Ontario's Billion dollar subsidies of Gas-fired Electricity Generation

 "I am against blanket subsidies for fossil energy, which would only increase power prices."

-German Environmental Minister Peter Altmaier, in opposing capacity markets

Subsidies are a difficult thing to define, and quantify.  There are many jurisdictions throughout the world seeking out structures to ensure adequate capacity to meet society's demand.  The issue is of particular importance in jurisdictions that have introduced significant quantities of intermittent solar and wind generation.

When the sun shines and/or the wind blows, wind and solar generators generally have priority on the grid, but even if they did not, they have no fuel costs and could therefore underbid most competing technologies.  Economically, this takes away the visibility of revenues, and operating costs, for the traditional generators that are needed to ensure demand is met.   Some generating systems, such as Texas' ERCOT, are compensating for the lack of visibility by allowing higher spot prices (now above $3500/MWh, or $3.50/kWh) to encourage merchant plants to build for only a few hours of production a year.  Nord Pool is a Scandinavian market that has a strategic reserve mechanism, and a number of American markets contain competitive capacity markets.  Ontario has no open market mechanism, but primarily hidden contracts with private suppliers.  The province - my province - is an example of the damage done by abandoning market principles in secret deals that attempt to outsmart functioning markets.

Better Ontario Electricity Estimates For August

The IESO has posted updated estimates for August's Global Adjustment.
As with July, the 2nd preliminary estimates are unlikely to provide good guidance on the final figures due in a couple of weeks.

The posted 2nd estimate for August 2012

Unlike July, August's mistake appears to me to be a typo, with 38.94 ($/MWh) being entered as 28.94.

July's big discrepancy was in the total pool of money.  A $599 million estimate was reduced to $421.7 million in the final charges.  The reason for the discrepancy being the costs of cancellation of a gas plant in Mississauga, promised during the previous election campaign.  Ontario's Finance Minister noted the costs of cancelling that plant would hit neither electricity rate payers nor tax payers due to the existence of a magical contingency fund (adjective added), but perhaps he did so only in the the proper Liberal government channel (The Toronto Star) without notification of the bureaucracy.

Wind Dies Down as Solar Growth Accelerates

Being cheap, and a blogger, when I went searching for a data source of European statistics to analyse electricity sector characteristics, my preferred source quickly became ENTSO-E

The European Network of Transmission System Operators for Electricity (ENTSO-E) provides data related to the operation of it's memeber TSOs, and much of the data is available via the data portal on their website.  ENTSO-E acknowledges the limitations of the TSO data, and it's members are to provide information to establish the 'representativity' of the received data to allow for the establishment of more reliable figures (see ENTSO-E .pdf on data issues).

The current data can be downloaded summarized by month, which I have done - and I have summarized that data on a 12-month running total basis.  The graph shows monthly figures as lines, with the scale on the left axis, and 12-month running totals as bars with the scale on the left (doc is here).  The data shows 12-month total wind production is now 2000GWh (2TWh) below the level of 36 months earlier, while solar production is up 15400 GWh at nearly 4 times the level of 36 months earlier - monthly solar production exceeded wind production in March, and the gap has continually widened since that time.

July's Ontario Electricity Price Lowest Since 2010

I told you so.
The IESO posted the final Global Adjustment figures (GA)for July late yesterday: $421.7 million.

That is $177.3 million less than their preliminary estimate of $599 million, but only $38.4 million less than mine.
With my estimates atop my podium, I'll try to reinforce some lessons using July's commodity pricing (class B) of  $67.10/MWh - which is based on an average market HOEP of $33.51, and the freshly released Class B GA of $33.59

• $67.10 is the lowest price commodity since September 2010.
• $33.51 is the highest HOEP figure since July 2011 

The paradox of the higher market (HOEP) rates accompanying the lowest overall commodity charges has been notable in Ontario for some time - and relates to high demand periods (July 2012 being the highest summer demand since at least 2007).

Fact-Checking Ministry of Energy Statement Shows We aren't at 1994 yet

Today the Ontario government posted a news release; "Ontario's Electricity System Can Take the Heat."  There's a couple of 'facts' included in it that should be examined more closely - not only to verify what is said in the release, but to show why wind production looks to be intentionally de-emphasized.

