regarding Ontario Electricity Generation and Costs, 2007 - 2015

This week I was handed some data indicating, by supply type, electricity generation and costs in Ontario. The data was a hard copy response of the IESO to a freedom of information request. There's nothing in the data that will surprise readers of my work, but perhaps it's time for a refresher, as today I read one flip comment by a mainstream journalist, joking they'd like to see "Ontario families can no longer afford skyrocketing nuke costs," and an opinion piece on the public broadcaster's site which included:

...as data from the [International] Electricity System Operator clearly shows (sic), it’s nuclear and gas plants that are responsible for the lion’s share of increases. 

"Clearly."
It is time for a refresher.

Some background on the data I'll share. The 2015 Annual Report from the office of The Auditor General of Ontario included a chapter on "Electricity Power System Planning." The entire chapter contained a wealth of information and continues to be cited frequently, but for those chasing hard numbers one particular star of the work was a figure revealing the quantity, and cost, of generation from various sources, inclusive of not only the larger generators frequently reported by the IESO (the "I" is not for international, but it is the electricity system operator), but also the seldom reported distributed generation - which is where most solar exists.

The freedom-of-information requests handed to me included this request:

Breakdown of Generation Cost by Energy Sources for the years 2007, 2008, 2009, 2010, 2011, 2012, 2013 and 2015. The Breakdown for 2014, which was included in the Annual Report of the Auditor General of Ontario, is attached as reference.

The data table that follows responds fully with the request - I have only reformatted it:

Solar: Ontario's Base-Value Power

What is the generation source least valued by Ontario's electricity market in 2017?

That is the question I asked on twitter the other day. I know it's not the most serious format, it's a small sample size, and my running the poll means there will be selection bias in the responses. I did invite others with different views of the energy world to share it - but they did not.

I got some feedback that the question was unclear. While there are multitudes of factors impacting/corrupting the metric, this question is precise. The IESO allegedly operates Ontario's electricity market, they do publish summaries for hourly generation by fuel (xml format) and they do publish an Hourly Ontario Energy Price (.csv format).

The least valued "fuel" - or generation source - this year as the 22nd of June, is the lowest valued by a big margin, lying 29% below the next least valued.

The lease valued source is the source least expected to be the least valued.

The least valued source is solar.

Which shouldn't come as a surprise. 

I'll briefly review the theory, put Ontario's experience in a broader context, and finally cherry pick one day to examine. Cynics may be surprised the day is June 12th, which is the highest demand day of 2017.

Nuclear Ontario - and giving electricity away

first posted on cold air currents.

Since I posted Reliable Electricity Generation Capacity declining in Ontario the IESO's NPCC 2016 Ontario Interim Review Of Resource Adequacy was published.
It's exciting stuff:

The Independent Electricity System Operator (IESO) submits this assessment of resource adequacy for the Ontario Area in accordance with the NPCC Regional Reliability Reference Directory #1, “Design and Operation of the Bulk Power System.” 

Spoiler alert!
The report concludes Ontario's system can meet Loss of Load Expectation (LOLE) criteria for the 2017 to 2020 planning period once Emergency Operating Procedures (EOP) are assumed. EOPs are indicated to be essentially 1/3rd public appeals to reduce consumption, and 2/3rds voltage reductions.

Phewff.

I wrote "With the exception of 2013 the capability at peak has declined every year since 2010, despite IESO-connected generator capacity being greater now than it was six and a half years ago," so I thought it only fair I offer a brief analysis of how the IESO is meeting the reporting requirements for resource adequacy - and the repercussions of how they are doing so.

Reliable Electricity Generation Capacity declining in Ontario

Ontario's electricity sector provided some material worthy of commentary over the past week.

A new 18-month Outlook issued by the IESO (the province's system operator) begins cheerfully enough:

The outlook for the reliability of Ontario’s electricity system remains positive for the next 18 months, with adequate generation and transmission to supply Ontario’s demand under normal weather conditions.

This is reassuring - unless there's a particularly hot run of weather:

Under extreme weather conditions, the reserve is below the requirement for 19 weeks over the entire Outlook period, with the largest shortfall being approximately 3,000 MW.

19 weeks in 18 months is 24% of the time - corresponding with the quarter of the year known as summer. In a province introducing carbon pricing in January (poorly), apparently the government is unconcerned about local warming.



There has been similar language in previous 18-month outlooks:

During the Outlook period, the...forecasts show that Ontario’s available generation exceeds projected demands...there are periods when Ontario’s available reserves are forecast to be ...below the IMO’s required planning reserve levels.

