Thursday, February 28, 2013

A questionable 18-month outlook from Ontario's system operator.

Ontario's Independent Electricity System Operator today released it's latest 18-Month Outlook - a document they update regularly, and I've written on regularly.

This one strikes me as less than coherent - some of the illogical content deliberate, and some irresponsibly unnecessary.
The supply advice going forward does not match the comfort level with the supply picture during the reporting period.

September 2012's report finished with:
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.
Today's finishes with
As Ontario’s coal-fired generation is shut down over the next year, its associated flexibility, such as quick ramping and operating reserve, will be lost. Therefore, future supply options, demand response programs, and storage solutions should also possess this flexibility to help facilitate the management of maintenance outages, provide effective ramp capability, supply operating reserve and even provide regulation when necessary.
From that it seems like ~3000MW of coal-fired capacity recently slated for closing at the end of 2013, halfway through the new outlook period, would be problematic.

Not so says the IESO:
Ontario will continue to have adequate generation and transmission capability to meet consumers’ needs over the next 18 months.
Or we won't ...  the same document that indicates future supply needs to have the characteristics of the coal-fired generation being removed now also notes demand is not expected to increase while a whole lot of additional intermittent capacity is anticipated coming online ... maybe.

First the demand.  The IESO notes:
Ontario continues to experience growth in both embedded generation capacity and participation in conservation initiatives. Conservation reduces end-use consumption while embedded generation simply offsets it, both leading to a reduction in the wholesale demand measured by the IESO.
Note that when the IESO says demand, they don't mean demand.  That's unfortunate as they house an enormous data repository of expensive metering data, and just renewed a rather large contract for services related to it.   If they IESO can't report demand as anything other than the sum of all the supply on it's grid, it is inept.
Contracts for solar are expensive, and solar may have a relevant capacity value during summer peaks.
These are important reasons to report on the data for that embedded generation in a meaningful manner, instead of dumbly implying some amount of supply will prevent demand from being reported for at some times.

Conservation initiatives are a hot topic in the sector, and thus the target of every confidence man in North America.  The IESO should remove the muddying influence of embedded generation in order to see the real, or reveal the false, reductions in consumption.

On coming capacity, the IESO's news release states:
By August 2014, total wind and solar generation connected to the province's transmission and distribution systems is expected to reach approximately 6,800 MW and produce approximately 14.9 terawatt-hours (TWh) of energy annually.
Table 4.2 in that actual outlook provides a somewhat different picture of things.  Of the ~3250MW of capacity that is "Considered" only 509MW is considered "firm"; of that 215MW has been operating for over a year and the IESO, or the proponents, haven't managed to get the paperwork done to indicate commercial operation status has been reached.

The table therefore shows firm additions of 294MW and the firm removal of 3000MW of coal-fired capacity.  The remaining "capacity considered" is planned; most of it is wind and most of it is unlikely to reach commercial operation by the time the feed-in tariff (FIT) contract requires commercial operation status to be achieved.  At a quick glance, Goulais, Bow Lake and White Pines all have "estimated effective dates" more than 4 years after FIT contracts were offered (originally the period was 3 years - an extension of 1 year was likely offered to all by the OPA); Dufferin and Port Dover and Nanticoke were expected in one year one year ago - they are still expected in one year.  Very few of the wind projects would receive financing if the perception was that the government would respect ratepayers by enforcing the contract periods.

Currently the government appears to be for sale and probably would dishonour the obligations to ratepayers implied in contracts while giving wind companies carte blanche, but the current government doesn't look particularly stable.

Regardless, somewhere between 215MW and 3500MW may be constructed after the IESO figures the supply is sufficient and demand is not increasing.

Why that would happen is one puzzling question.

Why we would need coal's attributes in more generation after that is a second question.

I suspect the answer is that the need for generation with coal's attributes would be desirable to compliment all the unnecessary intermittent generation also being procured; Ontario following the German path to higher expense, and emissions, that I wrote on 17 months ago in Germany's Will To Power.

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