While the Canadian Wind Energy Association, the trade association for the wind power industry and vested interests, continues to maintain that wind power cannot be contributing to Ontario’s rising and unsustainable electricity bills, the facts indicate otherwise. The figures for April 2017 show wind power produced out-of-phase with demand, causing power from other, clean sources to be wasted, and wind power producers paid not to add power to the Ontario grid.
Here is Parker Gallant’s analysis.
The Independent Electricity System Operator or IESO’s 18 month outlook report uses their “Methodology to Perform Long Term Assessments” to forecast what industrial wind turbines (IWT) are likely to generate as a percentage of their rated capacity.
The Methodology description follows.
“Monthly Wind Capacity Contribution (WCC) values are used to forecast the contribution from wind generators. WCC values in percentage of installed capacity are determined from actual historic median wind generator contribution over the last 10 years at the top 5 contiguous demand hours of the day for each winter and summer season, or shoulder period month. The top 5 contiguous demand hours are determined by the frequency of demand peak occurrences over the last 12 months.”
The most recent 18-month outlook forecast wind production at an average (capacity 4,000 MW growing to 4,500 MW) over 12 months at 22.2%, which is well under the assumed 29-30 % capacity claimed by wind developers. For the month of April, IESO forecast wind generation at 33.2% of capacity.
April 2017 has now passed; my friend Scott Luft has posted the actual generation and estimated the curtailed generation produced by Ontario’s contracted IWT. For April, IESO reported grid- and distribution-connected IWT generated almost 703,000 megawatt hours (MWh), or approximately 24% of their generation capacity. Scott also estimated they curtailed 521,000 MWh or 18 % of generation capacity.
So, actual generation could have been 42% of rated capacity as a result of Ontario’s very windy month of April 2017, but Ontario’s demand for power wasn’t sufficient to absorb it! April is typically a “shoulder” month with low demand, but at the same time it is a high generation month for wind turbines.
How badly did Ontario’s ratepayers get hit? In April, they paid the costs to pay wind developers – that doesn’t include the cost of back-up from gas plants or spilled or steamed off emissions-free hydro and nuclear or losses on exported surpluses.
Wind cost=22.9 cents per kWh
For the 703,000 MWh, the cost* of grid accepted generation at $140/MWh was $98.4 million and the cost of the “curtailed” generation at $120/MWh was $62.5 million making the total cost of wind for the month of April $160.9 million. That translates to a cost per MWh of grid accepted wind of $229.50 or 22.9 cents per kWh.
Despite clear evidence that wind turbines fail to provide competitively priced electricity when it is actually needed, the Premier Wynne-led government continues to allow more capacity to be added instead of killing the Green Energy Act and cancelling contracts that have not commenced installation.
* Most wind contracts are priced at 13.5 cents/kilowatt (kWh) and the contracts include a cost of living (COL) annual increase to a maximum of 20% so the current cost is expected to be in the range of $140/MWh or 14cents/kWh.
Math lesson on power costs for Minister Bob Chiarelli: Parker Gallant
January 5, 2016
Open “Tongue in cheek” letter to:
The Honourable Bob Chiarelli, Minister of Energy, Queen’s Park, Toronto
Dear Minister Chiarelli:
First, I hope you and your family had a Merry Christmas and a Happy New Year.
Second, I hope you found the time to make it through the exercises I described in my recent letter so you now understand the difference between “profit” and “loss” in respect to the energy portfolio.
With that behind you, I believe it’s time for a second math lesson. We will again use the chart for November 12th, 2015 prepared by my friend Scott Luft. See below.
This lesson is focused on allowing you to understand how the cost per megawatt hour (MWh) by generating source can be calculated using the chart Scott prepared versus the IESO daily summary which is not at all as transparent as Scott’s.
Let’s start! Note the second portion of the chart with the subject line “IESO Transmission (Tx)”. The first heading “Nuclear” is a reflection of the generation source and on this day it provided 58.1% of all generation. How to get that calculation is simple. Look at the first line; add the “Ontario” column of the generation of 429,668 MWh to the 2nd line “est. Distribution (Dx)1.” giving you 447,177 MWh. Divide it into Nuclear total of 259,444 MWh and you get 58%! Including curtailed it becomes 61.8%.