In July, Ontario's electricity system experienced the highest monthly summer demand since August 2007.

The communication states "summer" because January 2007, 2008 and 2009 were all higher - the IESO figures also indicate July 2006 was the last summer month with greater demand, but that's probably a deficiency in their inability to report on solar generation coupled with their inability to report actual metered demand.

Looking at the monthly generation chart for July 2007 (page 17 here), generation from coal and natural gas ("other" in the chart) are approximately 3.45TWh, or roughly 200GWh less than the generation from coal and gas-fired generation in July 2012.
We seem to have burned more fossil fuels generating electricity in July 2012 than we did in 2007

Vampire Turbines In July

I recently read an entry on Wayne Gulden's Wind Farm Realties website reviewing some figures for the Vestas V82 - 1.65MW capacity industrial wind turbine. The statement that stuck with me was:

... when the wind doesn’t get above 3.5 m/s – typically there’s a MINUS 50kw of production. This is power that must be supplied from the grid just to keep the turbine in business. And 50kw seems to be what the turbine uses to stay alive in good weather. In the winter it gets slightly higher – the highest negative numbers were in the 80 kw range.

I decided to investigate the performance of an industrial wind turbine project in Ontario comprised of 110 of the Vestas V82 turbines; Enbridge's Underwood turbines in Bruce County.

110 turbines potentially each drawing 50kW means that at times when all Enbridge's turbines are still, the draw would be ~5.5MW.  In the parlance of the Ministry of Energy, and the renewables lobby, a draw of 5.5 MW is enough to prevent power being provided to over 4000 homes.

In Ontario, we know that wind is least productive in July - so the topic of how much "parasitic" load is present when turbines are unproductive is particularly relevant here.

July Electricity Stats: Mild Demand Growth and double-digit inflation

Data from the Independent Electric System Operator (IESO) indicates July 2012 saw mild demand growth, over July 2011, of 1.2%, while prices look set to rise ~13% for Ontario's businesses.  Regulated price plans had already been set 10% higher. The Hourly Ontario Energy Price (HOEP), with a weighted average of ~$33.65/MWh is 8% lower than in July 2011, leading to the likelihood exports were sold at a lower rate.

These figures, and others, are shown in the preliminary monthly report now posted on the Cold Air Data Site (the weekly report, and the monthly supply cost estimates, are also updated)

The rise in price (from $64.97 to the preliminary estimate of $73.93/MWh) is far higher than my estimates indicate, and far outside the normal variance.  At $599 million, the global adjustment is shown as increasing $207 million over July 2011, while the amount recovered by sales at the HOEP rates dropped about $43 million.  This is extreme even in 2012's Ontario.

I have fought the growing trend to refer to the global adjustment as a tax, but it is becoming murkier each day; as lawsuits are suddenly settled and revelations indicate net revenue requirements for natural gas generators have been drastically increased, it is increasingly desirable to have better disclosure on how the GA pot is being calculated, and allocated.

Rebuttal to Ontario Clean Air Alliance (OCAA) Latest Paper on Closing Public Power Plants

Rebuttal to Ontario Clean Air Alliance (OCAA) “Ontario’s electricity surplus: an opportunity to reduce costs”

The introduction to the OCAA report notes that demand is likely to continue to decline, both in annual consumption and peak consumption.  Parker Gallant and I wrote on where previous declines were - and they were largely in the loss of Ontario’s largest power users, also known as industry.  The OCAA cites page 335 of the North American Electric Reliability Corporation’s 2011 Long-Term Reliability Assessment (November 2011)  in claiming that Ontario’s electricity consumption and peak demand will continue to fall until at least 2021.     
Page 338 states that growth rates to 2021 are expected to average -0.1%, but reality notes the peak demand exceeded the IESO's expectations in 2011 and 2012.  

“I don’t know” is as valid a forecast as any, and page 343 shows the ability to meet NERC’s on-peak reserve margin requirements will be strictly conceptual in the near future.