How Kathleen Wynne could have avoided public outcry over electricity costs

Former energy minister Thibeault and former premier Kathleen Wynne: no opinions wanted, thank you

Or, how she might have benefitted from listening to opinions (and saved Ontario millions)…

The following tweet from TVO reporter John Michael McGrath reflects the attitude of former Premier Kathleen Wynne to a question she was asked about an estimate of energy costs from yours truly:

 “John Michael McGrath‏ @jm_mcgrath                                                                                                           Tories introduce an estimate of energy costs from Parker Gallant, Wynne declines to comment on “one person’s opinion, one person’s research.”      10:20 AM – 3 Dec 2018”

The Select Committee on Financial Transparency questioning Wynne is/was attempting to determine the actual reason (e.g., hide debt and push the current cost of energy generation into the future) behind the creation of the Fair Hydro Plan (FHP) by the former Ontario Premier and her Cabinet.

Ontario is now one and a half years into the FHP which provides an opportunity to review the estimated costs of the 10 years of deferral by the Financial Accountability Office (FAO) of Ontario and see what has actually happened so far.

The FAO’s forecast estimated the deferral would cost $18.4 billion over 10 years plus another $21 billion for interest. The average monthly deferral (before interest costs) would therefore average $153 million.  Since the FHP first kicked in, IESO has posted monthly, what they call; the “Global Adjustment Modifier” (GAM) so, it is a relatively simple task to determine how the FAO’s estimates have played out, versus actual deferrals.

So far GAM deferrals (without interest costs) are $3,843 million for the 18 months — that’s about $770 per ratepayer. What that indicates is, the monthly average, so far, has been $214 million for the 17% of the GAM deferral versus the estimated $153 million in the FA0 forecast.  Should those averages continue for the next 10 years the deferred amount will be $25.7 billion or $5,140 per Class B ratepayer without interest costs. The additional $7.3 billion of the GAM deferral would also drive up interest costs to approximately $29 billion adding another $5,800 per ratepayer that would need to be repaid.

What that means is, future ratepayers could be on the hook for as much as $54.7 billion!

How could that $54.7 billion transfer to future ratepayers have been avoided?

The numbers are up in IESO’s website reflecting how much grid-connected wind power generation has been delivered for the first 9 months of the current year. My friend Scott Luft has provided the estimate of curtailed wind: the collective 8.98 TWh (terawatt hours)** translate to costs of $1,190.7 million. If one extrapolates the first nine months to a full year, the estimate of costs are $1,587.6 million for wind power.  IESO does not publish solar output (except for grid-connected) as most of solar is embedded within the distribution system.  Despite the lack of data, one can assume solar will have generated 15% of its capacity (380MW are grid-connected [TX] and 2,081 are distribution connected [DX]) meaning the 2,461 MW of capacity should generate approximately 3.23 TWh annually at an average cost of $448/MWh. That adds about $1,450 million to renewable’s costs.  Wind and solar together will therefore add $3.038 billion (rounded) annually to electricity costs assuming their capacity levels and annual generation remain at current levels.

As you can see, the estimated cost of wind and solar at $3.038 billion exceeds the adjusted annual GAM costs of $2.562 billion (18-month costs of $3,843 million/18 months X 12 months = $2,562 million) by $476 million.   At the same time TX- and DX-accepted wind (7.52 TWh) and solar (3.23 TWh) is assumed to come in at 10.75 TWh which presumably would need replacement.  In that regard the Ontario Power Generation 2018 3rd Quarter report indicates they spilled 2.4 TWh in the first nine months, which will probably transition to 3.2 TWh for the full year (ratepayers pay for spilled hydro so no additional costs) leaving a shortfall of just 7.55 TWh to be supplied to replace ALL wind and solar generation!

Without knowing, at this point, if nuclear generation had been steamed-off or exports could have been reduced, the question becomes: could gas plants*** have provided the 7.55 TWh (net after allowing for spilled hydro) wind and solar will probably provide for 2018?

Gas plants for the first nine months of 2018 generated 7.89 TWh; If extrapolated to 12 months, gas could generate 9.22 TWh and represent about 12.4% of its total capacity (8,500 MW). Adding another 7.55 TWh of generation would mean they would be required to operate at 22.5% of capacity so they could have easily replaced wind and solar generation.   The additional costs of that generation would be fuel costs plus a small mark-up.  Even if fuel costs and the mark-up were as much as $50/MWh the costs of the 7.55 TWh would amount to slightly less than $400 million.