Now let’s calculate the cost of each megawatt hour of Nuclear generation. We will include “est. Curtailed” in our calculations as it is generation that could have been delivered, but because IESO was concerned with the grid crashing it was “curtailed” i.e., not produced. Bruce Nuclear has the ability to “steam off” and that is what they were told to do, because wind/solar was generating too much power at a particular point in the day. Now the total of nuclear generation plus the curtailed (steamed off) nuclear is 276,301 MWh and that should be divided into the last line “Cost ($000s)” of $18.062 million —which demonstrates each MWh of nuclear cost $65.37/MWh. Still with me, I hope!
OK, so let’s calculate the cost per MWh for hydro: that was 86,965 MWh + est. Distribution (Dx) of 1,867 MWh and curtailed (spilled) of 208 MWh for a total of 89,040 MWh. Divide that into the “Cost” of $4.671 million and you will see the cost per MWh was $52.46. Hydro contributed 20.2% of Ontario’s total generation (ignoring curtailed generation) this day, so combined with nuclear those two sources generated or curtailed/steamed off 78.2% (365,341 MWh) of all electricity generated in the province, and 100.4% of total Ontario demand (refer IESO daily summary) of 363,960 MWh.
Hope you are paying attention Bob. Here’s why: our exercise up to now doesn’t include generation from wind, solar, gas, biomass or biofuel sources, yet they were were completely CO 2 free! Worth pondering, eh?
Now, time to look at costs of those other sources of generation. Let’s start with gas and its role in providing “peaking power”! On this day, gas provided 5.5% of Ontario generation (including “est. Distribution (Dx).” The calculation: 24,511 MWh divided by 447,177 MWh = 5.5%. The cost of those megawatt hours is simply: divide the “Cost” of $5.360 million by 24,511 MWh, giving a shocking total of $218.68/MWh!
Contracting for gas plants is to back up wind and solar generation when the wind doesn’t blow and the sun doesn’t shine!
Here is an example that requires some math calculation so read this carefully before trying the calculations. Specifically let’s review the TransCanada 900-MW gas plant (planned but canceled) for Oakville (most of the $1.1 billion cost) and moved to Bath! The OPA contract (negotiated by the OPA) will pay them $15,000 per MW per month to be “at the ready.” The annual cost of the 900 MW is $162 million (900 MW X $15,000 X 12 = $162 million).
Bob, what the foregoing means is that if that plant produced just one (1) megawatt hour of electricity in a year, the cost would be $162 million.
Now let’s do a “what if” exercise: assume it will operate at 10% of rated capacity of 900 MW which means it will produce 788,400 MWh (10% X 900 MW X 8760 [hours in a year] = 788,400 MWh). Actual generation costs from the gas peaking plants are based on the cost of the natural gas fuel plus a small mark-up but we will ignore those latter two costs in the next calculation just to keep it simple. Here we go: if you divide the annual cost of $162 million by 788,400 MWh, your answer should be $205.50/MWh. Pretty expensive, eh?
The requirement to back up industrial wind turbines is old news as noted in a Memorandum submitted to the U.K. Parliament which stated: “Dr Paul Golby CEO of E.On UK, says 90% whilst Mr Rupert Steele of Scottish Power says, “Thirty Gigawatts of wind maybe requires twenty-five GW of backup.” In other words, that means, if you contract for 1,000 MW of industrial wind generation you need a 900 MW gas plant to “back-up” its capacity!
So, doing math is important: you can see that you are almost doubling up on the cost of producing a single MWh of electricity.
That brings us to the actual cost of wind generation on the chosen day in November.
On November 12, 2015 (refer to Scott Luft’s chart) wind produced 63,203 MWh, i.e., the lines “IESO Transmission (Tx)” + “est. Distribution (Dx)” equals 63,203 MWh. On this day wind produced 14.1% of Ontario’s generation at a cost of $153.55/MWh (based on the calculations applied above) —or at least this is what one would assume. That is an assumption you shouldn’t make though, Bob, and I will try to explain why. Adding curtailed wind production (13,500 MWh) to the 63,203 MWh produced would reduce the per MWh cost to $126.52/MWh, but, and it’s a big but—it doesn’t include gas back-up costs. Now pay attention!
