Three days of wind and costs skyrocket

(October 16, 2019) Those breezes over the Thanksgiving weekend were turning the blades of industrial wind turbines throughout the province. But the costs and benefits of IWT are not something to be thankful for.

By Parker Gallant (a former banker who didn’t like what he was seeing in his Ontario electricity bills).

For the original version of this posting, see here.

For more analysis by Parker Gallant, check out his blog here:

The OEB every six months issues a “Regulated Price Plan Supply Cost Report” which is a forecast of things to come in respect to the costs of electricity.  The OEB used to use the report to set rates for the ensuing six months but with the Ford government’s freezing rate increases to the inflation rate its no longer the case.  In the latest report on page 17 for the May 1 2019 to April 30, 2020 period they estimate the individual cost by generation source in a chart.

They forecast “wind” is to cost 14.8 cents/kWh (kilowatt hour) which presumably includes either or both; the cost of “curtailed” generation and the 20% inflation bumper included in the contracts with the development companies.

That 14.8 cents/kWh wind forecast cost was blown out of the water over three very recent days. Wind has this bad habit, during spring and fall in Ontario, to blow harder then it does during high demand days in the summer and winter.  During the three days of October 11, 12 and 13th Ontario’s demand was relatively low, averaging about 311,000 MWh per day.  As if to bless the recent disclosure of Robert Hornung, President of CanWEA, industrial wind turbines were indeed generating lots of power at night but were also generating lots of power during the day.  In total, over the three days IESO reported they generated or curtailed 190,350 MWh for an average of about 63,450 MWh per day (20.4% of average Ontario demand).  Over the same three days Ontario’s net exports (exports minus imports) averaged 60,000 MWh (19.3% of daily demand) and totaled 180,000 MWh.  In other words, IWT generation plus curtailed power exceeded our net exports.

Export Costs: It should be noted Ontario’s ratepayers/taxpayers took a beating on exports as the HOEP (Hourly Ontario Energy Price) market was $1.04/MWh on the 11th, 0.01cent/MWh on the 12th and -$1.97/MWh on the 13th!  What the foregoing means is ratepayers/taxpayers paid $65,000 to offload surplus power. That amount added to IESO’s first estimate for the Global Adjustment (not included in export sales), for October of $178.78/MWh would represent a generation cost of $32,245,000!  Even if we use the lower September GA of $122.63/MWh the cost is $22,074,000.

Wind Costs: Over those three days wind was generating and curtailing power despite the lack of Ontario demand! It has a bad habit of performing when we least need it!  Its performance comes at a substantial cost and the three days in question demonstrated the 14.8 cents/kWh in the OEB report was well under cost.  We ratepayers pay 12 cents/kWh for curtailed wind so the 77,930 MWh that were not delivered cost $9,351,600 and the 112,420 MWh delivered to the grid at a cost of 13.5 cents/kWh or $15,176,700 brought the total cost for wind to $24,528,300 or $218/MWh for what was accepted into the grid.  At 21.8 cents/kWh that is 47% higher than the OEB forecast in their report.

Presumably we also spilled hydro and steamed off nuclear generation over those three days which would have added to the costs but IESO does not disclose that information.  We could also include a large portion of the costs associated with gas plants built to back-up the indeterminacy and unreliability of IWT which would have driven costs higher.

The cost of our exports plus IWT generation and curtailment represents three days of waste.  We must not only pay up for money lost on exporting our surpluses ($22.1 to $32.2 million) but also the cost of wind ($24.5 million) we didn’t need.  IWT generation and curtailment appears to have created the surplus we exported and over three days Ontarians saw $46.6 million at the low end and as much as $56.7 million at the high end extracted from their pockets—for nothing of value!

Ontario’s ratepayers/taxpayers/businesses collectively want to see value for what they pay in taxes or for energy they consume, so let’s stop the waste.

How about it, CanWEA President Robert Hornung, will you now admit;  wind turbines generate lots of power at night and lots of power during low demand periods?

If not, can we ratepayers and taxpayers call on Minister Rickford to fix the mess by declaring: IWT are not “baseload” power and in future pay them absolutely nothing for occurrences like we just experienced!

Parker Gallant is a retired banker. Retirement allows Parker to spend time researching the energy sector, applying his banker’s common sense to analyzing the sector’s approach to the production, transmission and distribution of electricity to Ontario’s consumers. Parker is a regular contributor to the Financial Post on matters related to the energy sector. He is a former director of the umbrella organization Energy Probe belongs to (see Energy Probe Research Foundation).

For previous blogs by Parker Gallant, published by Energy Probe: see here.

This entry was posted in Utility Reform. Bookmark the permalink.

1 Response to Three days of wind and costs skyrocket

  1. Andrew Roman says:

    In effect, the ratepayer/taxpayer, rather than the owner of the wind generators, takes the entire risk of the wind blowing insufficiently or excessively.

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