefit from a robust supply of electricity over the coming decade to meet projected demand.”

It’s time for Energy Minister Thibeault to recognize the power to reduce upward pressure on electricity rates resides with him; he should use it to halt purchases of power we don’t need.

 

The Premier’s mandate letters: no sign of plans to resolve a crisis

Premier Wynne: just do what I tell you. Not sure it will work, but do it. (Lucas Oleniuk/Toronto Star via Getty Images)
Premier Wynne: just do what I tell you. Not sure it will work, but do it. (Lucas Oleniuk/Toronto Star via Getty Images)

Part I

September 26, 2016

Ontario’s Premier Kathleen Wynne just issued 35 “mandate letters” to each Cabinet Minister in the government on September 23, 2016. The letters range from three to six pages, and carry platitudes about ministerial accomplishments and directions as to what she expects them to accomplish in the next two years under her premiership. (“Mandate” is defined as an authoritative command.)

One such platitude can be found in her six-page mandate letter to Finance Minister Sousa wherein she notes we (the collective we):  “Worked with the federal government to ensure the Ontario Electricity Support Program (OESP) would not be a taxable benefit.”

Any sensible person would say that money given to support low-income households in the payment of their electricity or other bills should not be a “taxable benefit.”   The OESP is levied as a charge to all of the non-qualifying ratepayers of the province via the Global Adjustment (GA) and becomes a cost of the basic commodity–electricity! So in effect, it is a charitable gift from other ratepayers who pay their escalating electricity bills every month.

Perhaps this “charitable donation” should be recognized by your local distribution company (LDC) who should be required to issue a charitable receipt that you can use when filing your tax return. The government should instruct the LDC to identify that on our monthly bills just as they tell us how much we have saved by not paying the debt retirement charge (DRC).

Interestingly, the same mandate letter to Minister Sousa notes another accomplishment: “Ontario will continue to fulfill its commitment to upload social assistance benefit programs, as well as court security and prisoner transportation costs, off the property tax base. This will ensure that municipalities have more property tax dollars to invest in local priorities.”

Electricity customers carrying the load?

That pronouncement should leave you shaking your head. In one paragraph Premier Wynne suggests the OESP isn’t a “social assistance benefit” but did require federal government approval to ensure it would not be a “taxable benefit,” and later the Premier brags about the wonderfulness of uploading social assistance benefit programs like court security and prisoner transportation costs from municipalities.  Is the reason the province could afford to “upload” those social assistance benefits  because the OESP is being paid by Ontario’s ratepayers without notice or consultation?

If the Wynne government is really looking for more money for municipalities, why didn’t the Premier instruct Sousa to tell MPAC to assess industrial wind turbines (IWT) at their real value rather than the $40,000/MW they are capped at now? Now, that would have increased property tax dollars for municipalities.

The fact is, if the costs of the OESP were properly allocated, they would be under the Community and Social Services Ministry, not the Energy Ministry.   As the ongoing news series from Global TV has noted, the number of people living in energy poverty in Ontario is growing at an alarming rate.

Premier Wynne has publicly noted the “crisis” in respect to the rising cost of electricity and the rise of energy poverty households, yet instructions to the Minister of Community & Social Services fail to respond to the crisis. Her mandate directs the Minister to: “Support the transformation of income-based and other benefit programs, with the Minister of Finance, Minister of Government and Consumer Services and human services system partners, focusing on client-focused delivery and information sharing.”

And in the Premier’s mandate letter to the Minister Responsible for the Poverty Reduction Strategy the instructions are:  “Support the transformation of income-based and other benefit programs, with the Minister of Finance, Minister of Government and Consumer Services and human services system partners, focusing on client-focused delivery and information sharing.”

It is very unclear how her mandated transformation designed to focus on “delivery and information sharing” will resolve poverty.

It is clear she depends on Ontario’s electricity ratepayers as the new charitable organization!

Parker Gallant