Thursday, March 7, 2019

Available low-cost electricity not utilized in Ontario

All figures are estimated (view in workbook)

In preparing my previous post I created a graphic posted separately on Facebook and Twitter. The graphic got more views than the post I edited it out of.

Comments on the original graphic included thoughts from the "electrify everything" perspective. I responded with too much caution, noting shrinking supply. Having given topic some more thought, I've added dumped exports as supply that has been available to Ontarians over the past years, on top of curtailed potential supply and under-utilized gas generators. In this post I hope to provide some context to the graphic, and show why coming changes in supply don't present a challenge for meeting Ontario's annual electricity needs, if not its capacity requirements.

Friday, March 1, 2019

Value lessons from Ontario electricity statistics

Data - and lots of it.

While I'll try to prevent this post from sliding into an abyss of Ontario electricity statistics, I'll be citing provincial data as the basis for discussion about public understanding being restricted by the presentation of data from official sources, and present new views of generally unreported data that would benefit literacy in valuations of electricity sources - an area where reckless ignorance blooms again and again.
but enough about academics, let's dive in!

The old standard of valuing generation sources is the Levelized Cost of Electricity (LCOE ). I was particularly pleased in late 2015 when a report from Ontario's Auditor General included a figure (5) indicating the cost and quantity of energy sources for 2014. I was more pleased a few years later when I received figures from a freedom of information (FOI) request with the same information for years 2007-2015. While I think the data is terrific, when I wrote about it I cautioned on presenting LCOE, "stressing these calculations deserve a big asterisk and lengthy footnote on the impacts of things such as curtailment and capacity payments." 

I have now done the data work required to add that lengthy footnote on curtailment and capacity payments.

I am certainly not unique in hoping for superior valuation tools to LCOE: the U.S. Energy Information Administration (EIA) has developed a  Levelized Avoided Cost of Electricity (LACE) metric, and the International Energy Agency (IEA) a Value-Adjusted Levelized Cost of Electricity (VALCOE - see pg 41). LACE is intended to value the cost (of alternatives) avoided by the generation, with the intent LACE > LCOE would signal a good project. VALCOE attempts to recognize the different capabilities of sources in providing firm capacity and flexibility. The specifics are less important than the principles: not all generation is of equal worth to systems that are intended to minimize loss-of-load situations. Concrete examples of LUEC's limitations will help conceptualize the issues that have people looking for better valuations.

Before I discuss my data I will note one other frequently cited source of Unit Cost in my province (I regard LUEC and LCOE as interchangeable terms): the Ontario regulator. Their most recent explanation of regulated rates includes a table (3) indicating hydro at 6.2 cents per kilowatt-hour, nuclear at 7.7, wind at 15.9, gas at 18.8 and solar at 51.3 c/kWh. I'll show replacing the OEB list's lower cost supply with gas is likely to lower total costs.

I have collected hourly data for the transmission-connected (Tx) generators reported by Ontario's system operator, including imports, and I've estimated (hourly) distribution-connected generation (Dx), curtailed supply, and contracted cost, either by unit generated (or curtailed), or by capacity required to be available. My base union query in working the data has over 16.4 million records. I will not repeat the word "estimate" in this post but simply note this one time it may be applied to everything (my work and the numbers from the IESO and OEB I cite).  

Here is my summary of annual generation and costs from 2008-2018:

Monday, February 18, 2019

A message from 2018 Ontario electricity statistics

Two notable aspects of 2018's electricity numbers in Ontario: average rates did not substantially increase, and demand did. Both of these buck the trend of the past decade. I'll explain how the trends broke.