What the foregoing suggests is that with no wind and solar generation, the costs of generation could have been reduced by $2,638 million (wind and solar costs of $3.038 billion less $400 million for additional gas generation of 7.55 TWh).

Coincidentally, the cost reduction of $2.638 billion per annum is remarkably close to the above noted GAM costs of $2.562 billion that will accumulate in the OPG Trust every year for the next 10 years along with the interest on that debt.

So, without wind and solar, former Premier Wynne might have avoided the public outcry about electricity costs and her party might have been re-elected.

Just “one person’s opinion, one person’s research”!

PARKER GALLANT

*Based on 5 million ratepaying households and Class B business consumers.                                                                   **Grid accepted: 7.52 TWh plus curtailed of 1.46 TWh = 8.98 TWh at a cost of $135/MWh for grid accepted and $120/MWh for curtailed.                                                                                                                             ***Gas plants are paid to idle at a rate as low as $4,200/MW per month (Lennox) to over $15,000/MW per month.

 

 

 

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Former Ontario Liberal energy ministers: your turn to eat crow

More enlightening facts from the Lennox gas plant, and how billions have been wasted

There have been a few problems with wind power, former Energy Minister Glenn Thibeault told a business audience almost two years ago. We had no idea how bad.

My earlier article briefly described my recent tour of the Lennox natural gas power facility in Bath, Ontario, and also provided the costs of wind power generation—including what was “curtailed” (wasted; paid for but not used).

The period covered was nine years (2009 to 2017) during which grid-delivered wind power generation was 53.1 TWh* (terawatt hours) and its costs (including 6.9 TWh curtailed) were approximately $8 billion.

What I didn’t note earlier was, as we were paying for power generated by wind turbines and curtailed power, we were also paying for spilled hydro and steamed-off nuclear which added additional costs to the GA (Global Adjustment) pot, driving up electricity costs. We started paying for “spilled hydro” in 2011 when the OEB (Ontario Energy Board) allowed OPG to establish a “variance” account.  Since that time 18.7 TWh have been spilled by OPG and the cost of $875 million (4.7 cents/kWh) was placed in the GA and paid for by Ontario ratepayers.

Likewise, the cost of 2 TWh of steamed-off nuclear was (about) $140 million (7 cents/kWh) and also became part of the GA. Adding that to the $8 billion costs of wind power in those nine years brings the total to slightly more than $9 billion, as the hydro spilled and nuclear steam-off were due to “surplus baseload generation” (SBG)!

In 95 percent plus of the surplus events, SBG conditions were caused by wind power generation because it is granted “first to the grid” rights.

So, you might ask on reading this, is, how does/could Lennox fit into this situation?

Well, the fact is Lennox is treated as “the leper” in generation sources within the province and is called on only when something untoward or unusual happens, despite its ability to generate power at relatively low cost. Examples of Lennox doing more than idling include this past summer’s Lake Ontario algae problem which caused the shutdown of a Pickering nuclear unit (the water intake was clogged) and the winter of 2014 when we experienced the “polar vortex” causing gas prices to spike.  As it happens, wind wasn’t there for either event and Lennox was called on to provide the power necessary to keep our electricity system functioning.  (Wind turbines cannot be turned on when demand suddenly increases when the wind isn’t blowing.)

Ontario without wind

If the then Liberal Ontario government had decided not to proceed with the GEA (Green Energy Act) which focused on wind and solar sources, one could justififably wonder how the cost of electricity might have been affected.   If we had instead focused on reliability and reasonable costs, Lennox coupled with our other sources, could have easily replaced the intermittent and unreliable generation from wind turbines.

