Yesterday Ontario’s electricity system operator (IESO) announced its first procurement of grid-scale solar, and wind, generators in over a decade. The reported average price of $87.80 per megawatt-hour is presented as attractive in a historical context, but analysis reveals a far different trend for wind and solar within Ontario.
The government’s press release following the IESO publishing results of its “Long-Term 2 Energy Supply (Window 1)” procurement (LT2) includes:Unlike the former government, Ontario is following the Auditor General’s recommendation on competitive procurements resulting in a 73 per cent cost reduction for ratepayers when compared to the previous Feed-in-Tariff contracts and 21 per cent lower than the Large Renewable Procurement (LRP). These results have proven more affordable than similar procurements in comparable jurisdictions across North America…There’s a few reasons to wince at this boasting. Regarding pricing across places and time, it is not unimportant that the federal government introduced Investment Tax Credits (ITCs) and Accelerated Capital Cost Allowances (ACCAs), benefiting the latest pricing. More notably, if the results are 73% below the awful Feed-in-Tariff (FIT) contracts of 16ish years ago, but only 21% below the LRP of a decade ago, that’s a pretty good indication the previous Wynne government had acted on pricing.
Shortly after achieving power the current governing party, under Premier Doug Ford, cancelled the contracts from the previous government’s last procurement (LRP-Large Renewable Procurement). From the March 2016 announcement of the LRP results:
- five wind contracts totalling 299.5 MW, with a weighted average price of 8.59 cents/kWh;
- seven solar contracts totalling 139.885 MW, with a weighted average price of 15.67 cents/kWh; and
- four hydroelectric contracts totalling 15.5 MW, with a weighted average price of 17.59 cents/kWh.
Yesterday’s announced price is 8.78 cents/kWh, which is quite similar to 8.59 cents/kWh: although they come a decade apart, and there is a time-value adjustment that ought to be made, there is also the increase in federal incentives for project developers. Wind pricing is little changed.
