Honesty, virtue and energy policy (3)

The previous two articles in this series pointed out how the mayor of the city of Georgetown, Texas and the former Ontario Liberal government endorsed the use of renewable energy to try to reduce emissions and save money for taxpayers. Led by environmental lobbyists (Pembina, Environmental Defence, David Suzuki, Al Gore and others) and proponents of wind and solar power generation, the politicians laid out the “facts” to persuade the public that doing so would both save money and create jobs.

The problem was, only some of the “facts” were presented and many of them were less than truthful!

Alberta-bound spin

What happened in Georgetown, Texas and Ontario has moved west to Alberta and the execution similarities are remarkable. In an article from the Calgary Herald November 24, 2016 the NDP Environment Minister announced, “We have chosen to incentivize new investment in clean energy and improve Albertans’ health by eliminating dangerous air pollution” and announced an agreement to pay $1.4 billion to shut three coal plants earlier than planned.

A government webpage titled: “Phasing out coal pollution” carries a message similar to what we were virtue signaled by Premier Wynne and her Environment Ministers noting: “Moving to more renewable energy and natural gas will protect the health of Albertans — especially vulnerable groups like children and seniors — and save money in health-care costs and lost productivity.”

Environmental push

Similar to what happened in Ontario in 2005 when a study was released about health costs (Liberal politicians claimed the cost was $4.4 billion annually) related to Ontario’s coal plants, Alberta politicians were handed a similar study. It was produced by Pembina Institute, the Asthma Society of Canada (ASC), Canadian Association of Physicians for the Environment and the Lung Association, and claimed the use of coal power cost $300 million annually in health costs. Using the 2017 Alberta census population figures for 2017 that works out to about $70 per resident. Using the 2005 census population figures for the Ontario study results in a cost of about $350 per resident. Something seems askew in the two claims, but in both cases, it provides the unverified “facts” politicians require to “virtue signal” and drive up electricity prices.

Political spin supported by wind power proponents                                                                                                                                     Alberta Premier Notley’s decision to phase out coal plants resulted in seeking out “more renewable energy” in the form of 600 MW of wind power generation. When the winning bids to the REP (renewable electricity program) were announced, the Premier was front and centre stating “It’s a new record for renewable energy pricing in Canada — the lowest price Canadians have ever seen, right here in Alberta.” The Premier went on to say in mid-December 2017: “Alberta isn’t only a leader in the [fossil fuel] energy that we are going to get to Tidewater. We are also a leader in renewable energy, and we are going to show our fellow Canadians, and the world, that economic growth and environmental responsibility can, and must, and will go hand-in-hand.”

Well, now it appears Premier Notley’s promise to get “fossil fuel” energy to Tidewater will not happen on her watch so that is just one “fact” she won’t be delivering on before the upcoming provincial election. Premier Notley went on to say: “In fact, our process was so competitive and so many companies wanted to invest, we got a 20-year price of 3.7 cents a kilowatt-hour.”

As one would expect, wind power trade association and lobbyist CanWEA (Canadian Wind Energy Association) was eager to get the word out, couched in language that made the announcement as wonderful as the Premier made it sound. Robert Hornung, CEO of CanWEA made it sound simply spectacular: “By attracting investment in the wind energy projects announced today, Alberta is diversifying its economy, driving economic growth and creating much-needed jobs in multiple sectors such as engineering, construction and local services.”

That sounds similar to what he said three years ago when he claimed: “Ontario’s choice to be the leading wind energy market in Canada has returned many economic benefits,” added Mr. Hornung, “As other jurisdictions consider a greater penetration of wind energy in their electricity systems, ‎this study clearly shows that the economic benefits associated with wind energy development are significant.” Pure fluff for the then Ontario Liberal government.

While the foregoing sounds impressive Premier Notley left out an important fact related to certain bonuses built into those contracts which include (RECs) “renewable energy certificates”.   Specifically, those RECs have a significant value which the recipients will be able to sell for revenue, boosting their income and the cost of electricity delivered to Alberta ratepayers. Those RECs will be tradeable in a market established in California in 2007.

From the Western Renewable Energy Generation Information System: (WREGIS) we would point out the following in a Q & A posting: “WREGIS issues one REC for each MWh of renewable generation. WREGIS accounts are similar to bank accounts; Certificates are deposited and managed within these accounts. Certificates can be transferred, retired, or exported to a Compatible Tracking System at the discretion of the certificate holder.” The value of a REC varies widely but as laws or regulations add such things as “carbon taxes”* to industries, (companies being charged a “carbon tax”) they can instead purchase an REC as an offset to the carbon tax and purchase it for less than the “tax”!

The monies will flow directly to those renewable energy companies.