The math: Taking the wind power generation of 53.1 TWh over the nine years out of the picture would have meant those 18.7 TWh of spilled hydro and the 2 TWh of steamed-off nuclear could have reduced the net contribution of wind to 32.4 TWh. That would have saved ratepayers $1.8 billion i.e., (cost of 20.7 TWh of IWT generation @ $135 million/TWh = $2.8 billion, less the cost of 18.7 TWh of spilled hydro @ $46 million/TWh [$875 million] and less the cost of 2 TWh steamed off nuclear @ $70 million/TWh [$140 million])

The remaining 32.4 TWh of wind power generation could have been provided by generation from the OPG Lennox plant (capacity of 2,100 MW). It would have eliminated the $800 million cost of the 6.9 TWh of curtailed wind as it would have produced power only when needed.  Now if it ran at only 20 percent of its capacity (gas or oil,) it could have easily generated the remaining 32.4 TWh generated by IWY and accepted into the grid.

Note: No doubt much of that 32.4 TWh wind power generation was presented at times IESO were forced to export it at a substantial loss. For the sake of this calculation we will assume Ontario demand would have required it.

More math: As noted in the earlier article “idling” ** costs for Lennox are fixed at $4.200 per MW per month, making the annual idling costs about $106 million or $8.8 million per month. Running at 20 percent of capacity would result in idling costs per MWh of generation of about $30/MWh.

Adding fuel costs*** of about $40/MWh would result in total costs (on average) of approximately $70/MWh or 7 cents/kWh.  Generation at 300,000 MWh per month on average would have generated 32.4 TWh over those nine years (2009–2017).  The cost of that generation would be approximately $2.3 billion whereas the 32.4 TWh generated by IWT in those same nine years cost ratepayers about $4.4 billion.

So, without any wind power generation at a cost of $8 billion over the nine years, Ontario ratepayers would have saved almost $4.9 billion:

  • $1.8 billion using spilled hydro
  • $200 million using steamed-off nuclear
  • $800 million paying for curtailed IWT generation and
  • $2.1 billion by utilizing Lennox

Beyond the dollar savings, the lack of subsidized wind power would also have other effects like:

  • zero (0) noise complaints, instead of the thousands reported,
  • elimination of the slaughter of thousands of birds, bats and butterflies
  • prevented the possible disturbance/contamination of well water

Again, that cost-benefit study might have proved useful!

PARKER GALLANT                                                                

*1 TWh is about the amount of energy 110,000 average households in Ontario consume annually.

**Idling costs of the TransCanada gas plant next door to Lennox is $15,200 per month per MW or 3.7 times more costly than Lennox.

***Lennox has the ability to generate electricity using either natural gas or oil meaning if a fuel priced spikes, as natural gas did during the “polar vortex” in 2014, Lennox can shift to the cheaper fuel.

Parker Gallant eats crow on gas power generation (really!)

An eye-opening tour of the Lennox plant in Eastern Ontario leads to starting calculations, too

Lennox power station in Bath–fast, efficient, low cost …what the heck did we need wind power for? [Photo: OPG]
Back in late May and just before the Ontario provincial election, I wrote a “what if” post titled; “If I were Ontario’s new Minister of Energy ” which was suggested how I would undertake to reduce the costs of electricity.

So far, a few of my recommendations have actually happened.

I won’t linger over the enacted or missed ones but I will focus instead on my suggestion that we close the “Lennox oil/gas plant in Napanee/Bath with a capacity of 2,200 MW that is never used.”

I received an invitation to tour the Lennox plant and I accepted! The tour was led by John Hefford, VP Regional Operations-Eastern Region, who has responsibility for not only Lennox but for all the hydro generating facilities located in the eastern part of Ontario, which (including Lennox), totals about 4,800 MW — that’s about 30% of OPG’s total capacity.

Driving toward the Lennox plant one can’t help but notice, in the distance, the industrial wind turbines (IWTs) recently built on Amherst Island (“owl capital” of North America).  That project is considered one of the most divisive wind power projects ever awarded a contract by IESO under the McGuinty/Wynne  governments.

The tour combined with a takeaway “Overview” of Lennox was truly enlightening.  The most noteworthy bits of information picked up were related to the ability of each of the four 525-MW turbines to ramp up quickly from their minimum load point of only 28 MW or 5%.  To put that into perspective, the other gas plants operating in Ontario are mainly CCGTs (Combined Cycle Gas Turbines) and they have to idle at minimum loads that are six to 14 times higher.

The ramping load point at Lennox logically translates to much lower emissions than the units added to Ontario’s grid(s) backing up industrial wind turbines (IWT) and solar under the FIT (feed-in-tariff) program.