The IESO's December reporting shows year-to-date Class B Wholesale Market rates of:

  • $114.94/MWh in 2018
  • $115.55/MWh in 2017
  • $113.18/MWh in 2016

That should be the most accurate source for this one consumer category, although the IESO did bungle November's rates due to an error in consumption figures (they compensated for it in December by pretending 688.6/8.695= 74.04). In 2017 they bungled June's consumption figures (which was accounted for in July, pretending 913.4/8.858 =112.8). These details demonstrate all IESO figures should probably be treated as estimates too - so I'll stick with my own data work here, and a graphic demonstrating the trends in different consumer segment pricing I developed, and explained in Trends in Ontario Electricity rates by Consumer Segments



Wednesday, December 5, 2018

Monthly Ontario Electricity data - presented with Tableau

I saw an opportunity for presenting Ontario electricity data in trying out the free public version of the Tab|eau business intelligence tool.

I'm not sure I have the patience, or the smarts, to learn how to do all I've learned with Microsoft's Power BI, but maybe I should. I'm astonished with the power of this map in filtering the data table!

(afraid the attempt at embedding on Wordpress was a failure - but here on Blogger...)

Sunday, November 25, 2018

Smart gift ideas: electricity monitors and hot water

The big deals of the early Christmas shopping season are coming to an end soon, so it’s a little late for advising on purchases, but I have been looking at some product and thought a post on what, and why, might be of interest. Like some - if not many - when I think gifts I think of addressing energy consumption, the new technology of a smarter “internet of things” (IoT), and emissions from energy use. Having served a decade in retail some time ago, I also think of selling as much as buying.

Some background on my electricity consumption history. Our current home uses much less electricity than it did when we arrived a decade-and-a-half ago. I wrote on the house early in 2015 after we’d received natural gas and installed a forced-air furnace and my beloved gas stove.

A quick narrative for the chart: from 2004 to 2007 the living space grew considerably (30+%) - efficiency improved although consumption doesn’t show it. Then the wood stove years began (about 3 full cords a years) and more of the house was renovated/insulated. At the end of 2014 gas arrives (we consume 1000-1100 cubic meters a year), and wood consumption is halved. The blip up in 2017 was due to a project by another member of the household (quite a productive one), which ended early this year and consumption is falling back accordingly. Electricity consumption is above the average for Ontario homes, but there may be very few homes at that average as those that heat water with electricity (as I do) are likely above average, and others probably below.

And then there’s cost.

Monday, November 12, 2018

Trends in Ontario Electricity rates by Consumer Segments



The graphic illustrating trends in electricity pricing in Ontario will be more impactful with some explanation. First I'll deal with the terminology housekeeping, allowing for some discussion of the trends.

Definitions/Terminology

  • Regulated Price Plan (RPP) consumers are most residential and small business consumers whose rates are set by the Ontario Energy Board (OEB), essentially on a forecast of supply costs over the next 12 months;
  • Class B consumers pay the flow-through cost of supply on their monthly bills (although usually as an estimate);
  • Class A consumers were the very largest consumers in the province - as of 2011 they could lower their bills by lowering their consumption during 5 peak hours;
  • Exporters pay only a real-time market price (RTP) for supply.
The Class A commodity rate is calculated as the statistical average Hourly Ontario Energy Price (HOEP) plus the average global adjustment for the class (total Class A charges divided by consumption). The Class B commodity rate is calculated as the weighted average HOEP plus the average global adjustment rate for the class. The global adjustment in my estimates differs slightly from figures reported by the IESO as global adjustment figures are publicly disclosed at gigawatt-hour level (GWh), while I expect the IESO calculated at a finer level of detail.

Exporters do not pay the global adjustment, and they settle at the real-time price (RTP) for particular jurisdictional interties, not the HOEP. As I only have RTP data from 2010 on, the figures from 2005 to 2010 are based on the HOEP which effectively underestimates the average cost. From other data (including this) it is known the actual average intertie-specific RTP value realized on exports was about 10% higher than the HOEP value during those years.


