Mild spring days mean big bucks for wind power operators
While Ontario struggles to reduce a multi-billion-dollar debt, wind power operators rake in the cash due to their “first-to-the-grid” contract rights. They’re laughing.
(From Parker Gallant Energy Perspectives)
As very recently pointed out, utility-scale wind power operators love the spring because it brings nice breezes that result in lots of generation for which they are paid. The bad news for Ontario electricity customers is that the power produced is generally not needed, but due to the wind power industry’s negotiated “first-to-the grid” rights, they must be paid regardless.
That was the case on May 8 and again the following day.
May 9 was another low demand day in Ontario as reported by IESO with only 337,700 MWh required to supply all of the province’s needs for electricity. IESO’s forecast for power generation from wind was about 79,400 MWh, which would have represented 23.5 % of total demand. However, a large part of it was forecast for low demand hours; no doubt that meant power from other relatively cheap sources of generation were dispatched off.
Low demand on a low demand day caused IESO to curtail 29,400 MWh (37.1%) of the forecast output and to sell off surplus generation to our grid-connected neighbours in New York, Michigan, Quebec, etc. The net exports of 41,600 MWh (rounded) sold to those buyers represented 83% of the accepted “output” of wind power.
In other words, Ontario didn’t really need any wind power!
The net exports were worth $3.70 per MWh (average of the Hourly Ontario Electricity Price or HOEP for the day) meaning they produced total revenue for Ontario of approximately $154,000.
So, you might ask, how much wind generation cost Ontario ratepayers for the day?
The 29,400 curtailed MWh at the $120/MWh IWT operators get paid was $3.528,000 and adding in the cost of the 50,000 MWh actually accepted at $135/MWh adds another $6,750,000 to the cost of wind. That brings the total cost of wind for that spring day to $10,124,000 if we deduct the $154,000 generated by the sales of our net exports.
Ten million paid, $150,000 recouped–makes sense doesn’t it?
So, wind power on May 9 cost Ontario ratepayers $202.48/MWh or 20.2 cents/kWh. That doesn’t include any of the other costs its generation may have caused such as spilling cheap hydro or steaming off cheap nuclear. To top it off, most of the day’s wind power generation, if exported, at an average price of $3.70/MWh means a loss of $198.78 for every megawatt hour sold.
The “average” Ontario ratepayer would love to be able to buy the 9 MWh they consume in a year at those bargain basement prices of $3.70/MWh. Imagine: it would cost them $33.30 for a full year’s electricity needs. I’m confident our small and medium-sized businesses would also love the opportunity to pick up some of that cheap electricity, instead of being forced to pay for expensive, intermittent and unreliable wind and solar generation!
It’s time to sort out the mess created by the McGuinty/Wynne governments in respect to the electricity file.
If it isn’t, Ontario will continue to be stuck with climbing above-market electricity prices until the wind and solar contracts finally end.