The other significant difference between the CCGTs and single-cycle Combustion Turbines (CTs) is in respect to idling costs: for Lennox the cost is about $4,200 MW per month versus CCGT generators with costs of $10,000 MW per month to $20,000 MW per month, and CTs which average about $10,000 MW.

Another impressive piece of information picked up on the tour is the ability of the units to operate on either natural gas or residual oil (or both). That means, if a fuel cost spikes due to high demand (e.g., gas in the “Polar Vortex” winter of 2014) Lennox can switch to the other fuel. Lennox was also recently called on when a Pickering nuclear unit was shut down due to the 2018 Lake Ontario algae situation.

IESO forecasted shortfall                                                                                                         It appears likely Lennox will be called on to provide the capacity during the shortfall that  the IESO projects during the upcoming nuclear refurbishment years. From a ratepayer perspective, it makes sense.

Carbon tax calculations

Completing the tour and driving home led me to the questions of how much Ontario’s ratepayers might have saved if Lennox had been deemed the back-up for wind and solar power generation or had been used to generate electricity instead of handing out high priced 20-year contracts under the FIT program.  The first question would take an inordinate amount of research, so I opted for the latter!

A report (IESO prepared?) titled the Ontario Energy Report has a chart showing emissions generated by the electricity sector and the report for year-end 2017 indicated emissions in Ontario were 14 mt* in 2009 and 3 mt in 2017, for a decline of 11 mt in 9 years. The decline was touted by the Wynne government as attributable to renewable energy in the form of wind and solar.

Looking only at the wind power generation and its associated cost in those nine years provides an indication of just how much Ontario’s ratepayers have paid on a per ton basis to achieve that 11 mt drop! According to the IESO, from 2009 to 2017, wind turbines generated 53.1 TWh (terawatt hours) and since we commenced paying for curtailed power (paid for but not used), ratepayers picked up those costs for about 6.9 TWh.

So, the approximate costs of the grid-accepted wind power generation was about $7.2 billion, and for the curtailed generation was another $800 million. That brings the overall costs of the 11 mt reduction to about $8 billion!

The cost of that reduction of 11 mt looking at IWT (generation and curtailed) only and without solar, works out to $655/ton!

Ontario’s ratepayers have obviously done their bit to reduce emissions and will continue to pay more until the wind turbines and those 20-year FIT contracts finally expire.

We don’t need a carbon tax.

PARKER GALLANT

P.S. The second in this two-part series about Lennox will follow shortly, covering off how much we might have saved without wind power

*mt denotes “megaton” equal to one million tons.

CanWEA makes promises it can’t keep

CanWEA’s ramping up rhetoric

While Robert Hornung, president of the Canadian Wind Energy Association (CanWEA), was all smiles at the trade association’s recent conference and exhibition in Calgary he must be concerned that the world is wising up to the unabashed conclusion: industrial wind turbines do nothing more than drive up electricity prices!  At the start of the conference Hornung launched “A Wind Energy Vision for Canada”, full of selective information aimed at rallying those present so they push the agenda and keep the gravy train rolling.

The CanWEA “vision” says nothing about how wind power projects affect humans by generating audible and inaudible noise along with infrasound or how they are responsible for killing birds and bats or even how they need back-up power when the wind is dormant.  The latter means the costs of delivering a kilowatt hour (kWh) of generation needs fast response back-up power at the ready to ramp up within minutes. Failing available back-up generation (usually natural gas) to respond to IWT cyclical, intermittent and unreliable generation would impact electricity grids causing brownouts or blackouts.

The CanWEA “vision” links to an October 1, 2018 posting on their website that brags about a variety of different issues, making claims like as “New wind energy would help keep Ontario’s electricity supply reliable, as well as more affordable.” And, this one: “Canada can get more than one-third of its electricity from wind energy”.  CanWEA backed this up by saying: Other jurisdictions around the world are proving this – for example, Denmark now produces more than 44 per cent of its electricity from wind turbines on an annual basis”.

What they fail to mention is that Denmark has the most expensive electricity costs in the EU with prices equivalent to Canadian $0.45cents/kWh.

A “Vision” claim                                                                                                                           The “vision” makes many claims that are spurious, including this one about environmental sustainability: “Wind energy does not produce greenhouse gas emissions, air or water pollution, nor hazardous, toxic or radioactive waste.”