Two average rates are shown: the average for Class A and B (or, prior to the introduction of the classes in 2011, simply the Ontario average) is shown as the "Average Ontario Commodity Rate", and the "Average Commodity Rate" which also includes exports. Those averages are all weighted according to the consumption of each consumer class. Notably, RPP rates are not in the average calculations (as they should simply be a different type of Class B rate).

Discussion and Analysis

Sunday, October 28, 2018

Saving TransAlta: a demonstration of Canada's Clumsy Carbon Pricing

Canada’s Prime Minister announced aspects of a carbon pricing policy again last week. This time there were some details on how much more people in four provinces would pay for fossil fuels, the estimated revenues from those charges, and what is to be done with those revenues. Subsequently there’s much commentary on the content of announcement, and I’ll offer some more, but my attention was returned to a topic I prepared to write on quite some time ago: the impact of government actions in Alberta on a company owning much of the coal-fired generation in its province. I’ll use that company to demonstrate why I refer to the allegedly national policy as Canada’s Clumsy Carbon Pricing (CCCP).

The government’s website contains a section on “Ontario and pollution pricing[sic] that describes the two main aspects of CCCP:
The federal carbon-pollution [sic] pricing system will be implemented in Ontario, under the federal Greenhouse Gas Pollution Pricing Act with the following features:
  • For larger industrial facilities, an output-based pricing system for emissions-intensive trade-exposed industries will start applying in January 2019....
  • A charge applied to fossil fuels, generally paid by registered distributors (fuel producers and distributors), as set out in the Greenhouse Gas Pollution Pricing Act, Part 1, will start applying in April 2019…
Because the 2019 pricing for provinces not deemed to have met federal pricing requirements is only now being finalized it will not be effective January 1st, but April 1st, while the Output Based Allocations (OBAs) that are still not finalized are still to be effective four months prior to that - on January 1st.

Clumsy - at best.

Sunday, August 12, 2018

Carbon Con: It's only economics

part 2 in a series imagining the participants at a 'Comic Con' like convention for reducing greenhouse gas emissions. The first post was ECO communication
"Assume I'm an economist..."

Way back when I began the second post to this blog with that ask. Over seven subsequent years of research, data analysis and communicating on electricity supply, emissions, and markets, I've since revised my perspective.
A man walks into a Doctor's office and says, "Doc, it hurts all over when I do this."
The doctor prescribes of a Pigouvian tax.
graph from Wikipedia 
In an April blog post I hinted at my envy of those utilizing richer media tools - from richer graphics to audio/podcasts to video. At that time a group called the EcoFiscal Commission had just released, on their attractive website, "Clearing the Air: How carbon pricing helps Canada fight climate change." A beautifully formatted .pdf provided more depth than the web page, and all were accompanied by short video explainers. The work features 3 case studies of jurisdictions with pricing of greenhouse gas emissions - only 1 of which has significantly reduced emissions. I was going to focus on these case studies but they're really a footnote to addressing a bigger issue, enunciated by in a video clip Ecofiscal Chair Chris Ragan:




"Canadians do care about climate change but they also care about the economy... until Canadians are presented with a solution that makes sense for both the environment and the economy they are not going to put this at the top of their list.
Carbon pricing is that solution."

As they say outside the hallowed halls, "to a hammer everything looks like a nail."

I am going to rebut the evidence supporting the "Carbon pricing is that solution" claim, while recognizing why there could be roles for economists to play following the introduction of The Paris Agreement.

I realize a credibility gap probably exists as the Ecofiscal Commission is stacked with prominent names whereas I am known by far fewer and often as an opponent of "green" energy - and/or a proponent of nuclear energy. To encourage reading on I'll note Ontario has greatly lowered its emissions since I began blogging - a fact which need not be credited to me to any extent, but it also has much less generating capacity from "green" energy, and more from nuclear, than was planned at when I started arguing for retaining nuclear and halting the wind and solar subsidies.[1] Certainly many names from Ecofiscal are recognizable, but I recognized none as being active and influential where emissions have been significantly reduced.