Wind power generation whacks ratepayers: surplus power sold at fire sale prices
IESO just released their January 2016 Monthly Market Report with details on electricity generated and demanded, along with prices and impact on ratepayers. It is interesting to compare January 2016 with January 2015 to get an idea of how the push for renewable energy is hurting Ontario’s ratepayers. The comparison of the facts (and some estimates) year to year is disturbing and solidifies the notion that rate increases will not slow down or stop, no matter what Bob Chiarelli, Minister of Energy claims.
Ontario’s demand fell 5.6% or 735,000 megawatt hours (MWh) but exports of surplus generation increased by 10.2% or 247.000 MWh even though IESO reported generation decreased by 4.5% (net of exports/imports) or 668,000 MWh. The reduced demand and increased exports wound up costing ratepayers a lot more in the current year than 2015 for a variety of reasons as we will show.
The IESO Market Report for January 2015 valued the cost of electricity production at $80.23 per MWh (GA of $50.68 + HOEP of $29.55) versus a cost in January 2016 of $105.48/MWh (GA of $91.79 + HOEP of $13.69). The cost increased $25.25/MWh or 31.5%, without factoring in the 10% reduction we received in 2015 from the Ontario Clean Energy Benefit (OCEB) or the nominal savings from the removal of the DRC, both of which became effective January 1, 2016.
A lot of the big jump in costs can be attributed to: Ontario’s net exports (exports less imports) which increased 67,000 MWh; the drop in the market value (HOEP) down by $15.86/MWh or 53.7%; a huge increase in curtailed production1. from wind (up from 41,000 MWh to 141,000 MWh) and nuclear (up from 26,000 MWh to 68,400 MWh). Additionally wind power generation increased 247,000 MWh and, including curtailed wind, was up 348,000 MWh or 35% from 2015.
As surplus exports are sold at the HOEP price the revenue generated from their sale in January 2016 was well down as Ontario’s ratepayers picked up the jump of $41.11/MWh in Global Adjustment or GA costs.
In total, the January 2015 net exports, together with the cost of curtailed wind and nuclear cost Ontario ratepayers approximately $97 million. The January 2016 cost of surplus exports and wind and nuclear curtailment was $191 million — that’s a jump of $94 million or 97% year over year. Net exports amounted to 1,851,800 MWh and wind generation and curtailed wind generation amounted to 1,339,000 MWh, which equates to 72.3% of net exports. What this means: power generation from wind is surplus.
Ontario’s long suffering 4.9 million rate-paying households in only the first month of the current year have each been forced to subsidize our fire sale of surplus energy to the tune of $39.00. If the pattern continues (February may be worse) Ontario’s ratepayers will pick up wasted costs of $470.002. each annually.
Minister Chiarelli should immediately cancel his directive to IESO for the acquisition of more intermittent and unreliable wind and/or solar generation.
March 2, 2016
- Hat tip to Scott Luft for his provision of the curtailment estimates.
- This doesn’t include the impact of the OESP (Ontario Electricity Support Program) or spilled hydro.