That is superficial. Why? The intermittent and unreliable nature of wind requires it to be backed up with responsive generation generally in the form of natural gas or coal plants.  This is evident in particular in Germany (electricity prices are the 2nd highest in EU) where a recent article stated “Despite the billions spent on wind and solar, the country is still hooked on coal, relying on it for almost 40 percent of its electricity. Coal provides the backup power needed when the wind doesn’t blow and the sun isn’t shining, something that will become even more crucial when the last nuclear plants close in 2022.” The claim that wind turbines don’t produce greenhouse gases may be somewhat true, but due to their unreliable nature they cause greenhouses gases to be generated by their back-up fossil fuel plants.

The CanWEA statement suggesting wind turbines don’t cause “air or water pollution” can also be easily disputed. The spinning blades kill birds and bats and produce a range of noise emissions(audible and inaudible) which are linked to health problems.

We have also seen how construction and operation of turbines may be involved in the contamination and failure of wells as noted in Chatham Kent where well water was affected.   Hydrologist Bill Clarke noted: “Simply stated, wind towers, for generating electrical power, should never have been constructed over the extremely fragile contact aquifer of the Kettle Point shale” where 19 families experienced distinct, observable changes in their well water, which expresses itself as cloudy and often includes dark particulates.

It should also be noted that while the fuel powering the turbines is non-polluting, the average 400 tons of cement securing the turbines towers and the turbines and generators along with those blades are simply full of both toxic and hazardous waste, some of which is not recyclable!

More rhetoric                                                                                                                                  CanWEA wasn’t finished with the bombast.

On November 1, 2018 their blog carried this post: “Cancelling renewable energy contracts in Ontario will negatively impact investor confidence”!  Why? Well, the lobbyist group said, “Investors rely on the rule of law and contract rights when they scope, build and operate projects in the province. Calls for cancelling contracts and stranding assets shakes investor confidence and risks undermining Ontario’s investment climate – and at the wrong time and for the wrong reason.”

CanWEA naturally ignored the fact that the rebellion on Ontario electricity prices was caused by renewable energy (wind and solar) being granted first to the grid rights and long-term contracts with prices exceeding what other markets were paying.  Those excessive electricity costs have driven investment out of the province in droves commencing with the passing of the Green Energy Act when, shortly after passing, Xstrata announced it would close its Timmins smelter and move it to Quebec.  One of the reasons for the closure was the high cost of electricity.

In a further effort to colour the costs to Ontario’s ratepayers of wind turbines, CanWEA proffered this reputed benefit: “The province’s wind sector will generate $12.5 billion in investment in Ontario in the 2006-2030 timeframe. Along with that investment will come 64,500 person-years of employment, $4.6 billion in earnings for Ontarians, and an additional $6.2 billion in provincial GDP.”

But that claim does not note the investment will extract approximately $45 billion from ratepayer’s pockets over the 24 years “2006-2030,” meaning the claimed investment will be returned four-fold!  Likewise, those 64,500 person-years of employment with the claimed $4.6 billion in earnings amounts to a miserly $3,000 per job when spread over those same 24 years.

The time has come for companies involved in industrial wind projects to pack their bags and find another country with gullible politicians!

PARKER GALLANT

The good old days of electricity prices in Ontario

… when supply and demand meant something, and electricity costs weren’t skewed by overpriced FIT contracts and “first-to-the-grid” rights

October 21, 2018

The good old days… just 11 years ago

My friend and energy analyst Scott Luft posted some interesting charts on his twitter account about generation on October 16, 2018, noting the wind was blowing and also that we used very little fossil fuel for power generation — the gas plants were basically all idling!

As is often the case in our fall and spring months, Ontario’s demand for power was low and IWTs (industrial wind turbines) were spinning. In fact the TX (transmission-connected) IWT delivered about 44,850 MWh and had another 26,760 MWh curtailed.  The corporate wind power operators were paid for potentially operating at 66% of their capacity — well above their annual average of 29 or 30%.  The cost of the generation they delivered, along with the curtailed (wasted) generation, put $9,265,000 into the pockets of the developers and all but approximately $84,000 found its way into the GA (Global Adjustment) account, as did the cost of hydro spills and those idling gas plants.