The outstanding contracts for gas generation total about 9,000 MW of capacity and the contracts guarantee them (including the 2,100 MW of Lennox owned by OPG) a monthly price similar to the TransCanada contract mentioned above. So, knowing that, let’s assume the “average” contracted price is only $10,000 per MW per month. Bearing that in mind the backup for wind (solar to a lessor extent) is costing Ontario ratepayers $1.080 billion annually to be on “standby”! In other words, if they produced one (1) MWh in a year the cost would be $1,080,000,000. Shocking eh? If operated at 100% of rated capacity (which they can’t) they would produce almost 79 TWh (terawatts2.) or over 50% (9,000 MW X 8760 hours in a year) of Ontario’s annual consumption.
OK, now back to Scott’s chart of November 12 and let’s figure out the full cost. On November 12, gas generators operated at around 11.3% of capacity (79 TWh divided by 365 days in a year = 216,438 MWh and 24,511 MWh divided by 216,438 MWh = 11.3%). The cost of that day’s gas generation combined with wind generation would be $171.75/MWh, i.e., combined cost of $15,065,000 divided by combined generation of 87,714 MWh (ignore the curtailed generation) = $171.75/MWh. Now that cost coupled with the losses of $7.9 million from our exports of 74,352 MWh (cost of $108 per/MWh3.) Nov. 12th, produces a combined cost of $279.75/MWh or 4.3 times the cost of nuclear generation.
At this point, Bob, I hope you have grasped the math so I won’t go through the exercise for Scott’s other headings of biofuel, solar etc. I will leave you to work those out on your own.
I certainly hope this exercise gives you sufficient math skills to at least understand the basic steps you should go through before making either rash remarks or issuing directives to IESO telling them what to do. Instead perhaps you could instruct them to produce information similar to what Scott Luft produces. The latter would also back up your leader’s wishes or intent to be “transparent” for the taxpayers and voters in Ontario.
Good luck with the math exercises and with demonstrating your Ministry’s intention to become more transparent.
Here from Ottawa-based energy economist Robert Lyman, a commentary on how Ontario’s electricity system has evolved. (You may also wish to read a letter in today’s Ottawa Citizen by wind industry lobby group the Canadian Wind Energy Association president Robert Hornung, who would have us believe wind power is the cheapest source of power available. )
For most of Ontario’s history, the official energy policy of successive provincial governments was generally the same. The Province sought to keep electricity prices as low as possible consistent with the goal of ensuring that Ontario consumers and industry had secure and reliable sources of supply. With the election of a Liberal government in 2003, the goal changed. Since then, the Government has raised electricity costs significantly, emphasizing reliance on expensive industrial wind turbines, solar plants and biomass for generation, and using higher rates to force consumers to cut back on their energy use.
The consequences of those policies have been a doubling of residential electricity rates and the ever-increasing share of renewable energy generation as part of the provincial electricity generation mix. According to data from the Ontario Power Authority, in 2014 biomass, industrial wind turbines and solar plants will provide about four per cent of Ontario electricity supply, but will cost consumers $1.933 billion dollars, or 17 per cent, of the total generation cost. The amount of renewable energy brought on line is expected to increase significantly by 2018, adding further to the costs.
The Ontario Long Term Energy Plan, published in December 2013, included a table projecting what this will mean for the average residential customer who consumes 800 KWh of electricity per month. Taking into account the costs of electricity generation, transmission, distribution, taxes and related regulatory charges, the average monthly bill will rise from $125 in 2013 to 181 in 2020, a 45 per cent increase. Large industrial users will see their rates rise from $79 per MWh in 2013 to $104 in 2020, a 32 per cent increase.
These increases do not take into the account the significant costs associated with having to provide significant back up capacity because the wind and solar plants are “intermittent” sources of supply. This means that they usually produce energy when it is not needed, and production from these plants cannot be varied to accommodate changes in demand. Ontario generation capacity now exceeds demand, and the Green Energy and Economy Act requires that renewable energy sources be given preferential access to the provincial grid over lower cost conventional supplies. The increases in rates do not take account of the cost of curtailing operations at existing plants or of losses on export sales. In 2013 this was about $1 billion.
