New Nuclear, Replacing Coal, Planning and Prayer

The big news this week on the Ontario electricity front would have to be Bruce Power synchronizing Unit 1 to the grid after a 15 year absence.

"This achievement by Bruce Power is an important step towards eliminating the use of coal fired electricity by the end of 2014.” – Ontario Minister of Energy Chris Bentley

Replacing coal is a mantra in Ontario now.  It's as if one day the Ministers went to Premier McGuinty and said to him
"Premier, teach us to talk to the Press to teach them to perceive intelligence in our energy foibles,"
and the Premier said to them,
When you talk with the press, talk thusly,

"Our actions, which are replacing coal..."

The IESO Gets the Global Adjustment Wrong - Again

Today the final Class B Global Adjustment was posted as being $41.78/MWh.  At the end of August the second preliminary estimate of $28.94 was provided.

I wrote the issues with $28.94 in a 'better estimate' September 1st;  a month earlier I had noted my concern with July's implausible figures in the second estimates for July.

Graphing the variance between what the system operator (IESO) 'estimates' at the end of a month, and what it ends up being after the abacus work is done a couple of weeks later, there looks to be a total disintegration of ability over the past 2 months.

Big Green, not little white, Lies

"The latest quarterly progress report by the Ontario Power Authority on electricity supply in Canada’s most populous province isn’t destined to be on the bedsides of millions of people. But what this dry, chart-heavy document reveals is the plain fact that starting in 2011 Ontario already had 4,125 MW of renewable energy projects operating and 6,255 MW under development thanks the Ontario’s feed-in tariff (FIT) program."

This statement is bullshit.

It comes from The transformative power of the feed-in tariff - Meet Ontario's Green Energy Act, which is written by David Dodge and Duncan Kinney.   David Dodge is "the former communicaitons director of the Pembina Institute."  Duncan Kinney is the "Editor/Production Manager for Green Energy Futures" ... that's "David Dodge's Green Energy Futures," which "is produced with the generous financial support of TD and Suncor Energy."

OPG Q4 2011 Progress Report, Page 5

This is big oily green... and big oily green is lying.

New US Study on PTC Demonstrates Market Damage of Wind Subsidies

Exelon, the USA's 5th largest generator of electricity was kicked out of the American Wind Industry Association (AWEA) last week, for the crime of opposing the Production Tax Credit.  Today came the release of a study commissioned by Exelon: Negative Electricity Prices and the Production Tax Credit: Why wind producers can pay us to take their power - and why it is a bad thing.  The study has a message for the current 'stakeholder' initiatives being played out in the realm of Ontario's Independent Electricity System Operator (IESO):  Wrong Way.

Exelon, long a champion of a carbon tax, generates approximately the same amount of electricity as the total IESO market, and it does so with the lowest CO2 emissions of any of the top 25 generators in the United States (pages 27 and 28 here).  The emissions intensity of Exelon's production is about half of Ontario's, and Ontario's is about one-quarter of Germany's.

Estimating the Costs of Eliminating Coal-fired generation in Ontario

Ontario has had a policy of eliminating coal-fired generation for longer than most Ontarian's remember.  The election of 2003 saw the Liberals promising to eliminate coal by 2007, while the 2 other main parties looked to 2015.   The Liberals won that election, but we are still working towards eliminating coal by 2014.  Every action the government takes on the electricity sector file is sold as a step to replace 'dirty' coal - whether it is referencing wind and solar feed-in tariff (FIT) programs, the contracting of natural gas-fired generation, or the signing of nuclear deals (Bruce 1 and 2 refurbishments).

Recently the allegedly environmental allegedly non-governmental organizations (ENGO's) have been broadcasting that 45% of the global adjustment is due to nuclear (OEB MSP report) - stupidly, or dishonesly, claiming that means 45% of the increase in your bill is due to nuclear.
The value of Ontario's electricity market, for only the commodity (excluding transmission and distribution) is about $10 billion, and whatever amount of that is not collected through market sales, at the Hourly Ontario Energy Price (HOEP), is collected by the global adjustment (GA).  I'll use the global adjustment as a starting point for discussing the cost of Ontario's methodology of replacing coal.

At the End of The IESO 18-Month Outlook: Updated

In a previous post I noted the final paragraph of the previous 4 18-month outlooks from the Ontario's Independent Electricity System Operator (IESO).  Here I add final sections of the 2 outlooks released since that post.
Nothing has changed: the current outlook notes ~3000MW of capacity to come online, none of which shares the 'flexibility' attributes of the coal Ontario is committed to replacing - despite not coherently planning to meet that commitment.

September 2012 - February 2014

...With the forecast increase in SBG, we foresee an increase in out-of-market control actions, such as minimum hydro dispatch and nuclear maneuvers, to be required in order to manage the surplus, extending beyond the typical market action of exports. With wind and solar becoming more prominent resources on the electricity system, the need for maximum flexibility from all resources becomes integral for the reliable and efficient operation of the grid. When variable generation becomes dispatchable, additional flexibility will be available to diminish the frequency of out-of market control actions for SBG.