On a fall day when Ontario demand was only 343,680 MWh, as noted by IESO in their “Daily Market Summary”, we had net exports (exports less imports) of just under 50,000 MWh for which we received the market price (HOEP) of $1.88/MWH.  Those exports returned about $94,000 for generation that cost Ontario ratepayers north of $5.6 million.  As IESO reported, the total value of our consumption and exported electricity had a market value (HOEP) of only $749,000, but a cost of about $45 million.

Nostalgia about the good old days took me back to 2007 when the Global Adjustment Mechanism* was first introduced, so I looked at the IESO’s “Daily Market Summary” of October 16, 2007 to see what that day’s HOEP was.  On that day there were few wind and solar “renewables” in place and Ontario demand was higher at 393,000 MWh.  The HOEP for the day was $54.47/MWh or 5.5 cents per kWh. That is slightly higher than what IESO said the cost of electricity was in 2007 in the year-end report when they noted “The average weighted electricity price in 2007 was 5.05 cents per kilowatt hour (kWh)”.

The good old days of supply and demand

Compare that to the IESO Monthly Market Report for August 2018 which came in at $113.32 (HOEP + GA) or 11.32 cents/kWh — that’s 124% higher than 2007 just 11 years later! Put another way, before we added intermittent and unreliable wind and solar in large amounts to our generation sources, the market operated in a way that properly reflected supply and demand economics!

All this serves to demonstrate how intermittent renewable energy sources in the form of wind turbines and solar panels which have been granted guaranteed prices under FIT (Feed-in-Tariff) prices and “first to the grid”** rights, can distort Ontario’s electricity market.

A cost/benefit study, recommended by two Auditors General in the past, might have proved useful.

It is time for the incumbent government to cancel the acquisition of any more wind or solar power generation that have not commenced construction or are fighting actions before the ERT or the courts.

PARKER GALLANT

*The GA was originally called the “Provincial Benefit” but the name changed when the ruling Ontario Liberal Party introduced the “Ontario Clean Energy Benefit” reducing hydro bills by 10%.

**Wind and solar generation ranks at the same level as non-dispatchable nuclear power so when generated must be accepted or if not needed due to low demand will still be paid.

 

Wind power in panic mode

Canadian wind power lobbyist CanWEA makes claims that don’t stand up to scrutiny. Boasting that wind power is “low cost” has nothing to do with what Ontario electricity customers pay…

CanWEA’s Robert Hornung (L) with then Ontario Energy minister Bob Chiarelli and a power exec during the boom times. The truth has now come to town.

October 8, 2018

The same day (September 20, 2018) the Government of Ontario announced the introduction of legislation to repeal the “Green Energy Act”, Robert Hornung, President of CanWEA (Canadian Wind Energy Association) issued a press release claiming the Government of Ontario has made inaccurate statements and misleading characterizations about the wind energy industry in the province.”

Needless to say, the Government’s announcement received wide media attention whereas the CanWEA press release received virtually none. The lack of attention to the CanWEA press release should be perceived as a strong signal mainstream media has become educated on the devasting effect of industrial wind developments in Ontario and the many erroneous claims made by CanWEA over the years.

What else did CanWEA claim in that press release?

Claim # 1

Wind energy is not the reason for high electricity bills or a significant electricity supply surplus in Ontario.

This claim is partly right: solar panels and generation from that source also helped to drive up costs, but a quick look at wind power generation for just 2017 will show what wind has done. In 2017, grid-connected industrial wind turbines generated 9.2 TWh (terawatt hours) and had 3.3 TWh of potential generation curtailed (not added to the grid).   Ontario’s ratepayers picked up the bill for both and that alone added at least $1.540 billion to electricity bills. As is the case for wind power generation 65% of the time, its generation was out of sync with demand due to its intermittent nature. Added to that cost, we should also include both the spilling of hydro (6 TWh) and steamed-off nuclear (1 TWh) which together added another $350 million to ratepayer costs. The foregoing alone raises the per kWh cost of IWT generation to 20.3 cents. Include gas plant generation of 5.9 TWh (backing up IWT) and you can add another $450 million resulting in a cost of over 25 cents/kWh! This is the “reason for high electricity bills”!

