Saturday, June 8, 2013

Wind Feed-in Tariffs in Ontario: An Info-Obit

Ontario's Ministry of Energy recently announced that, " the province will develop a competitive procurement process for renewable projects over 500 kilowatts (kW). The new process will replace the existing large project stream of the Feed-In Tariff (FIT) program."

I believe the announcement does end a FIT policy I've written extensively on, particularly in a pair of posts in November 2011 (here and here), and recently in a post concluding, of the FIT program.
It is a failure; a high cost, low value, artificial creature that deserves to be killed.
I say to the government, "well done"
but ...
The scenario that lead to the FIT policy, where professional planning was replaced with amatuerish whimsy, should not be allowed to repeat itself.
There is reason to believe that is exaclty what is happening.


It is possible to recreate the errors of the feed-in tariff program without the feed-in tariff, and the announcement was made, by the Minister of Energy, at the solar trade association CanSIA conference where the policy change was presented as a "move to establish a predictable and stable market for the solar energy industry in Ontario."    That raises concerns that the government is moving from wind to solar not due to any characteristics making solar better suited to integrate into, or replace, Ontario's generation mix, but for strictly political reasons.
The same press release announcing the end of FIT for larger projects notes the province will be "making 900 megawatts (MW) of new capacity available, between now and 2018, for the Small FIT and microFIT programs."
There is no evidence that small FIT is superior to the large FIT.

There are a number of reasons wind turbines have attracted opposition, but key ones featuring on this blog are economic, and the feasibility of that variable renewable energy source (vRES) considering it's production profile in relation to Ontario's energy demand profile. One reason wind's shortcomings have been exposed is the public availability on hourly production data from wind turbines (along with hourly data for price, demand and trade levels).

It is not clear solar is better suited to Ontario than wind; one large reason it is not clear is the lack of production data for solar capacity in the province.
There is a lack of evidence to support, or condemn, the solar feed-in tariff results.
___

As we bury the Feed-in tariff mechanism for factory scale industrial wind turbines, it's important to review how the FIT came to exist in Ontario, with a focus on the role of public availablity of data, and reporting, in the history of Ontario's electricity policy.  Recent news indicates the wanton destruction of public records at the highest level of the government (the Premier's office, as well as the Ministry of Energy).  The news isn't surprising, as the journey away from transparency, to secrecy, is chronicled in the history of Ontario's feed-in tariff policy.

Public Planning Before the Feed-In Tariff

The first industrial wind projects were contracted, through a request for proposal (RFP) process, in 2004/05; the RFP process would be replaced by Renewable Energy Standard (RES II and III) contracts in the period leading up to the introduction of the FIT model in 2009.
The Ontario Power Authority was established to provide long-term planning, and those plans were to be established based on supply mix parameters dictated to the OPA from the ministry of energy.  The first supply mix directive, issued in June 2006, called for "increasing the installed capacity of new renewable energy sources by 2,700MW from the 2003 base." [1], [2]

In 2008 the integrated Power System Plan (IPSP) process was essentially sabotaged by New Energy Minister George Smitherman in a directive interfering with the initial supply mix delivered less than 3 weeks after this Integrated Power System Plan was printed.

Smithman's directive lacked any figures, or other content making it sensible:
... I require that the OPA revisit its IPSP with a view to establishing new targets in the following areas, and in a manner consistent with further enhancing its current emphasis in these areas:
  • The amount and diversity of renewable energy sources in the supply mix;
  • The improvement of transmission capacity in the ‘orange zones' in northern Ontario and other parts of the province that is limiting the development of new renewable energy supply...
One need only look at the pricing in the northern region Smitherman singled out for removing limits to "the development of new renewable energy supply" to see the folly of abandoing a coherent, transparent and professional planning process for one driven by politics and related subterfuge.  The average price in the zone Minister Smitherman wanted generation developed in has been around negative $100/MWh ever since he directed the OPA to do something other than what they had done.

Estimated prices rise with FIT introduction: from L.C. Stokes [5]
In reality, Smitherman and McGuinty had both been taken in by a gaggle of lobbyist that had come together under the banner of "The Green Energy Act Alliance" to recreate German policies in Ontairo - a feat they celebrated accomplishing in May 2009 as the Green Energy Act (May 2009), and the feed-in tariff program, became law.

Supply mix considerations were no longer based on anticipated demand and an appropriate generation mix to meet that demand, but in simple, very very simple, terms:

Renewables good; less demand good; cost irrelevant ... that thinking replaced professional planning as the FIT came to town.

The Feed-In Tariff Contracts

FIT ramped contracted capacity: from L.C. Stokes [5]
By April 2010 Ontairo was embarking on a 15 month contracting spree:

April 8, 2010 -       2,500MW including ~1,210 MW of on-shore  wind
February 28, 2011 -  872 MW including ~615MW of on-shore wind
March 8, 2011 -     1,070 MW including 870 MW of on-shore wind [3]
July 4, 2011 -         1,046MW including  ~1,018MW of on-shore  wind

July 4, 2011 marked the last of the feed-in tariff contracts for large industrial wind.  The OPA reported 5721MW of wind contracts for 2011's 3rd quarter (with solar and bioenergy the total was slightly under 8000MW).  There was essentially no movement after that, with 2012's Q4 summary slightly over 8000MW of non-hydro renewables contracted, but only 2727 MW of non-hydro renewables were in-service, and of that less than 400MW held FIT contracts (another 130MW of solar held micro-FIT contracts).