So, do Ontario residents at least get more secure electricity supplies as a result of all these increased costs? The answer lies in…
From today’s Financial Post, an opinion by economist Jack Mintz. Mintz holds the Palmer Chair in the School of Public Policy at the University of Calgary and is the former chair of the CD Howe Institute.
Canada’s sagging middle: Ontario Ontario’s growth has lagged the rest of Canada, averaging less than 1% annually since 2009
With Quebec’s election over, we can turn to Ontario where a scandal-plagued Liberal government will soon present its 2014 budget – and possibly trigger a spring election. Ontario is sagging under the weight of monstrous public debt, uncompetitive energy prices and rising taxes. Given Ontario’s size, other regions of Canada are being hurt.
Ontario has only one way out: economic growth. Luckily, the American economic recovery will significantly benefit Ontario. However, it won’t be enough. The government needs to get its house in order.
Pushing aggregate demand with deficit spending won’t achieve growth. Economic stimulus might provide some short-term relief but won’t generate sustained expansion. Instead, growth will be attained with supply-side policies by reducing onerous regulations, providing some smart tax reforms and shifting to growth-oriented spending, especially to address the notorious Greater Toronto Area infrastructure problem.
Nor will growth come from expansionary public programs like the proposed Ontario pension plan. Forcing people to hold assets in a government-sponsored plan might be helpful to some but it will be just another form of new taxation for others, who are already have adequate savings for retirement.
Ontario’s growth has lagged the rest of Canada, averaging less than 1% annually since 2009. Employment since 2009 has increased by 375,000 but the employment rate has fallen to U.S.-levels of 61.4% as of March 2014, far less than Alberta’s at almost 70%.
Ontario‘s fiscal picture is also not pretty, with gross debt over $290-billion (net debt is $272-billion), requiring $10.6-billion in taxes to cover interest charges. This expense is enormous, about one-half of education expenditures.
The average Ontario debt interest rate is only 4% but interest rates are expected to rise within the next few years. Each point increase in interest rates will add at least another $3-billion in annual interest expense.
Ontario’s energy prices are soaring. Look at any bill and one can read added delivery charges, regulatory charges, debt retirement charges and HST, resulting in an average price of 12.48 cents per kwh in Toronto for households. Large power customers pay 10.89 cents per kwh in Toronto, less than New York but higher than most eastern U.S. and Canadian cities.
Ontario made real progress in 2009 by adopting the HST to replace the provincial sales tax and reducing Ontario’s corporate and personal taxes to ensure that revenues would not increase. However, the province reneged on tax cuts only two years later.
The Ontario corporate income tax rate is stuck at 11.5%, compared to the promised 2009 legislated rate of 10%. None of this helps the province’s poor investment climate. Ontario’s share of business capital spending is only 32% of Canadian investment, less than its share of population and dramatically less than a decade ago.
Personal income tax rates have also increased to almost 50% at the top end, third highest in Canada. There is a reason why many high-income taxpayers have moved Alberta with its top rate of 39%. Alberta’s rich households, with over $500,000 in family income, account for 15% of Alberta’s taxable personal income. This ratio is two-thirds higher than Ontario.
Add in Ontario sales taxes at a 13% rate (about the average Canadian rate), fuel taxes (Ontario’s at 14.7 cent per litre is one of the highest in the country) and property taxes (Ontario is on the high side especially for non-residential property) – it all adds up to a yoke on growth.
Ontario’s Minister of Finance is in a bind. He needs more growth but he also has to deal with a large debt mountain and an uncompetitive tax system. So what are his options? Here is a five-point plan.
First, focus spending on growth-oriented programs. Transportation infrastructure should be on the top of the list as GTA traffic results in unproductive use of time.
Second, kill off the feed-in tariff program for wind and solar that creates excessive electricity costs for households and companies. This would both improve growth and help reduce administrative costs….
A number of people have organized a rally in front of Energy Minister Bob Chiarelli’s office at noon tomorrow, to protest Ontario’s rising electricity bills.
