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New Ontario Government cancels renewable energy contracts

The official news release includes:

TORONTO — Ontario ratepayers will benefit from $790 million in savings thanks to the Government of Ontario’s decision to cancel and wind down 758 renewable energy contracts, Minister of Energy, Northern Development and Mines Greg Rickford announced today…

All of the cancelled projects have not reached project development milestones. Terminating the projects at this early stage will maximize benefits for ratepayers.

Rickford also confirmed that the government intends to introduce a legislative amendment that, if passed, will protect hydro consumers from any costs incurred from the cancellation. Even after all costs are accounted for, ratepayers can expect to benefit from $790 million in savings from this one decision.

I thought a short post is in order as the incoming mainstream media reports are not informative or in any way helpful.

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behind the bad Ontario electricity news

The Globe and Mail published an article by its Ontario legislative reporter Justin Giovannetti, In Ontario, hydro’s future gets murkier as costs of leaving the grid decline. The article posits, “a future where Ontarians produce their own power and cut the cord to the wider grid appears to be approaching.”

It’s a very bizarre assortment of factoids that supports the proposition.

Often stories are planted. I mean no disrespect to Mr. Giovannitti when I say this little fact is planted by somebody promoting a story:

…Feb. 18 could be seen as the start of the province’s electrical transformation. On that Saturday, with the sun blazing and a strong wind powering turbines, demand for electricity from the province’s traditional generating stations was actually lower in the busy middle of the day than it had been when most people were sleeping hours earlier.

That is a possible description of what happened that February Saturday. It was the first day since 2003’s blackout where mid-day “Ontario demand”, as defined by the system operator, was the day’s lowest – which is not a fact many would know how to locate. It’s only happened once since – on Friday April 14th, 2017, which the pious among us will recognize was Good Friday. The situation signalling the start of a transformation has occurred twice as often as the event that occurred on the third day following Good Friday – and the claim is the reprecussions of this event will be of similar significance.

On February 18th my daily estimates show 64.7 gigawatt-hours dumped on export markets, 32.5 GWh curtailed altogether, and 337 GWh consumed in Ontario – so over 23% of supply was worthless.

My estimates for Good Friday also show nearly 25% of supply was unusable in Ontario and worthless outside of it.

These are not days I want to preview the future.

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hot Sunday, windy Sunday

I noted Sunday morning curtailment of potential generation was around record levels – a claim repeated Sunday afternoon at a rally against a facility in Prince Edward County. My friend Parker Gallant subsequently wrote on the wasted wind that day. I thought a post comparing the past Sunday to other days might be instructive.

I developed a single page daily report some time ago – something Parker felt useful. The report for Sunday October 15th estimates the cost to a Class B consumer of consuming one megawatt-hour of electricity at $145/MWh.

$145/MWh was up steeply from the $108/MWh I estimated as the average cost for Class B consumers on the previous day. That $37 difference is greater than the difference estimated for exporters: on Saturday their price averaged $27/MWh; on Sunday it was free. The difference in cost for exporters is due to the change in the Hourly Ontario Energy Price, which dropped from $135/MWh in hour 9 on Saturday, when wind was forecast to produce 149 megawatts, to negative prices overnight and back up to $0/MWh in hour 9 on Sunday when wind was forecast to produce 3,876 megawatts. The correlation is not difficult to spot:

chart (41).png

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Alberta electricity, July 26th, 2017: Base truths

On July 26th Alberta’s electricity market hit its regulated peak price of $1000 per megawatt-hour (MWh) and stayed there for hours 17, 18 and 19. The price soon dropped back down but the commentary continues.

Upon seeing there had been a price spike, I checked to how industrial wind turbines had performed and saw they’d performed exactly as I’d expected, with output dropping from hour 14 to hour 18.

AESO July 26

I expected that as I’d seen it in 2014 and in 2012. I didn’t think this was a particularly big event. Prices have been very low in Alberta and this spike will do little to change the yearly average. Alberta is examining a capacity market, and the intent of those is to prevent high price hours – but Texas is an example of a jurisdiction thus far avoiding capacity markets/costs by upping the maximum peak market price. Theoretically, peak pricing can be healthy in encouraging new market entrants with peaking generation, or demand reduction, products. While seeing the one event as not particularly problematic, I did put some short thoughts up on twitter:

Capacity credit is an awkward term I’ll return to.

A response to my tweet tagged Andrew Leach who later put some other suspects for the cost spike up on Twitter, including:

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Solar’s near nil capacity value in Canada’s north

Alberta is issuing a Request for Proposal (RFP) for 135,000 MWh of “solar electricity”.  I think that’s a strange thing to buy, and pulled some Ontario data to explain why.

The amount is about 2.4 times the production from the 40 megawatt (MW) “Northland Power Solar Facilities” over the past 12 months, according to the hourly generator output and capability reporting of Ontario’s system operator. Those facilities are located in the area of Cochrane, Ontario. While very north from the perspective of most Ontarians, Cochrane is only slightly north of the 49th parallel which forms Alberta’s southern border.

I’ve pulled data for the Northland facilities and the Grand Renewable Energy Park near Cayuga Ontario, roughly 650 km south of Cochrane. July is usually the peak month for total solar generation, and January can be the least productive. I’ve compared by hour using capacity factor due to the different sizes of the facilities, and will also note Ontario systems can be overbuilt – for instance, Grand Renewable has about 140 megawatts (MW) of DC panel capacity behind a 100 MW (AC) connection point. For my measurement the contracted (connection point) capacity is used in calculating the capacity factor.Read More »

Negative pricing, and other, thoughts

A new post at the Energy Institute at Hass blog, Is the Duck Sinking?, discusses the growing appearance of negative pricing in California:

What do the negative prices tell us? At a fundamental level, they tell us that we have too much of a good and suppliers need to pay people to take it off their hands. Right now, California has too much renewable electricity. Emphasizing this point, a recent briefing from the California Independent System Operator [CAISO] noted that renewable “curtailments” were at record levels in March 2017, amounting to over 80 GWh, which is more than a typical day’s worth of solar production that month.

