Scott Luft has provided an excellent summary of Ontario’s electricity exports in December 2010.
There were extensive periods of negative prices early and late in the month when neighbouring utilities were paid to take excess power from Ontario’s grid. During the week of December 15 through 22nd, the average rate of exports was greater than the output of three of Ontario’s largest reactors at full power. During this period, market prices averaged just 3.7 cents/kWh, so neighbouring utilities were buying power at about half the cost charged to Ontario consumers or less than a quarter the cost of new power supplies coming onto Ontario’s power system through the FIT program.
The Ottawa Citizen published an article (“Surplus power costly for Ontario: Ratepayers paid $52.8M in December to subsidize sales to Quebec, U.S.”
Read more: http://www.ottawacitizen.com/technology/Surplus+power+costly+Ontario/4089148/story.html#ixzz1AiyH3pVO)
by Don Butler January 11th on Ontario’s electricity exports and what these exports tell us about the Ontario government’s power purchasing strategy.
To estimate total losses to Ontario electricity consumers on exports in December, I summed the net intertie flows in each hour (1.597 TWh over the month) and the price in that hour to figure out the total revenues from exports ($54.4 million). Then I netted that revenue against the cost of power, which averaged about 6.71 cents/kWh in December according to the IESO. The IESO’s power cost figure sums HOEP (3.48 cents/kWh) and Global Adjustment (3.23 cents/kWh). Whereas Scott estimated $60 million in total losses and I estimate $52.8 million.
Here is a crude way to put Ontario’s electricity exports into context. If one were to annualize Ontario’s pace of exports in December (19.2 TWh) and compare that to total Canadian net exports to the U.S. ( 32.2 TWh in 2008), you get some idea of the vast scale of the recent exports. The comparison isn’t perfect, because some of excess was due to unusually warm December weather and some of the net exports Ontario made in December appear to have gone to Quebec (which experienced a very low precipitation year in 2010) but still the comparison provides some sense of scale.
Upcoming interview on CFRA Radio in Ottawa at 7:45 am.
I calculated quicker!
The IESO did state recently that the real cost of power was the HOEP plus the GA
That definition does match what I’ve been using in my estimates.
I would note that, overall, December consumption was slightly up, and was forecast to be slightly up, and;
the trend in what I’ll call the export subsidy is up since the coal units were removed, and that looks only to get worse as the problem is a lack of flexibility in the supply chain
Sorry for the grammar – sent from the rink
Maybe I’m a little daft, but if it costs Ontario so much money to produce all this excess power, why doesn’t Ontario make less so it costs us less to consume it then pass the savings onto the consumers? Or maybe they can somehow apply that surplus to the idiotic debt retirement fee?
If Ontario can save a few bucks on producing power, but still have a bit of a surplus to export, isn’t that a ‘win, win win’ situation?
Is my thinking skewed? Am I just not grasping some overly complex concept? Can someone provide an Executive Summary on this?
James,
Your questions are all sensible. Many, although not all, of the contracts that the Ontario government has entered into for the supply of power impose take-or-pay provisions on consumers. For example, under the Bruce Power and the renewable energy Feed-In Tariff contracts the generators are paid on the basis of deemed generation, that is the power they could produce at any point in time, irrespective of whether consumers need the power.
One thing seems to be continually missing in all of the blathering about Ontario electricity. And that is, if the government had offered residents of Ontario assistance, in the form of grants, to get themselves off of the grid, then this whole thing would have made sense.
Where it became stupid was when they made the offer to pay ridiculous amounts of money for people to put power into the grid. Mainly because the government was attempting to get regular citizens to provide power to run the province.
However, because the sun doesn’t always shine and the wind doesn’t always blow then the energy producing companies are required to have a backup system.
So, now we are paying twice for electricity. One for the realignment of the grid to accept power from farm lots and one for the extreme prices for the wind and solar.
