Massive revenue guarantees for a handful of lucky wind power generators, but no appreciable environmental benefit from Ontario’s energy policies says economics professor Ross McKitrick
You may be surprised to learn that electricity is now cheaper to generate in Ontario than it has been for decades. The wholesale price, called the Hourly Ontario Electricity Price or HOEP, used to bounce around between five and eight cents per kilowatt hour (kWh), but over the last decade, thanks in large part to the shale gas revolution, it has trended down to below three cents, and on a typical day is now as low as two cents per kWh. Good news, right?
It would be, except that this is Ontario. A hidden tax on Ontario’s electricity has pushed the actual purchase price in the opposite direction, to the highest it’s ever been. The tax, called the Global Adjustment (GA), is levied on electricity purchases to cover a massive provincial slush fund for green energy, conservation programs, nuclear plant repairs and other central planning boondoggles. As these spending commitments soar, so does the GA.
In the latter part of the last decade when the HOEP was around five cents per kWh and the government had not yet begun tinkering, the GA was negligible, so it hardly affected the price. In 2009, when the Green Energy Act kicked in with massive revenue guarantees for wind and solar generators, the GA jumped to about 3.5 cents per kWh, and has been trending up since — now it is regularly above 9.5 cents.
In April it even topped 11 cents, triple the average HOEP.
So while the marginal production cost for generation is the lowest in decades, electricity bills have never been higher. And the way the system is structured, costs will keep rising.
Go to Ron Clutz’s Page and follow the links. Horrible things are happening in Ontario!
The energy mix in Ontario’s electrical sector is dominated by hydro and nuclear, so getting off coal seemed doable. But in the provincial government’s drive to reduce CO2 emissions and join the California Emissions Trading Scheme, they have hardwired costly energy contracts that Ontarians will pay for through their noses for decades. Meet the Global Adjustment Fee (covering a multitude of sins and mismanagement).
A small fire was reported yesterday morning at the Ivanpah Solar Electric Generating System (ISEGS) in California, forcing a temporary shutdown of the facility. It’s now running at a third of its capacity (a second tower is down due to scheduled maintenance), and it’s not immediately clear when the damaged tower will restart. It’s also unclear how the incident will impact California’s electricity supply.
Putting out the blaze was not easy task, either. Firefighters were forced to climb 300 feet up a boiler tower to get to the scene. Officials said the fire was located about two-thirds up the tower. Workers at the plant actually managed to subdue the flames by the time firefighters reached the spot, and it was officially extinguished about 20 minutes after it started.
The problem with solar power on a state wide basis is that it peaks at mid day while “everyone” is at work and no one is doing laundry or cooking dinner or turning on the A/C at the end of a long hot day at work or school.
There is a real risk of overgeneration which means you need to dump electricity somewhere or quickly shutdown any non-solar power you can.
And then kids start coming home from school and then the sun starts to go down and the parents come home and put something in the oven and maybe do a load of laundry and plug in the hybrid car.
And suddenly you need 13,000MW of power to pump into the grid.
And the demand curve looks like a duck.
The surge in intermittent solar power will test the statewide electricity grid because it exacerbates the need for alternative sources such as gas outside of daylight hours. Regulators have warned it’ll make California more vulnerable to price spikes and power disruptions.
California is planning for TOU (Time of Use) pricing for electricity that matches up with renewables like solar and wind:
From late morning until the sun sets, California produces a significant amount of solar power; and the future for solar is so bright, we’re reaching for our shades. With TOU pricing, we can shift demand to match up with the abundant solar electricity we produce – making the cheapest price windows for TOU rates likely from 10 AM until 4 PM. The good news is, the success of clean energy programs in California over the past decade means we’ll be able to meet peak demand by simply re-aligning our energy use to synch up with plentiful, clean, and cheap electricity.
Starting January 1, 2019, after a period of study, public outreach, and education, California’s large investor-owned utilities (Pacific Gas and Electric, San Diego Gas and Electric, Southern California Edison) will switch households to time-of-use (TOU) electricity pricing.
This simplified rate structure rewards customers who shift some of their electricity use to times of the day when clean energy is plentiful.
Why would you run the dishwasher at 6 PM, for example, if it were cheaper to wash the dishes overnight when wind energy is abundant and cheap?
The last line is an actual quote.
Why? Because you want clean dishes? You can’t sleep with the dishwasher running?
Do you want to be able to afford electricity for showering, laundry or charging your electric car?
Then stay home in the middle of the day (but only when it is sunny). or only do those things when it is windy!
If you don’t you know they will punish you with grotesquely high electricity rates.
In German, the term Dunkelflaute is used to describe the predicament. Dunkel means “dark”; solar is simply not available half the time, and solar power production is significant for only around six hours a day even when the sun is shining. Flaute is “doldrums” – when the wind is not blowing. So the “dark doldrums” are times when solar and wind power is not available in sufficient amounts.
This chart is just wind+solar for March in Germany. Red lines are periods less than 5GW.
Ontario Canada is converting a 4,000MW coal power plant to a 44MMW solar farm.
“Through the IESO’s new Large Renewable Procurement program, solar providers will receive an average of 15.67 cents/kWh for their clean energy.”
“The province’s pivot toward renewables has not come without significant economic ramifications, however. On-peak power cost consumers 17.5 cents/kWh in Nov. of 2015, compared to just 9.7 cents/kWh in the same month of 2006, according to the Ontario Energy Board—an 80 per cent hike. For off-peak power, Ontarians paid 8.3 cents/kWh in 2015, relative to 3.4 cent/kWh in 2006—or 144 per cent more.”
There was no mention in the story how 44MW of intermittent power can replace 4,000MW of dispatchable power.
There was no mention in the story of how many jobs will be transferred to China or India.