The Cost of Wind

The Real Costs of Wind Generation in Ontario

In 2011 I wrote a series of articles inspired by, “The Impact of Import Dependency and Wind Generation on UK Gas Demand and Security of Supply to 2025,” from The Oxford Institute for Energy Studies. 

Part 1: Excessive Wind Power Generation in Ontario

This introduces the project, which is driven by data modelling. The UK study noted gas capacity, and production, would change little as wind was added to the UK's grid. Here I replicate some of the same graphs in an Ontario context - the first two indicate all this is already known, as the wind already appears treated as 'extra' supply.

Part 2: Ontario's Bizarre Industrial Wind Strategy

This post explains Ontario's supply mix plans, and indicates how intermittent sources are particularly problematic in our system due to extremely high baseload generation as a share of total generation.

Part 3: Industrial Wind, SBG, $3.3 billion ... and more

This post explains Ontario's relatively unique problem of surplus baseload generation (SBG), and is the first post with figures derived from hourly modeling of generation, and Ontario demand, through 2022. The post establishes the price we will pay either to halt wind production, other baseload production, or to buy power only to dump it on export markets.

Part 4: The Cost of Wind Generation: Bumping Hydro and Duplicating Capacity

This post explores the hydro production that will either be spilled, or require a halt to wind production to continue. To estimate this, the hourly model needed to allocate available hydro potential. The one outcome is the amount of hydro available to allocate that is not needed as wind is added to the supply mix - the other is the determination of the hourly generation requirements not met by nuclear, hydro, other baseload sources, and wind.

Part 5: Capacity Markets and $263/MWh IWT Output

This post explores the economic concepts required to model the additional costs of peaking capacity that is desired to have very low utilization rates.

RELATED Subsequent Articles

Billions at Stake In Feed-In Tariff Contract Fine Print

In June 2006 I reran the database with updated capacity forecasts based on updated Ontario Power Authority, and Ontario Ministry of Energy, information.

The point of that article was to prevent the Minister of Energy from simply handing over billions be ensuring payments for curtailed supply.

That Minister of Energy did not make that guarantee.

Sadly, that responsible non-action did seem to mean that instead of being the next Premier he exited politics early in 2012.

RELATED - International Studies/Reports

The Market Value of Variable Renewables | Lion Hirth (backup copy)

The paper has extraordinary interesting claims in evaluating the value of variable renewalbe energy supply at different penetration levels.

Abstract

This paper provides a comprehensive discussion of the market value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the market (market value). During windy and sunny times the additional electricity supply reduces the prices. Because the drop is larger with more installed capacity, the market value of VRE falls with higher penetration rate. This study aims to develop a better understanding on how the market value with penetration, and how policies and prices affect the market value. Quantitative evidence is derived from a review of published studies, regression analysis of market data, and the calibrated model of the European electricity market EMMA. We find the value of wind power to fall from 110% of the average power price to 50–80% as wind penetration increases from zero to 30% of total electricity consumption. For solar power, similarly low value levels are reached already at 15% penetration. Hence, competitive large-scale renewable deployment will be more difficult to accomplish than as many anticipate.

Nuclear Energy and Renewables: System Effects in Low-Carbon Electricity Systems | OECD/Nuclear Energy Agency (Executive Summary)

Description

This report addresses the increasingly important interactions of variable renewables and dispatchable energy technologies, such as nuclear power, in terms of their effects on electricity systems. These effects add costs to the production of electricity, which are not usually transparent. The report recommends that decision-makers should take into account such system costs and internalise them according to a “generator pays” principle, which is currently not the case. Analysing data from six OECD/NEA countries, the study finds that including the system costs of variable renewables at the level of the electricity grid increases the total costs of electricity supply by up to one-third, depending on technology, country and penetration levels. In addition, it concludes that, unless the current market subsidies for renewables are altered, dispatchable technologies will increasingly not be replaced as they reach their end of life and consequently security of supply will suffer. This implies that significant changes in management and cost allocation will be needed to generate the flexibility required for an economically viable coexistence of nuclear energy and renewables in increasingly decarbonised electricity systems.

Possible Consequences (in Ontario) of Reporting

Hundred of millions of dollars kept by Ontario's Ratepayers noted savings from a slowdown of planned intermittent/renewable generation (in January 2013), and a March 2013 post at the Tom Adams Energy site, including information from an Freedom of Information request, confirmed savings were occurring: Ontario Electricity System Operational Update #7: Green Energy, Cold Feet