The Long Term Energy Plan (LTEP)/ IPSP II

The Ontario government released a Long Term Energy Plan (LTEP) in November 2010 in an attempt to return to professional planning - or to feign an attempt at returning to professional planning.  The supply mix proposed in the LTEP included 10,700MW of "renewable capacity (wind, solar, bioenergy)" by 2018 - and that was shown as the planned contribution from the sources in 2030 too.
The LTEP kicked off a process: 

  • Comments were invited on the supply mix directive (through the environmental registry), although, unlike for comments submitted as part of the first IPSP process, no comments were ever published [1]
  • The Minister of Energy issued a directive to the Ontairo Power Authority (OPA) in February of 2011, including the supply mix to be developed in the integrated power system plan the directive launched.
  • The OPA developed the 2011 IPSP in a relatively transparent process, with an intial draft of the document reportedly delivered to the Minister of Energy late in the summer of 2011 - prior to a fall election campaign. [4]
The IPSP 2011 has, to the best of my knowledge, never been made available for public viewing.  Queries made by people who maintain e-mail records indicate the process was shelved by the Ministry in 2012 - apparently anything involving documentation was too cumbersome for use in planning.

The FIT Review

March 2012 brought the release of "Ontario's Feed-in Tariff Program: Two-Year Review Report," a report which stated:
With Ontario on track to procure 10,700 MW of non-hydro renewable energy generation by 2015, the government should review Ontario’s electricity supply and demand forecast in 2013 to explore whether a higher renewables capacity target is warranted.
The review is problematic in a number of ways - not the least of which is that in 3 years between the first FIT contracts being issued and the review, the OPA showed only 133.6 MW of solar FIT contracts had entered operation (of 1539MW), and only 224MW of wind FIT contracts were operational (of 4003MW).

The FIT review could only review the ability to award FIT contracts.

The Ontario Clean Energy Task Force

Having declared the FIT program a success for signing so many contracts, the government outsourced planning again (as with the Green Energy Act Alliance):
Ontario’s Clean Energy Task Force has been established to help broaden the Province’s energy focus. The Task Force will facilitate collaboration within Ontario’s clean energy industry to identify export markets, marketing opportunities and approaches to demonstrate Ontario’s advanced clean energy systems.
Having constructed little of the contracted capacity, apparently we are looking at exporting our expertise at awarding "clean energy" contracts.
This is surprising given the enormous costs of relocating 2 contracted gas plants, muliple NAFTA lawsuits (MESA and Wolfe Island Shoals), judged violation of World Trade Organization obligations, and widespread local opposition to projects contracted in Toronto.


The New Long Term Energy Plan


The Ministry of Energy has posted:
The Ministry of Energy will review Ontario’s Long-Term Energy Plan and wants to hear from you.
The original Plan, released in November 2010, recommended a three-year review.
...
The review includes a strong and transparent consultation process with the public, municipalities and the energy sector and engagement of Aboriginal leaders and communities. These conversations will be on all aspects of our energy plan including the different forms of generation such as renewable, hydroelectric, natural gas, and nuclear, our conservation efforts and opportunities to control costs and ensure affordability.
At the time this review was posted - essentially taking planning away from the Ontario Power Authority  - Ontario's active supply mix was essentially as planned in the original IPSP (2007/08), which also coinicides with the last "strong and transparent consultation process" producing a document available to the public.

The input that the Ministry of Energy needs is to return planning to public planners - removing it from evidence-destroying political operatives and outsourced incompetents.

As it stands now, the government has positioned itself to recreate the conditions that lead to escalating costs, escalating regional tensions, escalating legal actions, and diminishing faith in responsible government.

___


Endnotes

[1] The first supply mix, although issued by the Minister of Energy, followed an extensive process documented, by the OPA
The second supply mix was put up for comment on the environmental registry, but no changes were made and comments were never made public ( I posted mine, and Tom Adams posted comments from himself and Parker Gallant)

[2] The OPA reported an actual total of 1788MW installed capacity of "in-service" renewable energy for the 4th quarter of 2010
The 2700MW of renewables, directed in the supply mix, could be found in the IPSP, with already contracted sources forecast to add ~270MW of hydro, 2000MW of wind, 135MW of bioenergy and 355 MW of solar by the end of 2010; at the end of 2010 about 2/3rd's of the total were reported, by the OPA, as in service.
The closest to the planned capacity was wind (71% of plan), while hydroelectric and bioenergy were the least likely to have been constructed.

[3]  These contracts were a result of a Directive from the Minister on April Fools' Day 2010 which was subsequent to a preliminary Green Energy Investment Agreement (GEIA) with a Korean Consortium  in January 2010 (frequently simply referenced as the Samsung deail).
The government accounts for the GEIA separately from the FIT, but the contracts are very similar

[4]  Tthe head of the OPA, Colin Andersen, states this about 4 minutes into this quarterly call  in October 2011.

[5] The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada, Leah C. Stokes, Department of Urban Studies and Planning, Massachusetts Institute of Technology. Published in Energy Policy

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