Wednesday, July 6, 2011

Pembina is an Oilfield

An article in the Toronto Star, Don't blame green power: Energy bills rising anyway, alerted me to the latest marketing pitch from the Pembina Institute. Behind the Swithch, Pricing Ontario Electricity Options is the latest propaganda release. It claims to consider 2 scenarios: in one Ontario's Green Energy Act (rumoured to have been penned by a cabal including Pembina) continues to gut Ontario, and an allegedly worse one where the the legislation is dismantled and somehow a greater reliance on fossil fuels is the outcome. They then make some bad assumptions which serve to deceive Ontario about the impacts, on pricing, the scenarios are expected to have.

The Pembina report notes, in the assumptions for it's first scenario (which is that McGuinty is re-elected and Pembina and Green Energy Alliance co-conspirators continue to write government policy in Ontario), as additional renewable supply comes on line and demand grows, the gas share of the generation mix decline from roughly 15 per cent in 2010 to 8 per cent by 2030.” They fail to account for the low capacity factor in pricing, and in emissions, forecasts. Page 17 (26 of the .pdf) shows a list of natural gas generating sites, 5 of which are the CCGT group I have noted as contributing to the excessive price of natural gas supply in Ontario,1  as the contracts awarded them carry a Net Revenue Requirement of $7900/MWmonth.  The less we use these suppliers, the more expensive supply, per MWh, is. Additionally, CCGT is not constructed to do what Pembina is proposing it must do. The emissions from generation at 8% are likely to be far, far, greater than they have modeled.2, The Appendix has a number of tables loaded with figures that make it clear the authors of the report cannot responsibly estimate pricing, or emissions, with the assumptions they've erred in making.

The assumptions for the second scenario, (McGuinty loses and the GEA, and the FIT programs, are put to an immediate death) are worse. Pembina mistakenly claims “However, both hydropower and — to a much larger extent — natural gas increase their installed capacity as well as their output relative to Scenario 1 as they largely replace wind and solar.” This is nonsense. All the capacity to back-up intermittent wind and solar is already in the natural gas generation capacity.  The replacement is running the CCGT as the intermediate source it is constructed to be, not as the inefficient and costly peaking source, diminished to a supporting role to service intermittent and unreliable generation sources, it is currently forced into.3

The IESO prepares an 18-Month Outlook that will help people understand that, at most, 20% of wind would need to be replaced with additional natural gas capacity. Table 4.1 of the supporting spreadsheet shows winds 'forecast capability at summer peak” to be 189MW, out of 1334MW of installed capacity.  That 14.2% is actually about the mean for wind production during the peak summer months, so the IESO forecast is likely to be optimistic half the time. It is an act of self-delusion, or deliberate deceit, to claim wind capacity would need to be replaced in order to meet demand requirements.

The net impacts on pricing that are predicted in the Pembina report should be ignored, and the report itself can be viewed along with the recent propaganda piece prepared for CANwea, which inadvertenly indicated an increase in emissions after 2015, as Ontario once again drops to become a net importer of electricity.4 This is a strange goal for 2018 - in a report justifying the excessive costs of unreliable generation. Pembina is more careful, but in the end their claims will have the same results. 

The strategy is to add so much generation in the short run, that the economics of adding new baseload sources, especially nuclear, will make the projects unthinkable. They are not only being successful on that front, but a beneficial side affect, for Albertans, has been the blossoming of Alberta's energy interests in Ontario's electricity system. In 2009 and 2010, over half of the wind and CCGT projects the IESO notes as being added to Ontario's generation capacity, are owned by TransCanada, Enbridge or TransAlta:

MW Capacity    Owner
Portlands Energy Centre 550.0    TransCanada Energy Ltd (partner with OPG)
Halton Hills Generating Station 641.5    TransCanada Corporation
Enbridge Ontario Wind Farm 181.5    Enbridge
Talbot Windfarm 98.9    Enbridge
Wolfe Isand Wind Project 197.8    TransAlta Energy

It isn't difficult to see where these 'stakeholders' identified by Ontario's Liberal government are based. All of these projects are protected from the uncertainty of market forces through the lucrative contracts gifted by the McGuinty regime. It is remarkable in a North American electricity environment where prices are so depressed that Ontario has chosen to spend so much on not only unneeded intermittent generation, but more remarkably, Ontario has found the ability to drive up the cost of natural gas generation for it's citizens.

This the Ontario Pembina warns should not change tack.

Everything you need to understand about the Pembina study is on the front page of their report.

Pembina is an oifield.

1 Page 15 of this RPP document 
2 There is some debate, and a wealth of information supporting this statement, at bravenewclimate. Pembina shows emissions figures in the Appendix on page 46, but the figures are useless without calculation at different capacity factors (California is the source of their figures and capacity factors there are not 8% - they are around 30%)
3 Note in figure 10 (pg 18), generation capacity exceeds 40000MW, due to the need to duplicate capacity for renewables as figure 9 (pg 16), shows where peak load kicks in around 20000MW (since 2008, Ontario exceeds 20000MW in demand about 6% of the time - less in 2011 than in the history of the IESO data). Figure 11 should be far lower than figure 10.
4 Drop in accepted emissions estimated for coal and natural gas generation into Appendix 1 of their report.

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