That from the Outlook produced in April 2002.

I'm sure today's Wynne government finds comfort in how well Ontario's system coped with heat waves in 2002 and 2003 - despite their braying indicating the opposite.

Ontario Energy Minister Previews Long-Term Energy Plan Themes

"I've really come to respect the enormous complexity of the energy and electricity system in Ontario."

Ontario's rookie Minister of Energy, Glenn Thibeault, is now confident enough of his grasp of the province's energy system that he unveiled themes for an upcoming Long-Term Energy Plan in a speech to the Empire Club:

1. Nature and style of procurement should be technology agnostic
2. Ontario's electricity market renewal/reform to provide better value
3. Empowerment of consumers

These are ambitious themes. Unfortunately Minister Thibeault didn't display an understanding of the institutional barriers to change, and he's going to need to confront the demons of the sector before meaningfully advancing any of these goals.

He seems to expect the barriers to deliver change.

Fixed: Ontario's electricity relationship with Quebec

Ontario's government, keen to appear responsive to public anger at electricity pricing, has announced an agreement to fix one aspect of the supply system currently working well.

Ontario and Quebec announced an electricity agreement guaranteeing Ontario 14 million megawatts-hours of imports from Quebec over the next 7 years. Compared to Ontario's other electricity contracts, this deal looks attractive at first glance. Looking closer the deal is less attractive,and putting the deal in the context of Ontario's move away from public power, at cost, to what was intended to be a competitive market system, it may be the most ridiculous contract of all.

The agreement, according to Ontario's press release, is for:

1. energy capacity,
2. trading electricity, and
3. energy storage.

All 3 aspects of the agreement exist already, due to the realities of electricity supply and demand in the two provinces, and previous initiatives connecting the systems.

The capacity arrangement, securing rights to supply for peak demand hours, is technically convenient. Quebec has a very high winter peak demand, due to electric heating. They have a system designed to do that - but more capacity on the coldest days is desirable. Ontario's demand peak is usually in summer - and more capacity for that is desirable. Since April 2011 I've captured hourly intertie movements - and looking at each subsequent season's top 10 daily peak hours, its evident Ontario is a net importer from Quebec during the highest demand summer days, and usually an exporter during the highest demand winter days. While this relationship has existed, and would continue to exist, without an agreement, there are capacity reserve tests requirements enforced by the North American Electric Reliability Corporation (NERC), and this formal agreement should be useful in meeting those requirements.

Increased electricity ties with Quebec have long been recognized as having benefits. Significantly, late in 2006 an agreement was made to expand the connections between the two provinces by 1,250 megawatts, and the completion of the work allowed for greater trade by 2009.

2015 Ontario Electricity Data Summary Part 1: the basics

I'm hoping to produce 3 posts for the new year. This one will be more familiar for long time readers as I try to keep it constrained to data that is freely and widely available. A second post will use my estimates of additional data to provide a fuller illustration of that state of Ontario's electricity sector in 2015, and the other will hopefully be more disruptive, connecting data to provincial, national and international events and personalities.

Ontario's simplest electricity data is hourly data from Ontario's electricity system operator (IESO) for demand, imports, exports and Hourly Ontario Energy Price (HOEP). Using only this hourly data annual "Ontario Demand" is indicated as lower than it's been since the market opened in 2002 - and using other data available on the IESO site the demand is lower than it's been for over 2 decades.

Curiosity took me back to a graphic in my first blog post, in 2010, which confirmed it has been a full quarter of a century since Ontario's generators produced less than the 137 million megawatt-hours (MWh) the IESO shows as "Ontario Demand" in 2015.

Ontario Generation is calculated, in the graph above, from the base IESO data as "Ontario Demand" plus "exports" less imports. As that generation exceeded provincial demand by more than ever in 2015, it's not surprising the weighted average market price (HOEP) set a record low at $23.58/MWh.

Record low pricing was accompanied by record high exports. Valued at hourly rates (except when negative after the banning of negative priced exports) revenues from exports look to have been 56% lower than in 2008 - the previous record export volume.

Sir Adam Beck is dead: The Gifts of Nature have been taken from the public

The Adam Beck Memorial.

dona naturae pro populo sunt

-the gifts of nature are for the public-

Early in the 20th century, Adam Beck lobbied the Premier, from his position as a Conservative Member of Provincial Parliament, for a commission to investigate the electricity sector.  An advocate of public ownership in the sector, a century later Sir Adam Beck has Ontario's largest hydroelectric facility bearing his name, and his statue sits prominently in Toronto surrounded by iconic structures housing iconic organizations - including Osgood Hell, the Four Seasons Centre for the Performing Arts, and the Bank of Canada.

