The growing subsidy of wind and solar in Ontario

I was recently asked the amount of subsidies paid to wind and solar generators in Ontario, and felt answering deserved a blog post. I will show that from the introduction to Ontario's transmission grid of the first industrial wind turbines in 2006 up to June 30, 2016, subsidies to wind and solar generators have been approximately $6.4 billion.
More important than the figure, are the trends in annual magnitude and composition.

I have tried not to use the word "subsidy" in recent years - having been guilty of using poorly in the past. However, it's increasingly clear to me that avoiding the "subsidy" discussion has been harmful to Ontario's ratepayers.

In Ontario the word "subsidy" is often quantified by the amount paid for electricity by consumers above the price of that electricity in Ontario's market. The method of recovering that amount is the global adjustment mechanism. The complicated system with huge figures (on track to hit $12 billion in 2016) meant great attention was paid when the Auditor General of Ontario reported, "[from] 2006 to 2014, electricity consumers have already paid a total of $37 billion, and they are expected to pay another $133 billion in Global Adjustment fees from 2015 to 2032." 



However, with all generators in Ontario now recovering some of their costs outside of the market rate, the global adjustment has become a poor tool for defining subsidy. Treating the global adjustment as a subsidy ignores that Ontario's weak electricity market isn't intended to recover all the costs of generation. When the market functions to provide any indication of generator cost, it is usually only the fuel portion of a natural gas-fired generator's expenses. This makes the global adjustment a poor definition of a subsidy - although it's a fine indicator of the poor quality of Ontario's electricity market.

New wind study provides a good argument for nuclear power

Last Wednesday I posted my critique of a wind-water-sun (WWS) fantasy for Canada, which unknowingly coincided with the Canadian Wind Energy Association (CanWEA) release of a Pan-Canadian Wind Integration Study (PCWIS) 1. The PCWIS, primarily prepared by a branch of industrial wind turbine manufacturer General Electric, contains statistical work that should be of interest to those looking at capacity valuation, and its impact on electricity supply mixes. However, the basic data discipline indicated by the study is poor. Unfortunately a rather deep read of PCWIS is necessary to realize how unimpressive the expected impacts of adding industrial wind to Canada's generation mix are.

The main conclusion of the study is that building out the wind industry in Canada does very little to reduce greenhouse gas emissions in Canada.

The study was mostly paid for by Canadian taxpayers via Natural Resources Canada:

 "The project’s primary goal was to obtain insight into the challenges, opportunities, mitigation measures and operational tools needed to efficiently integrate wind energy into the grid. This has been accomplished by undertaking an integration study approach, which involves matching time series modelled wind energy production data with electricity demand data, and evaluating how this influences the rest of the electricity grid."

I'll evaluate the data work for Ontario, although some claims the study makes for other provinces also demand comment.

Wind Water and Sunlight: Jacobson's sorcery

Dreams of a future powered by wind, water and sunlight (WWS) have been spread by Stanford professor Mark Jacobson. Jacobson's work is more optimistic about the contributions to come from WWS than other projections, which may explain an infectious political appeal. In my country the allure of a WWS power supply is impacting Canada's most left political party, the NDP.

SK Premier Wall and Lead Leaper Klein exchange tweets

I've looked at the the WWS work and will demonstrate its shortcomings in Ontario, with the expectation that can be extended to all northern jurisdications. One inspiration for looking at the viability of WWS is opportunistic: Ontario, with a new Minister of Energy, is initiating another Long-Term Energy Plan (LTEP) process. The WWS work provides a test case to run through a data model I created for the previous LTEP planning, and refine my work as necessary.

I won't concentrate on Jacobson's work to nearly the extent of Jani-Petri Martikainen's convincing and entertaining Why does Mark Jacobson hate Finland? or multiple insightful articles at the "A Chemist in Langley" site, including the most recent, Debunking the Leap Manifesto’s 100% Wind, Water and Sunlight Annual Energy, Health, and Climate Cost Savings. I'll attempt to limit myself to briefly discussing how the WWS paper arrived at its supply mix for Canada, and testing that mix within an hourly model - the only way a mix can be rigorously tested.

The April 2016 draft paper from Jacobson and others, 100% Clean and Renewable Wind, Water, and Sunlight (WWS) AllSector Energy Roadmaps for 139 Countries of the World, concluded, "The study finds that the conversion to WWS is technically and economically feasible. The main barriers are still social and political." It's a grand claim for a draft exercise that claims only to,

"[calculate] the number of generators of each type needed to power each country based on the 2050 power demand in the country after all sectors have been electrified but before considering grid reliability and neglecting energy imports and exports."

WWS does not present itself as attempting any hourly modelling of an electricity system, building requirements solely based on total energy requirements for a calendar year.

Ontario's electricity sector performance halfway through 2016

The year-to-date average unit cost for electricity for the typical Ontario consumer (class B) is up 16% from a year ago, while the average market rate (weighted) dropped to only $12.03/MWh.

I've posted less than usual thus far into 2016, but spent more time on database work and related pages at my data site. A lot of that work is for myself, allowing me to take in the latest data in a scroll through a weekly, or monthly, report, but I thought I'd use the halfway mark of 2016 to pull some interesting statistics together that I hope will communicate why I added some graphics, based on more speculative data, to those reports.

If you follow only the numbers the IESO (Ontario's system operator) features on its website, you would find the first six months of 2016 had the lowest total "Ontario Demand" on their records - even using meter data they've made available going back to 1994.


The record low "Ontario Demand" figure is of little real importance, but is useful in illustrating the changes to Ontario's electricity sector. The IESO's "Ontario Demand" is the generation from the suppliers in its system, including generation lost on transmission lines and the consumption of generators themselves. It does not include generation with local distribution systems, and that is the generation growing within Ontario - lessening "Ontario Demand". Better estimates of actual consumption of electricity in the first half of 2016 was down from the same period in 2015 (which was colder - and 2014's winter was colder again), but I find 2016 about equal to consumption in the first half of 2009 through 2013.