Ford government contracts new solar (and wind) generators

 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.

No hydro was successful in the latest procurement – which hopefully isn’t a statement on separating energy and capacity streams, but that’s another topic.

What’s clear from yesterday’s LT2 contracting announcement is solar has dropped very significantly over the past decade. While it was less than one-third of the LRP procurement, it is over two-thirds of LT2, and the reason is likely that 8.78 is quite substantially less than 15.67!

Aside from wind pricing changing little over a decade, it is also notable that both successful bids are on Crown land – which is very much related to resistance to wind from most municipalities asked to support projects in the run-up to these awards. The Northern Breeze wind project is shown as having participation from the Fort William First Nation, which had opposed a Big Thunder wind project (which had a feed-in tariff contract). When I wrote Big Thunder is a Big Mistake late in 2013, I noted the local opposition, as well as noting the high curtailment in the northwest.

While curtailment, in general, has decreased in recent years, my estimates still show it highest in northern zones – where 95% of the new contracts are situated. If enough money is thrown at transmission, maybe curtailment won’t be an issue