Correcting Ontario’s energy minister on the cost of wind power
It’s not just the cost of wind power contracts, it’s the other costs that accrue because of wind power, Parker Gallant says mean Ontario ratepayers are “wind-whipped.”
Energy Minister Bob Chiarelli and the Ontario Energy Board (OEB) both blamed the upcoming May 1st increase in electricity prices on lower consumption. But the blame clearly lies with wind power and what the industrial-scale wind turbine projects delivered to the grid, delivered to local distribution companies (LDC), and also curtailed. (Curtailment means, the Independent Electricity Systems Operator [IESO] requests that power not be supplied to the grid.)
Future rates are set by the OEB, based on both estimates of future demand and the cost of contracted power in the six months following each rate setting, in mid-October and mid-April.
Looking back, it appears that the OEB failed to forecast wind generation correctly in the mid-October price increase. They explained that the “pot” established to track settlements with generators came up short. Then they blamed that shortfall on our lack of consumption.
Here’s what really happened: wind — generated and delivered to the grid, generated and delivered to LDC along with record curtailment (based on Scott Luft’s conservative estimates) in the five months starting November 1, 2015 through to March 31, 2016 — produced power at levels of about 47% of capacity. What that means is, wind turbines could have produced about 6.2 terawatts (TWh) in the five months versus 4.9 TWh in the comparable five month period, one year previous.
That difference of 1.3 TWh cost ratepayers an average of $133 million/TWh (13.3 cents per kilowatt hour) meaning the extra generation and curtailment (1,082,600 MWh) of those industrial wind turbines ran the bill up by $173 million, based on an average cost of $133 per megawatt hour.
Based on the foregoing added cost of wind generation and curtailment, let’s look at revenue the recently announced rate increase will generate. With 4.5 million residential households in Ontario, the ½ cent per kilowatt ($3.13 per month) increase will generate about $169 million — almost exactly what the wind power companies were paid for the additional generation delivered to the grid and LDC (year over year about 745,000 MWh more) and the incredible amount of curtailed power generation increasing from 548,000 MWh (rounded) in the comparable five-month period to the above noted (rounded) 1,083,000 MWh, or 535,000 MWh more.
It should also be noted wind (including curtailed) generation in the comparable five-month period (2014/2015) represented approximately 26% of Ontario’s exports to New York, Michigan, Quebec, and other jurisdictions. In the latest five months (2015/2016) it represented almost 62% of Ontario’s exports to those same markets.
It is time Minister Chiarelli1. and the OEB came clean and finally admit wind power is produced completely out of sync with Ontario’s demand. The admission should logically lead to a cessation of acquiring any more wasteful renewable energy from a source whose biggest benefit is to line the pockets of mainly foreign developers at the expense of rate-paying Ontario households.
© Parker Gallant,
April 25, 2016
- The following quote from Minister Chiarelli appeared in a letter to the editor of the Toronto Sun April 24, 2016 in response to a critical report from the Fraser Institute: “In fact, for the first time, wind power generation is below the average cost of electricity production in our province.” But, it’s out of sync with demand and only adds to the cost of generation billed to ratepayers!