Despite the powerful wind power industry lobby group’s efforts to downplay the cost of renewables in Ontario’s electricity bills, the fact is that since Ontario launched its program to put wind and solar first to the grid, Ontario’s power prices to consumers is now the highest in North America. In fact, since wind and solar get preferential treatment, when supply exceeds demand, Ontario has been forced to waste power from other clean sources–hydro and nuclear–at great cost to the province.
See news story from Metro News on the Ottawa rally here.
Note that there is also a rally planned for Carleton Place at 11 a.m.
Here from today’s Financial Post, a comment from Parker Gallant, on the cost of the Green Energy and Green Economy Act. He estimates $1,100 per household per year, but that’s not including property value loss for areas living near wind power projects…Ontario is in deep, deep trouble, and it’s not over yet.
The Ontario Power Authority is currently tripping through Ontario asking communities what will make them happier about the planning process for large-scale power projects.
Here from Ottawa economist Bob Lyman, an overview of the electricity billing situation in Ontario. It’s not pretty.
WHAT HAS HAPPENED TO ELECTRICITY RATES IN ONTARIO SINCE 2002?
In 2002, the residential electricity rate in Ontario was 4.3 cents per kWh. There was only one tier that applied at all times and levels of residential use. This is the rate for the power alone, and does not include the charges for transmission, distribution, regulatory charges, debt retirement and taxes.
In 2004, the two-tier system was introduced. The lower-tier rate was 4.7 cents per kWh and the upper-tier rate was 5.8 cents per kWh.
By 2011, the lower-tier rate had increased to 6.8 cents per kWh and the upper-tier rate had increased to 7.9 cents per kWh.
In 2011 and 2012, Ontario introduced time-of-use (TOU) rates based upon the use of “smart” meters. The rates were set at 6.3 cents per kWh for the off-peak and 11.8 cents per kWh for the peak periods.
Last Friday (April 5, 2013), the Ontario Energy Board authorized an off-peak rate increase to 6.7 cents and a peak period rate increase to 12.4 cents.
Since 2002, therefore, off-peak rates have increased by 56%, and peak period rates have increased by 188%. Transmission and distribution costs have increased as well, of course, but not as much in percentage terms. The addition of the HST has added about $1.2 billion to ratepayers’ bills every year.
There are many conflicting projections as to where rates will go in future. The province projected in 2010 that rates would rise by about 50% by 2015. Parker Gallant, the well-known critic of provincial electricity policies, has estimated that costs could rise by $7.3 billion per year by 2016, or almost 100%.
Incidentally, Ontario consumes about the same amount of electrical energy today as it did in 2004.
Here, from Parker Gallant, a comment on what Dalton McGuinty and the Liberal government has done to Ontario. We have spent billions on new “renewable” power sources, without actually adding any generation capacity. How does that make any sense?
But here’s the kick: by the end of 2016, Ontario consumers will be paying $2,055 a year MORE for power because of the McGuinty government’s policies.
Read the article, originally published in the January 18 Financial Post, here:
Ottawa’s own Robert Lyman has already had a comment:
I was glad to see the article that Parker Gallant published in the National Post. For the first time that I have seen, it draws together the costs of the decisions taken by the McGuinty government in the electricity field since it came into office. The results are striking.
The “bottom line” is that the costs to the average Ontario homeowner, which have doubled since 2004, will double again by 2016. Over the next four years, the additional costs per ratepayer/taxpayer will be about $2,050. The cost of wind turbines is only one part of that cost, but it alone will add $2.5 billion per year to the costs of the electrical system. All of this, on a net basis, has not added one bit to Ontario’s generation capacity, as the province has essentially shut down the inexpensive coal plants and replaced them with the super-expensive wind and solar plants and the “smart meters”.
This analysis, never before assembled (to my knowledge), provides a powerful case against the electricity policies of the current Ontario government.
Of course, this just deals with the costs to consumers and small- and medium-sized business; never mind the dropping property values in rural communities invaded by wind power companies, the reduced appeal of Ontario tourist destinations and–most horrific of all–the damage to the health of some Ontario citizens forced to live near these power projects.