What the foregoing suggests is the “20-year price of 3.7 cents a kilowatt-hour” may be a lot more as the future value of a “carbon tax” climbs over the $20/50 current cost, making the REC offset much more valuable than in today’s market. In summary, electricity prices will rise!

As politicians keep “virtue signaling” while only releasing selective “facts” we taxpayers/ratepayers must keep a vigilant watch.

PARKER GALLANT

*Current carbon tax in Alberta is $30/tonne and will increase further in 2021 to $40/tonne.

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Honesty, virtue, and energy policy (2)

Yesterday’s post in respect to honesty and energy policy examined a small city in Texas and how its mayor has been courted around the world by proponents of renewable energy — because his actions sit into their narrative. However, I also showed how incomplete information given to the media can lead to bad results for those directly affected, the people who have to pay the bills for the “virtue signaling”.

What follows is how the two parties (politicians and energy proponents) collectively stomped on Ontario’s taxpayers/ratepayers!                                                                                                                

CanWEA spin

The Canadian Wind Energy Association (CanWEA) recently published an article that carried this claim:  “The Pan Canadian Wind Integration Study – the largest of its kind ever done in Canada – concluded that this country’s energy grid can be both highly reliable and one-third wind powered.”

The annoying part of the “study” is that it was completed by biased parties and used considerable taxpayer funds!

Perhaps Ontario’s grid operator, IESO, did make wind generation reliable but at what cost? As it turned out, in 2017, wind turbines delivered only 24.9% (9.2 TWh) of their capacity and curtailed* over 26% (3.3 TWh) of what they could have actually delivered.  That generation also caused hydro spillage of 5.9 TWh and nuclear steam-off of one (1) TWh!

IESO’s 18 Month Outlook Report also indicates they only rate the capability** of wind turbines to deliver generation 12.9% of the time it may be needed. Wind power generation also contributes to a reduction in the “real market” (HOEP) price, meaning we sell our surplus generation into the export market well below its cost.

Virtue signaling from former Ontario Premier Wynne                                    

Just over three years ago Ontario’s Auditor General released her report that noted the billions of dollars in extra costs Ontario ratepayers had to pay for the Liberal government’s green energy. The AG’s report said consumers would pay $9.2 billion more for 20-year wind and solar contracts signed by the Liberals than they would have under the former procurement system.

Premier Wynne’s response was: “There’s a cost associated with getting out of coal, of putting more renewables in place, and we’ve got other jurisdictions looking to Ontario as a model for how to do that,” said Wynne. “I’m happy to defend the changes that we’ve made.” She went on to say: “You only have to look at other jurisdictions that are struggling with air quality, with particulate matter in their air, with families that don’t feel they can let their kids play outside,” she said. “I know we weren’t in those serious straits, but the fact is we have reduced our pollution in this province.“

Apparently lost on her was the concept of the costs her government later imposed on those “kids” when in an attempt to win the last election she kicked in the neighbourhood of $50 billion down the road for them to pay via the Fair Hydro Act.

Premier Wynne earlier (about five years ago) got a pat on the head from Al Gore the climate crusader, when the last Ontario coal plant was about to be shut down.  In her speech she also referenced the children who will be paying back the above costs when she said: “And I would contend it’s our moral duty to take action to protect our children, our grandchildren, and our fellow citizens. We’re lucky today to be in the presence of a man who’s been fighting on these fronts for many years.”

In another announcement with Al Gore present she claimed: “Becoming a coal-free province is the equivalent of taking up to seven million cars off the road, which means we’ll have cleaner air to breathe, while saving Ontario $4.4 billion in health, financial and environmental costs”

It has now been four years since Premier Wynne said that so it would be nice to know, from a ratepayer and taxpayer perspective, what has happened to that $17.6 billion, we were supposed to have saved?

We should suspect Premier Wynne’s remarks was simply political spin meant to preserve her position as Premier while driving up our cost of living for a necessity of life. Our health care system has not improved in the last four years and the province’s financial situation has only become worse!

The self-evident virtue signaling has simply resulted in increasing a future cost for “our children, our grandchildren and our fellow citizens”.

PARKER GALLANT

*Those 3.3 TWh of curtailed wind cost Ontario ratepayers almost $400 million or more than all of the curtailed wind in the UK which was estimated as costing them more than £100 million in 2017 to switch off their turbines and NOT produce electricity. The equivalent of the UK’s cost was about $174 million Canadian!

**Forecast capability of capacity for other major generating sources are:  nuclear 81.9%, hydroelectric 68.4%, gas/oil 81.4% and solar 10%.

NB: If one wants to view what former Minister of the Environment and Climate Change, Glen Murray knew about the Ontario energy sector have a look at his interview at the COP 20 Conference in Lima, Peru here.  You will see that Minister Murray gave many incorrect answers and even wrongly cites the Atikokan (200 MW) coal station as the largest in North America.  It was Nanticoke (3,964 MW!

