Adding more power from wind at this point only benefits our U.S. neighbours, not Ontario citizens
It was a “WOW” headline for Cleantech Canada on their website: “180 megawatt Armow Wind project comes online in Kincardine, Ont.” The article claimed Armow would power 70,000 Ontario homes each year. That’s a “stretch-goal” unless the average household in Ontario has reduced consumption from 800 kilowatts (kWh) per month to 675 kWh. The Ontario Energy Board (OEB) maintains the average household consumes 800 kWh per month, but apparently, the anonymous author of the report did no research, and just assumed Armow would produce what he was told.
What will happen to the 475,000 megawatt hours (MWh) Armow might produce, probably in the middle of the night or in the spring and fall when Ontario’s demand for electricity is low?
If 2015 production from industrial wind turbines (IWTs) is the measuring stick, we should assume most of the generation we will pay the Samsung/Pattern partnership $135 per MWh for, will be exported!
The surplus power Ontario exported to Michigan, New York, etc. in 2015 was reported by IESO as 22,618 gigawatts (GWh). That’s enough to provide 50% (2.4 million) average Ontario households with the 9.6 MWh of annual consumption the OEB use as the basis for setting electricity rates. If Ontario was generating a profit selling surplus power we would all be happy, as it would reduce our rates. But that’s not how the Liberal government has reconfigured the system since first elected in 2003.
The average sale price of those GWh in 2015 was $23.58/MWh meaning their sale generated $533 million. Remember though, the sale price doesn’t include the Global Adjustment or GA (the price difference between the contracted rates of say, industrial wind, and actual market value1.).
The GA costs for those 22,618 GWh averaged $77.80/MWh in 2015, meaning the additional costs of generation picked up by Ontario’s ratepayers was $1,760 million. To be fair we also have to deduct the GA we saved by importing 5,763 GWh, which was about $450 million, reducing the ratepayer burden to $1.3 billion ($1,760 million less $450 million). One would think the $265 per household subsidizing our neighbours should be treated as a tax-deductible gift, but the province instead levies a tax on the total GA for the exports via the HST. That means the province generated an additional $100 million for their portion of the HST, pushing the cost per household to $285. And, the drop in the Canadian dollar in the past year made the purchase price for those U.S. buyers even cheaper.
Now if we look at generation from wind, solar and biofuel for 2015, you will note they were respectively 9,000, 250 and 450 GWh, representing 42.2% of all exports. If we include embedded generation, estimated at 4,500 GWh (principally solar), it would represent 62%. If we look at the all-in costs of production with wind priced at an average of $130/MWh, solar at $500/MWh, and biofuel at $150/MWh, ratepayers are paying $2.4 billion or roughly $500 each per average household!
In short, adding more wind and solar power generation to Ontario’s mix only provides a benefit to our neighbours, but zero value to Ontario’s ratepayers.
Clearly, we don’t need more wind turbine or solar developments like Armow forced on rural Ontario, without consideration of the health and economic consequences. The province needs to back away from their plans to add another 500 MW of intermittent and unreliable wind and solar capacity now.
© Parker Gallant
February 3, 2016
- Market value is the value determined by the trading activity and the HOEP or hourly Ontario electricity price. Defined by IESO as: “The Hourly Ontario Energy Price, or HOEP, is the average of the twelve market clearing prices in each hour.”
My fear with all of this is that we’re going to be thrown under the bus no matter who wins the next election. Nobody will want to decommission these monsters.
Just imagine if the system was structured to maximise hydroelectric production and we got power from those gas plants we pay to sit idle.