Claim # 2

In reality, wind energy projects are making significant contributions to Ontario’s economy across the province and are providing long-term, stable pricing for Ontario ratepayers. They are providing sustained revenue, as well as benefits agreements and green jobs that are helping rural and Indigenous communities thrive”.

Examining this claim highlights actual contributions of renewable energy.

The Concerned Manufacturers of Ontario is described by the CBC in March 2017 as “A group that represents hundreds of small to medium sized manufacturers across the province is urging the Ontario government to lower hydro fees for industrial users, or face the prospect of some factories packing up and moving to other jurisdictions where electricity is cheaper.”

The Canadian Federation of Independent Business with 42,000 members in Ontario was featured in a Globe and Mail article from December 2016 which contained a few member stories. Here’s one: “Tor Krueger has big plans for Udder Way Artisan Cheese Co., which sells handmade goat cheese in Stoney Creek, Ont. But crushing hydro bills are hurting the artisan cheese maker’s plans to modernize his facility so he can get federal certification and sell his cheeses across the country.” Mr. Kruger went on to note, “After payroll, hydro is consistently one of my top three operating expenses”.

Another association Canadian Manufacturers and Exporters sent a message to Premier Wynne in March 2017 that stated: “We need to reduce the barriers that are holding us back, particularly high electricity prices and the costs associated with cap & trade.”

The Ontario chamber of Commence in a Globe and Mail article in July 2015 had similar comments noting “This week, the Ontario Chamber of Commerce released a survey that suggested as many as one in 20 business are worried about their survival because of high electricity costs.”

Now, if one accepts the fact that the above mentioned four associations represent the vast majority of businesses in Ontario, it seems obvious the cost of electricity has caused job losses in the province. That observation clearly flies in the face of the claim by CanWEA’s President who stated “wind energy projects are making significant contributions to Ontario’s economy across the province and are providing long-term, stable pricing for Ontario ratepayers.” In 2017 nuclear and hydro generated over 97% of grid-connected Ontario demand at prices of less than 7 cents/kWh for nuclear and 5 cents for hydro. So, shouldn’t CanWEA realize the remaining 3% came from all of the other generating sources including wind at costs as noted above under “Claim # 1”!

Claim # 3

As the lowest cost source of electricity available in Canada today, wind energy is the best choice for new electricity generation when it is needed in the future and can help the Ontario Government meet its objective of an affordable and reliable electricity system that benefits Ontarians.”

Mr. Hornung’s claim that wind energy is the “lowest cost source of electricity” doesn’t specify what he is referring to! One should suspect the reference is to either the LOCE (levelized cost of electricity)* or the cost of fuel (wind is free) but in either case his claim has nothing to do with what Ontario ratepayers pay for the intermittent and unreliable nature of the actual wind power generation. That annually averages only 29/30% of its capacity and is out of sync with actual demand 65% of the time.

Claim # 4

“… the report provides no consideration for the value returned by the province’s strategic investment in renewable energy, most notably its role in eliminating smog days”

That claim from a CanWEA press release just over a week later (October 4, 2018) had Mr. Hornung responding to a report released by the Fraser Institute which suggested the Doug Ford-led government should cancel contracts because “According to our study, cancelling the subsidized contracts would reduce the GA charge by almost 40 per cent, thereby reducing residential electricity prices by, again, roughly 24 per cent.”                                                                                     

CanWEA’s response reiterated much of what they claimed in their earlier press release including the suggestion cancelling the contracts would undermine “investor confidence” and the one above noted as “Claim # 4”.

What is interesting about this latter claim is that the Fraser Institute back in January 2017 in another report stated: “The Ontario Ministry of the Environment and Climate Change undertook a special analysis of the role of U.S. emissions in Ontario air quality in 2005, which showed that a majority of O3 (ground level ozone) and PM2.5 (particulate matter) was due to U.S.-based emissions and would not be reduced by cutting emissions in Ontario.”

As the backlash over the cost of renewable energy, along with its other failings, is finally being discovered by politicians around the world and now includes Ontario, it is obvious CanWEA’s concern is that it will affect the targeted provinces of Saskatchewan and Alberta where they have signaled they want more wind power generation. The revelations emanating from Ontario may well impact those current deliberations and slow or stop the IWT march affecting CanWEA’s members!