Is there anything to do about the negative prices? Negative prices certainly highlight the value of storage, where the basic idea is to buy low and sell high. Buying when prices are negative is especially lucrative…

Another solution is to expose more retail consumers to wholesale prices, or find other ways to encourage customers to respond to real-time prices. Economists have bemoaned the disconnect between wholesale and retail pricing for years…

If Catherine Wolfram’s post represents a significant concern for curtailments and negative pricing, it’s worth noting the situation in Ontario with Ontario’s system operator, the IESO.

It’s worth noting both because CAISO is noting the curtailment, and negative pricing, and it is acting on it.

This graphic, from the CAISO presentation noted above, shows monthly curtailment in their system:

CAISOcurtailment

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Can 20 year contracts be amortized over 30 years?

written by Gary Mooney, and reproduced here with permission.

I contacted the Ministry of Energy by phone to ask if 20-year electricity generation contracts – e.g. wind and solar — were going to be extended to match the government’s new 30-year amortization period for capital expenditures.

The answer that I got back was:

* There will be no negotiations to extend contracts at this time.

* But generators will be offered the opportunity to continue producing electricity beyond the 20-year point, at the market price (or a negotiated price, not sure which was mentioned).

This is consistent with Minister Thibeault’s comment, in justifying a longer amortization period, that wind turbines have a useful lifetime of 30 years.

The idea of an extension of wind contracts will be a major concern to those living with turbines, as they have been expecting that the problem will go away after 20 years. And worse, if there are no negotiations now, these folks will have to live with uncertainty for anywhere from 10 years (the earliest contracts) to 20 years.

To make an extension of the amortization period work, the province needs continued power generation over the whole period out to thirty years, either:

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Alternative (Energy) Facts – from Environmental Defence, et al.

I started receiving messages last night on a sorta report by Environmental Defence (ED), and as I am still receiving them, I thought I’d write some thoughts – if only to simply copy a link when again asked for my thoughts.

Here is how ED’s Keith Brooks begins a blog post on their latest “work”:

Electricity prices in Ontario have risen in recent years, putting the squeeze on some Ontario residents and businesses. There are many reasons for the increase in electricity prices and renewable energy is one of them.  However, the role of renewables in diving up electricity bills has been vastly exaggerated.

I wrote on a poor 2014 ED work and noted their new backgrounder contains a graphic with the same information as Figure 1 of their 2014 work. Without acknowledging any level of competency in the compilation of data for either ED graphic, here’s the elements of residential electricity bills as they report them for 2016 and 2014:

edcomp2

Perhaps the “role of renewables in driving up electricity bills” is perceived as being significant because:

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Mitigating Ontario Electricity Costs – The Long-Ago Missed Solar Opportunity

This is a post written by Bruce Sharp. An earlier version appeared on Linkedin.

Well, the (subsidized, one would suppose) L.E.D. light bulb finally went on at Queen’s Park last week concerning electricity costs.

Kathleen Wynne says high cost of hydro is concern across province | CBC

Did a single by-election loss cause this awakening?
In this day of politicians seemingly and completely incapable of climbing down from heavily entrenched positions, this seems to represent at least some progress – admitting there’s a problem.

 

Upon hearing this news, my mind went to what the government would do to provide relief – the depth, breadth and source of funds. Since 2003, we’ve had a number of dubious band-aid solutions, including a retroactive price freeze, the Ontario Clean Energy Benefit, an end to the Debt Retirement Charge (for residential consumers) and the Ontario Electricity Support Payment.
What would be next?
We now know it’ll be a removal of the 8% provincial sales tax — for those who vote and perhaps small business. Estimates have put the cost at $ 1 billion per year – suggestive of a base of $ 12.5 billion per year. That looks to me something like 70 TWh at 18 cents/kWh or perhaps slightly more energy at a slightly lesser rate. The Regulated Price Plan is about 58 TWh per year and excludes those on retail contracts, so perhaps the threshold will be 250,000 kWh per year.
The inappropriateness of this new measure should be obvious to anyone with even a modicum of energy policy instinct and yet the policy will have appeal for some. For all but the latter group, one has to wonder: does the government think we’re all stupid?
Some of the reactions have been bang-on, including Ontario Regional Chief Isadore Day’s reference to the move as a “shell game” and a Globe and Mail editorial referring to the move and electricity file as a “total mess”.

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Estimating Ontario’s Electricity Supply Costs with OEB data

I’ve been asked on a couple of occasions for costs of Ontario’s electricity from unbiased sources. I answer with a single snapshot source, but that – in my opinion – can’t communicate much about what is behind changing pricing, so I also provide some other sources so people could estimate costs in 2013, 2014 and 2015.

auditorFigure5

In this posts, I’ll cite the data sources, run the estimates, note some shortcomings – and end with a look at some of my own estimates.

The singular best data is from  the 2015 Auditor’s report chapter on power system planning – only the Auditor has extracted a coherent set of numbers on both production and costs from the system operators (IESO).

The data the IESO provided the Auditor is different than the data the IESO posts on its website. The difference is due to generation embedded in distribution networks, and the IESO’s inability to update its reporting to include that supply.

Most starkly, the IESO reports on its website 2014 solar generation of 0.0185 TWh (billion kWh). With the auditor they revealed 1.8 TWh-essentially 1.8 billion kilowatt-hours more.

So… for reputable accounting of annual generation and costs, I suggest looking at the less frequent, but more reliable, documents from the Ontario Energy Board (OEB).

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