Honesty and energy policy

The new buzz is “virtue signaling” in which politicians espouse environmental solutions — but are they being honest? First in a three-part series

Texas small-town mayor Dale Ross: a star is born. But is he really a leader? [Photo: CBC]

An article penned just a couple of weeks ago focused on the spin emanating from industrial-scale wind power proponents and coupled their spin with less than honest political diatribe. Needless to say, the spin and diatribe continue.

Here is one example:

Mayor’s spin in Georgetown, Texas

Mayor Dale Ross* of Georgetown, Texas, population 70,000, has become an international celebrity. The reason: the city contracted for 100% renewable energy from a wind power development and a large solar farm, both hundreds of miles away. Because of this, Mayor Ross has been touted by Al Gore in his sequel to “An Inconvenient Truth,” interviewed by the UK’s BBC as well as many other national and international radio and TV stations. Mayor Ross, in this linked article estimated he has been seen by over 500 million people (now 2.1 billion-see below) around the world. What could go wrong? 

“To achieve 100% renewables, Georgetown negotiated two long-term (20+ year), fixed-price power contracts, one with EDF Renewables’ 194 MW Spinning Spur 3 wind plant beginning January 2016 and the second with NRG’s 154 MW Buckthorn solar site, effective July 2018. Details on pricing were withheld citing business confidential, but the contracts are for 144 MW of wind and 150 MW of solar for a combined annual quantity of nearly 900,000 MWh.”

Both of those generating sources were hundreds of miles away from Georgetown! 

Mayor Ross spins in Edmonton, Alberta

Mayor Ross was invited to speak at the 2018 Alberta Climate Summit organized by the Pembina institute. During that visit he was interviewed by the CBC where he claimed, in respect to a question about how he could support this as a Republican while the U.S. Republican president is pro-coal: “My daytime job is being a Certified Public Accountant and we make our decisions based on facts. In Georgetown, we put silly national partisan politics to the side and we just do what’s good for the voters and citizens that put us into office.”

Mayor Ross and CanWEA

Canada’s wind power trade association CanWEA naturally took an opportunity to interview Mayor Ross during his visit to Alberta and the Q & A session had the usual spin.  On closer examination however, some things Mayor Ross disclosed had a few bits of truth, but they were couched in such a way the reader would have to have knowledge of how electricity grids function to find them.

The Mayor said: “2.1 billion people have heard, read or saw my message”. When asked what advice he would give other communities, he had this to say: “In Georgetown’s case, it was mitigation and hedges to prevent negative pricing impacts of fuels components of energy production. Those take many forms and are often debated but certainly are a major component of electric generation pricing that use any form of fuel component in the process.”

If one reads about the subsequent events that have occurred to the public utility delivering electricity, water and waste collection in Georgetown, it is obvious Mayor Ross is really admitting that a few “facts” he and the City’s council based their decision on were missing.

What Mayor Ross didn’t say

A recent article notes Georgetown’s average annual consumption is about 575,000 MWh, which means they were forced to sell the surpluses into the real-time market usually at prices well below the contracted rate, including negative prices.

This small city is now facing a problem! “Actual power purchases for 2016 were 22% over budget coming in at $42.6 million against an expected cost of $35 million. In 2017, costs surged again to $52.5 million and all indications are Georgetown electricity customers will take another bath this year.”

This unexpected cost will presumably have a detrimental effect on the services that the city will be able to deliver OR service costs (electricity, water and waste removal) will spike much higher! These are just a couple of facts” that will make Georgetown’s utility consumers upset!

The message, even from a mayor who claims as a Certified Public Accountant, his decisions are fact-based, is that “virtue signaling” outweighs telling your constituents the real truth!

PARKER GALLANT

*Reading about Mayor Ross of Georgetown reminded me of Chatham Kent (population 102,000) where Mayor Randy Hope has a love affair with wind power, and CanWEA awarded him the “Friend of Wind Award” in 2017. Mr. Hope was defeated in the municipal elections of 2018.

 

 

 

 

 

Ontario Energy Board looked the other way on rising electricity bills

After seven years, the Ontario Energy Board has determined that a move by the McGuinty government to shift the burden of electricity costs to smaller ratepayers was “complicated and non-transparent.” What took them so long to find out that out, when it cost Ontario citizens billions?

Where your money went [Shutterstock photo]
Back in 2011, the Dalton McGuinty government introduced the Industrial Conservation Initiative (ICI) with the idea of changing the way Global Adjustment (GA) costs were allocated to different classes of consumers. “The stated purpose of the ICI is to provide large consumers with an incentive to reduce consumption at critical peak demand times. The resulting reductions in peak demand were expected to reduce the need to invest in new peaking generation and imports of electricity from coal-reliant jurisdictions.”