I hope the iconic institutions surrounding his statue endure better than Beck's legacy has.

My previous two posts have demonstrated the global adjustment mechanism measures the dysfunction of the market, and that large, and increasing, capacity payments are serving to drive down the market price (HOEP).  This post will show how the reduction of the HOEP, and the global adjustment mechanism, have combined to take the benefits of public hydroelectric facilities away from the public, and distribute them to the private entities awarded contracts by the McGuinty government.

Week 26 Reporting: Nuclear productivity highs and continued pricing woes

I've had a lull in posting as I am developing some more reporting on my data site to support future blog posts.
Here's a post to indicate how my Weekly reporting demonstrates the supply mix, pricing, and export issues frequently noted on this blog - and increasingly elsewhere.

Weeks 25 and 26 are amongst the highest demand weeks of the year.  Peaks are far higher than in January, but total weekly consumption is yet to surpass week 3.

Summer is now our peak (hourly) demand period, which should raise some supply requirement issues.  During the highest demand week in January, peak demand was ~7000MW above the minimum demand for the week.  During the heat of week 25, demand rose to ~12000MW above the minimum demand for the week (essentially doubling the week's minimum demand).

Estimating Costs in Ontario's Electricity Sector

I haven't posted lately as I've revisited data to provide improved estimates of a number of entities in Ontario's electricity system.  I've tried to do so in a manner that can be easily updated, and written some descriptions of the process, in a lengthy entry at my data site (users with slow connections are warned).   Since I've put the time in building the data structure to support posts, I'll grab some of the data to illustrate the types of figures that can be produced, albeit as estimations with imperfect data, depended on a number of assumptions.

The cost of supply is broken down based on known information on contracts with suppliers.  Some of these contracts pay for capacity (Cpcty) in different formats. The average pricing for 2011 is shown below.  Also shown is graphing of each 'fuel' generation type as a percentage of supply, and of cost (if it's cost share is greater than the share of generation, it's more expensive than average)

Fuel	Rate_Output	Rate_Cpcty
Nuclear	$57.05	$0.00
Hydro	$36.47	$0.00
Gas	$63.58	$24.44
Coal	$37.66	$75.27
Imports	$36.23	$0.00
Wind	$135.00	$0.00
Other	$115.77	$112.82
Solar	$500.00	$0.00
Unknown	$28.40	$0.00
TOTAL	$55.85	$6.41

New Year, Same Stories, Old Professions

 Goodbye 2011.

This blog was new as 2010 turned to 2011. My first post of 2011 noted huge exports in December of 2010, negative pricing records for January 1, 2011, and record wind production in hour 21 of January 1st. It took about a week before the first reporter picked up on the subsidized exports story, which generated some interest in the mainstream media (MSM). Remarkably, in hour 18 of January 1st, 2012, wind would again set a production record (1633MW).

Comparing the immediately available data for New Years' Day 2012 to the 2011 data, we see why the price disaster of 2011 was curtailed, to only intermittent periods of negative pricing, this year.

Nuclear was idled: one unit at Darlington just for this weekend (we'll see if they get it back up for tomorrow's deep freeze), and one at Pickering they seem to have decided not to bother with this season (a Bruce A unit is also offline for a fairly substantial project).

Net Imports are only up compared to last year: 1/1/2012 we were still a net exporter - of over 1000MW/hour

Ontario’s Electricity Policies Bite Into Municipal Budgets

I read an article in the newspaper the other day that began; “The skyrocketing cost of lighting city streets is the result of Ontario Energy Board (OEB) rate changes, city councillors were told Monday.”  The previous week the same council had heard of $130,000 associated with annual electricity bills for the new local twin-rink.  I hadn’t dwelled on it until I read it out loud to a visiting relative; “Street lighting costs are budgeted to increase to $645,500 next year, an increase of 41% since 2009.”  Then the nickel dropped – duh!  I’d written, a week earlier, “OEB Hikes Electricity Rate … 41% in the Past 2 years.”  

