Ontario’s IESO: keeping the lights on (and the champagne flowing for some)

Mild weather might mean lower power demand and savings for electricity customers … but not in Ontario

February 28, 2018

The IESO has responsibility for ensuring the electricity system in Ontario keeps the lights on. They must manage the flow of generated electricity and keep it within the confines of producing too much or too little which could lead to either brownouts or blackouts.

That task has become more difficult as frequent Energy Minister directives, mandating the acquisition of more and more intermittent and unreliable wind and solar power generation, have made reliability an issue of concern, particularly during times of low demand. They are concerned with “surplus base-load” which in the past generally meant nuclear and “must-run” hydro. Wind and solar generation joined that latter group under those mandated directives pushing the potential “must run” power generation much higher.

Higher base-load on low demand hours/days could cause the system to fail.   And, it’s obvious that managing the system today has a much higher cost.

Example: February 25, 2018

The 25^th of February saw higher than normal temperatures in Ontario, resulting in lower demand.  Demand in one hour was only 12,716 MW and the average was 14,390 MW/per hour for the day according to IESO’s daily summary.  Total Ontario demand for the day was only 345,000 MWh.  The IESO summary discloses the market valued all generation (including surplus exports) on that day at “0” meaning our net exports (exports minus imports) of 48,000 MWh were sold at a substantial loss.

Another issue facing IESO on the 25^th was the fact it was a windy day. The forecast was for wind turbines to generate 89,100 MWh.  But only 49,500 MWh were accepted into the grid and the balance (39,600 MWh) were curtailed (paid for but not used).  Ratepayers pick up the costs for both accepted and curtailed wind.  It is worth noting our net exports of 48,000 MWh for the day, were only slightly less than the grid-accepted wind power generation.

Because of low demand and excess wind power generation, OPG were no doubt spilling water at IESO’s instructions. IESO don’t disclose spilled water, but a reasonable estimate for this day would be 45,000 MWh — which ratepayers are obliged to pay for.

Yet another source of power would have been our gas plants which receive payment(s) for idling at a contracted amount (payable monthly per MW of capacity). As one would expect, they were not called on to produce any power for the day which would have been cheap (fuel costs plus a small markup). Gas plants are essentially the back-up for the approximately 7,700 MW of intermittent wind and solar capacity now either grid- or distributor-connected in the province.

So let’s look at what ratepayers paid just for wind power for the day:

 

One day’s cost for unreliable intermittent wind!

Wind accepted: 49.500 MWh at $135/MWh =                                      $ 6,682,500.

Wiind curtailed: 39,600 MWh at $120/MWh =                                    $ 4,752,000.

Total wind costs:                                                                                $ 11,434,500.

Spilled Water (estimated): 45,000 MWh at $45/MWh =            $   2,025,000

Gas plant idling costs (estimated):                                                       $   2,500,000

Gross wind costs:                                                                                $ 15,959,500

 

Less: Recovered from net exports (estimated):                                  $     720,000

            True net wind generation cost:                                                     $ 15,239,500

 

Cost per MWh: $15,239,500/49,500 = $307.87/MWh or 30.8 cents/kWh

 

If all the days in a year were like last Sunday, annual costs would be well over $5 billion for unneeded high priced generation from wind power projects.

This all just goes to show, Ontario ratepayers were filling the pockets of IWT developers so they could sip the champagne while IESO kept did its best to keep the lights on!

 

 

NB: All of the numbers above are rounded to the nearest hundred.

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Ka-ching! Windy days blow away ratepayer dollars

Consumers pay: wind power is surplus, and expensive — emissions-free power is wasted

Wind power on two recent windy days cost Ontario electricity customers three times the current rate … and the surplus meant emissions-free hydro and nuclear was wasted

 

A simple Google search “wind power is cheapest energy” will generate 1.2 million hits.

If you search “wind power is most expensive energy” you get 2.1 million hits.

Two days last week in Ontario are real-world proof of the cost of wind power, no matter what the government or wind power industry spin tells you. Tuesday, December 5^th and Wednesday December 6th were two very windy days, an excellent opportunity to examine both the power generation from industrial wind turbines in Ontario and their delivered cost of power to the grid.

The numbers for those two days:

$$$   IESO forecasts indicated that wind could have delivered 23.8% (177,100 MWh) of total Ontario demand (755,200 MWh) via the 4,200 MW of grid-connected wind capacity.

But wind turbines have a bad habit of generating power when it’s not needed (middle of the night, spring and fall) so the intermittent power must often be curtailed (constrained/wasted but paid for).  It was!

$$$   The IESO curtailed 41.8% of their forecast generation meaning 74,000 MWh were not used!

Via the contracts in place with wind power companies, IESO is obliged to pay for both delivered and curtailed power at prices for grid-accepted power at $135/MWh and $120/MWh for curtailed power.

$$$   Quick math: the cost for grid-accepted wind on those two days meant Ontario ratepayers got charged approximately $22.8 million or $221.14/MWh for grid-accepted wind. That means it cost ratepayers 22.11cents/kWh (kilowatt hour), well above what the average time-of-use rates would be for the average Ontario ratepayer!  The cost of the delivered wind power for those two days was almost three times the current levied^* “average” cost of 8.22 cents/kWh, and 3.7 times the off-peak cost of 5.9 cents/kWh.