The government had been lobbied hard by the Association of Major Power Consumers of Ontario (AMPCO) who had been feeling the effects of climbing power rates brought on by the Green Energy Act (GEA) and the resulting FIT (feed-in-tariff) contracts for renewable energy (wind and solar).

Needless to say, the Liberal government caved, the ICI was born and officially started September 2011.

Just over a week ago the Ontario Energy Board released a report titled: The Industrial Conservation Initiative: Evaluating its Impact and Potential Alternative Approaches. What struck me immediately was this sentence in the Executive Summary: “In the Panel’s view, the ICI as presently structured is a complicated and non-transparent means of recovering costs, with limited efficiency benefits.”

It took the OEB seven years to come to this conclusion. And they are supposed to be the regulators for the energy sector. Their vision is: “The OEB supports and guides the continuing evolution of the Ontario energy sector by promoting outcomes and innovation that deliver value for all Ontario energy consumers.”

So, it took seven years to determine the ICI wasn’t delivering value?

The ICI was created via a change in the Regulations* and was posted August 27, 2010 on the Environmental Registry with this statement:  “As a result of the consultation, there was general agreement that the proposed changes would result in a net benefit to electricity consumers, the electricity system and the broader Ontario economy.”

The new OEB report noted the Class B to Class A shift commencing in 2011 “has shifted nearly $5 billion in electricity costs from larger consumers to smaller ones. In 2017, the ICI shifted $1.2 billion in electricity costs to households and small businesses—nearly four times greater than the amount in 2011.”

Wondering what 2018 would bring in respect to the B to A shift and, knowing IESO now posts both consumption and costs of the GA by customer class on their website, it was worth an exercise to determine if the $1.2 billion shift of 2017 would increase or decrease.  Using IESO’s data it appears the subsidy for the first 11 months was about $35.4 million per TWh (terawatt hour).  Based on 36.9 TWh consumed by Class A ratepayers the cost shift is $1.306 billion.  The 4,665,000 residential ratepayers who use 9 MW of electricity annually will absorb approximately 30% of those costs — in other words, it represents an annual subsidy to Class A customers of almost $100 from each ratepayer.

Small and medium sized businesses will pay a lot more absorbing the remaining 70%, or about $900 million!

Now you know why the price of that hamburger and everything else went up!

Electricity price increases have hit all classes of ratepayers in the province and now that we see the shift of costs, it is helpful to look at the cause!

Renewable energy in the form of wind and solar** power generation has played a big part in rising electricity bills, so it is an interesting exercise to do a simple calculation to determine what wind generation and curtailment have cost in the first 11 months of 2018.   My friend, Scott Luft posts actual wind generation and curtailment for grid-connected (TX) and distributor-connected (DX)*** wind.  Calculating the TX, wind generated (9.655 TWh) and curtailed (1.940 TWh) for the 11 months indicates costs were $1.305 billion for grid-accepted generation and $230 million for curtailed (paid for but not used) wind.

That brings total costs of intermittent and unreliable wind to more than $1.5 billion. ****

What this simple exercise really does of course is demonstrate how our costs would be much less without intermittent wind power generation, which is produced out-of-phase with demand in Ontario. Considering first-to-the-grid rights for wind power operators means it also results in spillage or waste of hydro (5.9 TWh in 2017) and nuclear steam-off (1 TWh in 2017) and must be backed up with gas generation — all of which we pay for — wind power simply increases our electricity bills without any significant benefit to the environment or power system.

If solar costs were also included in these calculations, we would be in the $3 to 4 billion range.

Short story: Without all that waste, all classes of Ontario ratepayers would have reasonable and cost-competitive electricity rates.

Conclusion                                                                                                                                       The OEB should have stood up for consumers a lot sooner and called out the government for NOT delivering the “outcomes and innovation that deliver[d] value for all Ontario energy consumers.”  Instead, the OEB simply watched while billions of dollars were removed from ratepayers’ pockets for foreign-owned wind power developments and stood by for seven years while residential, small and medium sized businesses provided increasing subsidies to large industrial companies for a program “with limited efficiency benefits.”

PARKER GALLANT

* Class A was limited to very large consumers with an average monthly peak demand of more than 5 MW (primarily large industrial consumers). Since then, the government has expanded eligibility such that Class A now includes all consumers with an average monthly peak demand of more than 1 MW, as well as consumers in certain manufacturing, industrial and agricultural sectors with an average monthly peak demand of more than 0.5 MW.

**IESO do not disclose solar generation until early the following year                                                                                                                                                      ***Estimated for grid connected but generally very close to actual generation.

****Generated wind at $135/MWH and curtailed at $120/MWh.

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.

 

 

 

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.