The existing coal fleet, though running at vastly reduced levels from previous years, provides the IESO with desirable flexibility, such as quick ramping and operating reserve, under all market conditions. As Ontario’s coal-fired generation is shut down over the next two years, its associated flexibility will be lost. Therefore, future capacity additions should also possess this flexibility to help facilitate the management of maintenance outages, provide effective ramp capability, supply of operating reserve and even provide regulation when necessary.

There is no value in Gipe's FiT Tripe

Nowadays people know the price of everything and the value of nothing

-Oscar Wilde 

This week renewables' advocates were citing the German Renewable Energy Agency's compilation of the cost of wind energy across selected countries demonstrating wind energy was cheapest where feed-in tariffs were utilized to procure electricity from wind turbine companies (as opposed more market oriented renewable energy standards/RES quotas).

This shouldn't come as a surprise.  Suppliers in competitive markets need to price risk, and guaranteeing a return on investment clearly removes much of the risk.   That may have provided value to consumers if the risk didn't serve any purpose - but risk is fundamental in how a market establishes value.  The risk to wind suppliers in an RES environment is the uncertainty of pricing, including the possibility of not finding buyers at positive pricing,  For the grid utilities serving customers, the expense from committing to intermittent renewables is not maintaining suppliers to meet demand when called on.

Slide 7, Power Markets of the Future

The German Renewable Energy Agency promotes only renewables; the German Energy Agency (dena) ensures electricity can meet demand.  The German Energy Agency is currently looking closely at capacity mechanisms to ensure that there is enough generation to meet demand.  The graphic shown here was part of dena's presentation at a recent conference on Capacity Mechanisms - meaning how to pay to ensure there is the traditional generation to provide power when it is neither windy or sunny.

Canada's ENGO's Offensive Response to New Regulations for coal-fired generators

Yesterday the Canadian government announced new regulation for coal-fired electricity generators.

The rules, promulgated under the Canadian Environmental Protection Act, 1999 (CEPA, 1999), set a performance standard of 420 tonnes/GWh, which is the emissions intensity level of Natural Gas Combined Cycle technology, the government said—but it is much higher than the of 375 tonnes/GWh limit proposed in the draft rule....
Federal Environment Minister Peter Kent on Wednesday admitted the new rules are "at the high end" of the 360 to 425 tonnes/GWh range that had been considered, but he defended the decision, saying it would avoid putting the "consuming public at risk of inadequate power supply." The 375 tonnes/GWh performance standard “would have been applicable only if, in the coal-fired electricity sector, plants operated at a steady productivity," Kent said. "In reality, plants go up and down in the generation of energy depending on demand."

Power Magazine: Canada Finalizes GHG Rules for Coal-Fired Power Plants

That all sounds reasonably aggressive to me, as Germany's latest coal plant will reportedly emit 13 million tons of CO2 annually, on production of 16 million MW (~800 tonnes/GWh).  This for a plant the German environment minister references as 'state-of-the-art' as he viewed a demonstration of the plant's ability to ramp up and down to match the variation in the output of renewable wind and solar generators (reference here)

The reaction of the groups Canada's mainstream media considers green didn't mention their pet projects necessitate higher emissions from the fossil fuel plants that must accompany renewables.

Ontario's Billion dollar subsidies of Gas-fired Electricity Generation

 "I am against blanket subsidies for fossil energy, which would only increase power prices."

-German Environmental Minister Peter Altmaier, in opposing capacity markets

Subsidies are a difficult thing to define, and quantify.  There are many jurisdictions throughout the world seeking out structures to ensure adequate capacity to meet society's demand.  The issue is of particular importance in jurisdictions that have introduced significant quantities of intermittent solar and wind generation.

When the sun shines and/or the wind blows, wind and solar generators generally have priority on the grid, but even if they did not, they have no fuel costs and could therefore underbid most competing technologies.  Economically, this takes away the visibility of revenues, and operating costs, for the traditional generators that are needed to ensure demand is met.   Some generating systems, such as Texas' ERCOT, are compensating for the lack of visibility by allowing higher spot prices (now above $3500/MWh, or $3.50/kWh) to encourage merchant plants to build for only a few hours of production a year.  Nord Pool is a Scandinavian market that has a strategic reserve mechanism, and a number of American markets contain competitive capacity markets.  Ontario has no open market mechanism, but primarily hidden contracts with private suppliers.  The province - my province - is an example of the damage done by abandoning market principles in secret deals that attempt to outsmart functioning markets.

Better Ontario Electricity Estimates For August

The IESO has posted updated estimates for August's Global Adjustment.
As with July, the 2nd preliminary estimates are unlikely to provide good guidance on the final figures due in a couple of weeks.

The posted 2nd estimate for August 2012

Unlike July, August's mistake appears to me to be a typo, with 38.94 ($/MWh) being entered as 28.94.

July's big discrepancy was in the total pool of money.  A $599 million estimate was reduced to $421.7 million in the final charges.  The reason for the discrepancy being the costs of cancellation of a gas plant in Mississauga, promised during the previous election campaign.  Ontario's Finance Minister noted the costs of cancelling that plant would hit neither electricity rate payers nor tax payers due to the existence of a magical contingency fund (adjective added), but perhaps he did so only in the the proper Liberal government channel (The Toronto Star) without notification of the bureaucracy.