One can almost see the tears in Robert Hornung’s eyes!

PARKER GALLANT

 

*Levelized cost of electricity (LCOE) is often cited as a convenient summary measure of the overall competiveness of different generating technologies. It represents the per-megawatt hour cost (in discounted real dollars) of building and operating a generating plant over an assumed financial life and duty cycle. 4 Key inputs to calculating LCOE include capital costs, fuel costs, fixed and variable operations and maintenance (O&M) costs, financing costs, and an assumed utilization rate for each plant type.” 

 

 

Should the Pickering nuclear plant be closed? Not based on cost and performance…

Pickering: working at 95% capacity during the heat wave [Photo: OPG]
July 6, 2018

Wind power a failure during recent high demand during heat wave; dependable power needed

I got a call at 11 a.m. on June 25th from the producer of the Scott Thompson show on CHML 900 AM to appear on the show to discuss the suggestion by NDP leader Andrea Horwath about closing the Pickering Nuclear plant.

Essentially it was about her statement during the election campaign indicating the NDP’s position on Pickering:  “we will begin the decommissioning process immediately, which will bring more jobs to the area — as opposed to the Liberal plan, which is to mothball that facility for 30 years and allow the next generation to figure out the decommissioning”.

Doug Ford, leader of the Ontario Progressive Conservatives, on the other hand stated: “The Pickering plant can continue to safely operate until at least 2024. We can generate 14 per cent of Ontario’s power needs right here”.

The producer suggested Scott wanted to explore the opposing issues with me.

Aware I was scheduled to be on his show at 12:35 p.m., and remembering that a Brady Yauch article a few months earlier in the Financial Post had suggested closing Pickering, I felt I should do more research before the call back.  Brady’s principal point was Pickering was a poor performer and the estimated costs ($300 million) of the extension would prove to be negative for ratepayers.

OPG’s website describes Pickering as follows: “Pickering Nuclear has six operating CANDU® (CANadian Deuterium Uranium) reactors. The station has a total output of 3,100 megawatts (MW) which is enough to serve a city of one and a half million people, and about 14 per cent of Ontario’s electricity needs.”.

Pickering Nuclear traces its roots back to 1971 when it first commenced operation with four units and expanded to eight units in 1983.  Two of the first four units have been in voluntary lay-up since 1997.  The CNSC (Canadian Nuclear Safety Commission) awarded OPG’s Pickering and Darlington nuclear stations its highest safety rating in 2017.

Combined, the Pickering and Darlington nuclear stations generated 10.4 TWh (terawatts) of power for the 1st Quarter of 2018 at a combined cost of 7.2 cents/kWh (up from 5.8 cents/kWh in the comparable quarter).  The 10.4 TWh was sufficient to supply the 4.6 million average residential households in the province.

Directing my research to IESO’s hourly Generator Report I was able to discern Pickering at hour 10 of June 25th had just generated 2,308 MWh out of 10,457 MWh produced by all the nuclear plants in the province.  Pickering nuclear represented 22% of nuclear generation at that hour, 15.6% of Ontario demand and 14% of total demand (including exports).   At hour 10, wind turbines were generating 452 MWh or 10% of their capacity versus Pickering nuclear which was operating at about 74.5% of its capacity.

Both nuclear and wind are classified as “base-load” generation!

As it turned out, when I was on Scott’s show the bulk of our chat was related to his prior guest’s discussions about Premier Ford’s cancellation of the “cap and trade” tax.  Only a couple of questions were raised about Pickering which I responded to.

Interestingly enough, now that the Ontario July heat wave has passed, I felt the urge to look at the performance of Pickering and IWT over the seven days when peak demand was high.  Pickering nuclear performed well generating close to 3,000 MWh each and every hour over the period meaning it was operating at over 95% of capacity.  Wind power generation, however was all over the map reaching a high of 2,769 MWh (62% of capacity) at midnight July 1st and a low of 5 MWh (0.11% of capacity) at 10AM on July 4th!

It is obvious that wind fails miserably as “base-load” generation when needed and the relative cost of generating power (sans back-up costs) is over 17 cents/kWh.

It sure looks like we should keep Pickering nuclear operating, as Premier Ford suggested.

Parker Gallant