There’s more (sorry): be assured IESO instructed OPG to spill water over the hydro dams and Bruce Nuclear to steam off nuclear power — so power from our two reliable, emissions-free sources of power generation was also wasted.   OPG and Bruce will be paid for that waste and the cost will be added to our bills.  At the same time gas plants (backing up wind and solar) were being paid for idling.

Those two December days also saw sales of surplus power of 93,700 MWh to our neighbours in New York, Michigan, and others for pennies of the actual cost. In all probability, we recovered around 15% of their generation costs meaning, we bit the bullet for another $10/11 million.

Total: too much

Just the cost of the curtailed and grid-accepted wind and the losses on our surplus exports for those two days was $32/33 million for absolutely no benefit to any of us ratepayers. If every day of the year was like those two days last week, Ontario’s ratepayers would be shelling out over $6 billion annually, due to the abysmal planning and management of the electricity sector by the current Ontario government.

Imagine how far $6 billion would go to improve our health care system.

Parker Gallant,

December 10, 2017

 

* This price reflects the 17% deferral under the Fair Hydro Act.

CanWEA gets it wrong on energy costs: university professor

University professor in engineering and environment says CanWEA guilty of “willful blindness”; quotes him incorrectly in statement on energy costs

Just a few days ago, I wrote that the Canadian Wind Energy Association (the trade association for the wind power industry, also known as CanWEA) posted a statement by its Ontario representative that people who say wind power is adding to Ontario’s electricity bills are misleading the public. Ms Gianetta referred to University of Waterloo professor Natin Jathwani to support her views.

Professor Nathwani e-mailed me in response to the claims made by Ms. Giannetta’s in her recent post on CanWEA’s website, which I repeated in “Wind power lobby myth buster is busted”.

Professor Nathwani’s email:

Dear Mr Gallant:

In your Blog, you have cited Ms. Giannetta’s post on CanWEA’s website on April 24, 2017 as quoted below:

Her article points to two articles that purportedly support the “myth” she is “busting,” but both require closer examination. She cites Waterloo professor Natin Nathwani’s, (PhD in chemical engineering and a 2016 “Sunshine list” salary of $184,550) article of March 6, 2017, posted on the TVO website, which supports Premier Wynne’s dubious claims of “a massive investment, on the order of $50 billion, for the renewal of Ontario’s aging electricity infrastructure.” Professor Nathwani offers no breakdown of the investment which suggests he simply took Premier Wynne’s assertion from her “Fair Hydro Plan” statement as a fact! It would be easy to tear apart Professor Nathwani’s math calculations — for example, “The total electricity bill for Ontario consumers has increased at 3.2 per cent per year on average” — but anyone reading that blatant claim knows his math is flawed!

First and foremost, the record needs to be corrected since Ms Giannetta’s assertions are simply incorrect and should not be allowed to stand.

If she has better information on the $50 billion investment provided in the Ministry of Energy’s Technical Briefing, she should make that available.

The breakdown of the investment pattern in generation for the period 2008-2014 is as follows:

Wind Energy $6 Billion (Installed Capacity 2600 MW)

Solar Energy $5.8 Billion (Installed Capacity 1400 MW)

Bio-energy $1.3 Billion (Installed 325MW)

Natural Gas $5.8 Billion

Water Power $5 Billion (installed Capacity 1980 MW)

Nuclear $5.2 Billion

Total Installed Capacity Added to the Ontario Grid from 2008-2014 was 12,731 MW of which Renewable Power Capacity was 6298MW at a cost of $18.2 Billion.

For the complete investment pattern from 2005 to 2015, please see data available at the IESO Website.

In sum, generation additions (plus removal of coal costs) are in the order of $35 billion and additional investments relate to transmission and distribution assets.

I take strong exception to her last statement suggesting that the 3.2 percent per year (on average) increase in total electricity cost from 2006 to 2015 in real 2016$. The source for this information is a matter of public record and is available at the IESO website.

Ms Giannetta’s assertion is complete nonsense because she does not understand the difference between electricity bill and generation cost. Let Ms Gianetta identify the “blatant flaw.”

As for the electricity bill that the consumer sees, there is a wide variation across Ontario and this is primarily related to Distribution.

The Ontario Energy Board report on Electricity Rates in different cities provides a view across Ontario:

For example, the average bill for a for a typical 750kWh home Ontario comes is $130 per month.

In Toronto it is $142, Waterloo at $130 and Cornwall at $106. On the high side is Hydro One networks is $182 and this is primarily related to cost of service for low density, rural areas.

Your Table 2 Total Electricty Supply Cost is helpful and correctly highlights the cost differences of different generation supply.

Only wilful blindness on Ms Giannetta’s part would suggest that wind and solar are coming in at a low cost.

Warmest regards,

Jatin Nathwani, PhD, P.Eng

Professor and Ontario Research Chair in Public Policy for Sustainable Energy Executive Director, Waterloo Institute for Sustainable Energy (WISE)

Faculty of Engineering and Faculty of Environment Fellow, Balsillie School of International Affairs (BSIA)

University of Waterloo, Waterloo, ON