Winter 'Years' starting Nov. 1 (ie. 2011 is Nov. 1, 2010, to April 30, 2011)

The two figures shouldn't match.  My understanding was that the Municipalities, Universities, Schools and Hospitals, known as the MUSH sector, were no longer offered regulated rate plans.  They are to pay the actual rates (Hourly Ontario Energy Price -HOEP), with the global adjustment (GA) mechanism applied to ensure recovery of all generation costs (plus a couple of  other things).  The story I read claimed the that, "the number of connections, not the amount of power used, has the greatest impact on cost..."  Regardless of the reason for streetlight costs escalating at the same rate as residential off-peak rates,  some investigating shows rampant contracting of supply, facilitated by the global adjustment mechanism, is destroying the attempt to differentiate off-peak rates in both the regulated consumer market, and the wholesale market.

Value, LUEC Limitations, And FiT Failure

The comparative value of  of each generation source in Ontario’s electricity system is measurable.  I’ve written on this before, and recently read a couple of encouraging articles noting the shortcomings of the LUEC (levelized unit energy cost), or LCOE (levelized Cost Of Electricity) tools in evaluating electricity generating technologies.[i]   Presenting some of the data I’ve collected, in a slightly different way, will emphasize the need for a value analysis that also considers the supply mix, and demand characteristics..  The analysis indicates Ontario’s recent electricity planning foibles will not provide a low-emissions, sustainable, electricity supply.

September Stats: Preliminary Ontario Electricity Figures

A quick overview of some stats, for September 2011, along with some views of the data not included in the IESO monthly reporting.   I offer these only as my own calculations based on freely available data from the IESO site.

Mistakes in the data may be my own ... but it's unlikely.

Accounting And Ontario's Electricity System: A Farce

People are trying to make sense of the record low electricity price Ontario achieved this Sunday.  I wrote about it Monday morning, but most are getting their information from other sources, including the Toronto Star– and these source don’t seem to working with any foundation in accounting.  I have some experience with ‘retail math’ – which is probably about a grade 7 level of math. I combined unease with my qualifications, my interest in technology and theories of education, and my occasional feeling I should take a more active interest in my children’s schooling, and brushed-up on my accounting with some lessons at the Khan Academy (which I learned of in a recent column by Margaret Wente). 

Sunday Sees Record Low Pricing in Ontario’s Electricity Market

The official daily report from the system operator shows August 28^th’s  an average HOEP at $-22.58 (weighted average of $-17.53/MWh).  This is the lowest average price throughout a single day on record – breaking a record set only January 1^st.  

Searching For Value in Ontario's Electricity System

I'm constantly amazed how difficult it is to underestimate the value of generation from industrial wind turbines.

I have queried hourly generation data by source 'fuels' to demonstrate the 'value' of the various sources. I was inspired to do so while writing my previous post, which calculated average hourly rates of imports/exports for different jurisdictions. Quebec was much more expensive power to import, but that was because we imported from Quebec at more expensive times. I concluded that was because Quebec could run off cheap imports at night to run as little water through the hydro turbines as possible, and run their hydro turbines during more expensive daytime periods for . Using the same process, with another data set, wind is demonstratively the least valuable source in Ontario.

10 for 10: Ontario's Surplus Baseload Generation

The latest SBG report shows there are only 10 hours during the next 10 days when Ontario is capable of not producing too much supply for Ontario's market.

Over the first 130 days of the year, Ontario's net exports grew 50% from last year, while the market price (HOEP) dropped 8%.  The variance between the price Ontarians pay, and exports, is the global adjustment.

In 2011 this means export customers have paid approximately $143.8 million dollars less than Ontarians would have paid for the same amount of electricity (3,745,460MWh of net exports at $38.39/MWh).

Price of Ontario's Electricity Policies Hits New High In April

The Global Adjustment rate for April is $43.89/MWh, which is the highest it has ever been. The reality of the mess we are in is being hidden by the mainstream press deflecting the blame from the government, such as Metro Martin's, “a small proportion of the recent hikes can be attributed to subsidies, for the simple reason that few renewable energy projects are up and running yet.” At The Globe and Mail, Adam Radwanski toned down the not-due-to government policy theme so trendy in the media hub of Toronto; “Mr. Hudak stands to capitalize on pocketbook angst over rising energy prices for which green projects have (to an exaggerated extent) been blamed.”

Exaggerated eh?

Ontario's Surplus Baseload Generation Forecast Skyrockets

The IESO describes Surplus Baseload Generaton (SBG) as, “a condition that occurs when electricity production from baseload facilities is greater than Ontario demand. There are limited options available to lower output from baseload generators in order to maintain the balance between supply and demand. It is expected that incidences of SBG may increase as Ontario's supply mix continues to change. “

It is expected, because it is planned!