For the life of me, I cannot understand why there is not more written about this aspect
TK Ottawa
Hindsite is 20/20. When the current government took over from the PCs we were faced with brown outs and a crumbling infrastructure. It was also about the same time the Cons. took over in Ottawa. The province rightly so started to plan for 30,000 megawatt days and no coal. That required a sharp increase in capacity. Meanwhile the Cons. set about turning the Canadian economy into an oil sheikdom, a move that killed manufacturing in Ontario. Couple that to the US fed recession and Ontario rather suddenly nolonger needs 30,000 megawatts peak capacity. To all of you who forcast the dollar would hit 1.10US and at the same time we would experience the worst economic downturn since 1929 go ahead and cast the first stone.
Electricity planing is a decade or longer planning horizon and what we are experiencing is a blip. We saw the same thing when Darlington was mothballed and then restarted. During the downturn it looked like a big mistake. Turns out it was needed. As we move more and more away from fossil fuels electricity will be the energy of choice. In that not to distant future all this capacity will look like genius.
John,
You and disagree about a lot of things. Let’s see if we can find something we do agree on. Do you agree that government procurement of more wind power right now in Ontario is adding useless generation, although at a high cost relative to the cost of a gas-fired alternative?
Tom
No, I do not agree. Where I live there is an important birding area. Half the population of the birds for which this designation exist have disappeared. The cause has been identified as climate change. Those birds arrive at their breeding ground too late because spring is arriving sooner. Their breeding success has plummeted. Seals in the Gulf of St Lawrence need 12 days of solid ice after birthing before the young can survive in the water. They are not getting it and the seal pups are drowning. Populations are plummeting. I could go on.
Natural gas was once thought a viable stop gap. EPA air studies near Denver got a big surprise: they found high levels of methane. It was traced to methane leaks from a nearby gas field. These leaks when coupled with the level of leaks throughout the natural gas distribution system now make natural gas as dirty an alternative as coal. Remember natural gas is 26 times more potent than CO2 as a green house gas.
Here are some things that could form a basis for agreement:
Climate change is real.
Human burning of fossil fuels is a major contributor to climate change.
The impacts of the change are too complex to predict but they will be significant.
Known changes such as sea level rise and weather extremes are already being experienced.
We will need massive amounts of new clean electricy. (Toronto’s new rail system is an example, as is hydrogen generation.)
Natural gas is not a clean energy alternative, but at best a stop-gap.
The new natural gas is subsidized vs the current market price to about 2 cents per kilowatt hour.
Tom, the real problem occurred when mike harris for ideological reasons decided to largely privatize our generation system. Because of the nature of NAFTA, once something is privatized there is no turning back. The biggest beneficiary of that policy has been Bruce Nuclear, not the wind industry. The second biggest beneficiary has been the new gas plants whose contracts were signed during a period of high prices (thanks again to harris’ policies).
If you do the math, the new Niagara Tunnel will cost 50% mare than wind per megawatt hour of output capacity (not nameplate capacity). In addition the economic activity from an equivalent amount of wind generates significant tax revenue for the province which the tunnel does not. Further the turbines require significant ongoing economic activity which will continue to feed the provinces coffers.
The energy file in Ontario is far from perfect but we are headed to a more sustainable future. The terrible pricing situation is much more a legacy of Mike Harris than it is the GEA.
My posts have talked a lot about what has happened but not what needs to be done. There is a chicken-and-egg situation here and like that question, there is an answer. German studies have shown they can power their economy entirely with wind and solar. The missing ingredient is that they need to install pumped-water capacity to use excess electricity generation and be available for peak demand. Until you have the excess generation capacity you will never have storage facilities developed.
The Ontario government is currently looking at storage options. These options include pumped storage of water, compressed air, and hydrogen generation. The latter is the most promising because it provides a transportation fuel as well as an electricity generation fuel.
During the oil crisis of the 1970’s the US government commissioned Lockheed to develop a hydrogen-powered, heavier than air passenger jet. To everyone’s surprise it was not only possible but because of the low fuel weight, it could actually be built with a much longer range. Most of the fuel was saved on take-off. It was shelved becaues of a lack of infrastructure and the end of the oil embargo.
That aircraft, and simarly powered trains and road vehicles, are the type of forward thinking we require. However, whether it is a heat pump or a hydrogen-powered jet, it all starts with more electricity.