On my twitter feed this morning:
“I’d like to hear from
@ScottLuft on this.
“This” involved something about the value of wind, and what could be done to contain it.
I’ve written a lot on this in the past, and won’t do so again here except to explain the graph that accompanies this post – which explains what can be done to increase the value of the 20-year contracts Ontario’s thug Premier claims will have ongoing value.
It also explains why wind won’t, in the near future, be part of a near-zero emission electricity system anywhere not blessed with large hydro reservoirs.
The graphic shows:
- with the blue line measured on the left axis, a declining value of electricity contracted from industrial wind turbines;
- with the red line measured on the right axis, the growth in contracted supply from industrial wind turbines as a percentage of Ontario consumption – with the wind numerator including reported IESO generators, estimated embedded generation and estimated curtailment
There are a couple of places in this graph I’ll discuss, but first note this inversely proportional relationship between market share and energy value of industrial wind would be a textbook example of the economics of sporadic energy systems if such textbooks existed.
The relationship has been quickly apparent in Ontario due to other generators in the supply mix. With very high baseload (constant) supply from nuclear, hydro, and previously contracted natural gas-fueled generation (NUGs), there was little fuel to displace in the system. If you want to explore this further, try getting through my work explaining why most consumers in Ontario have seen wind drive up their costs by far more than the cost of wind (it’s true – and complicated).
so… 2 points on the above graph.
#1 – October 2013: From the introduction of industrial wind to the system operator’s reporting in 2006, up until October 2013, there was a relatively consistent in wind purchased as a share of overall consumption (to <4%) and decline in the relative value of that production (from 96% to 87%). By the fall of 2013 only about 500 megawatts of the capacity procured with the inflated prices and other sweetheart terms following 2009’s Green Energy Act had entered service. While the orgy of contracting ended in July 2011, the supply contracted entered commercial operations mostly between late 2013 and the end of 2016. Thus the steep increase in wind bought as a share of Ontario consumption as of October 2013 (not to imply it was consumed in Ontario), and corresponding sharp drop in the relative value of that supply.
By my calculations the IESO market valued all purchased supply from industrial wind turbines in 2016 at about the same total as in 2013, despite the Watt-hours more than doubling (including curtailments).
The second point of interest in the graphic is the rise of both supply share, and relative value, beginning in October 2016. This corresponds to the removal from service of the Darlington 2 nuclear service (for refurbishment). Subsequently the IESO bought out baseload gas generators. The combined impact of expiring non-utility generator contracts, buy-outs and the reduction in nuclear capacity, is around 1500 megawatts of baseload generation.
The only way to make industrial wind output more valuable is to have less baseload generation. Traditionally utilities spend more on cleaner facilities to operate in baseload mode – with savings coming from using less fuel per unit of power generated.
Wind devalues as it grows as a share of total generation, and it’s value always requires fuel-burning generators operating.