Electricity Sector Lessons from Ontario and Germany

Germany's electricity sector performance during 2012, the first full year of its Energiewende, provides warning signs to Ontario; Ontario's bloated Global Adjustment mechanism provides a warning to Germany - both provide warning signs to other countries experimenting with their electricity sectors.

Ontario's electricity policy has been linked to Germany's since David Suzuki introduced the anti-nuclear crusader Hermann Scheer to Dalton McGuinty in 2008.  The meeting was reportedly instrumental in Ontario developing it's Green Energy Act (GEA) and feed-in tariff (FIT) programs  When the Liberals fought for re-election the main Liberal propaganda paper, the Toronto Star, provided space to German "Green" Politician Jürgen Trittin to advocate for continuing down the garden path with the Liberal Party of Ontario.

Trittin and Scheer are considered founding fathers of 2000's German Renewable Energy Act, which effectively connected feed-in tariff (FIT) contracts with the mechanism to recover the costs of those contracts from consumers.  The mechanism, a per kilowatt charge on bills, is known as the EEG umlage, or simply as the EEG after the act itself (Erneuerbare-Energien-Gesetz).   Industry is broadly exempted from the EEG umlage, leaving households and smaller commercial enterprises to bear the full difference between the contract FIT expenses and the recovery of those costs on the markets.

The return of the Ministry of Lies, and other weekly electricity sector news from Ontario

This week a series of reports related to Ontario's electricity sector were released

The most prominent of these was probably a report written by Economics Professor Ross McKitrick released by The Fraser Institute, titled Environmental and Economic Consequences of Ontario's Green Energy Act.  The Canadian Wind Industry (CanWEA), the Environmental Commissioner of Ontario, and Ontario's Minister of Energy Bob Chiarelli all provided responses to McKitrick's study.   
I've already written much of what I'd like to communicate on these topics, but I'll revisit some old posts due to alarm that Chiarelli's comments indicate the grandfatherly figure is installed to return to the structured campaign of lies that his predecessor, Minister Bentley, had the courage to curtail.

McKitrick's report claims 3 main finding:

1. It is unlikely the Green Energy Act will yield any environmental improvements other than those that would have happened anyway under policy and technology trends established since the 1970s. Indeed, it is plausible that adding more wind power to the grid will end up increasing overall air emissions from the power generation sector.
2. The plan implemented under the Green Energy Act is not cost effective.  It is currently 10 times more costly than an alternative outlined in a confidential report to the government in 2005 that would have achieved the same environmental goals as closing the coal-fired power plants.
3. The Green Energy Act will not create jobs or improve economic growth in Ontario. Its overall effect will be to increase unit production costs, diminish competitiveness, cut the rate of return to capital in key sectors, reduce employment, and make households worse off.

These are all plausible claims.  Problematically, the Green Energy Act (GEA) has accomplished very little in the 4 years since it passed, and McKitrick confuses the cost of similar policies introduced starting in 2003 with the GEA.
We do have a data history to support McKitrick's claims, but that data history isn't a result of the GEA.

Killing Time: Ontario's Feed In Tariff

An industry, of sorts, is gathering in Toronto today and tomorrow for a "feed-in tariff forum".  It's a good time to reflect on the procurement mechanism's history in Ontario; doing so will shed some light on what type of industry holds a forum around a power purchase agreement (PPA) tool.

The feed-in tariff mechanism was imported from Germany during George Smitherman's passage through the Minister of Energy's office in 2009.  Early in 2010 there was an attempt to kick-start the industry with a massive 2500MW contract awarded to a Korean Syndicate.  The earliest FIT contracts we had details on came on April 8th, 2010, when Ontario awarded it's first large batch of feed-in tariff (FIT) contracts (also ~2500MW).

The subsequent passage of three years is relevant according to the template FIT contract the Ontario Power Authority (OPA) shows as being in effect during April 2010 (version 1.3)

2.5 Milestone Date for Commercial Operation
The Supplier acknowledges that time is of the essence to the OPA with respect to attaining Commercial Operation of the Contract Facility by the Milestone Date for Commercial Operation set out in Exhibit A 

...

Exhibit A ...1.2 Technology-Specific Values(a) The Milestone Date for Commercial Operation is the date that is three years following the Contract Date

So how has the industry done 3 years later, realizing the "time is of the essence"?

Lousy.

Lower class treatment for the home unit

The mainstream media has dutifully been moving from inaccessible technical units for power, such as the MWh, to a friendlier unit called the "home."

"LS" Computer model greatly embellishes (ie. some portions don't exist)

I have a home.
I have a smart meter on my home.
I have 2 complete years of hourly data from that meter, as well as the hourly data for the province's pricing and demand.

I produced some statistics for Ontario's electricity sector in not simply the warmish but still abstract "home" unit, but an even cosier "my home" unit - which I'll make the LS [1]

---

Production from industrial wind turbines is one area where the "home" is frequently used as a unit of measurement.  Assuming my home was typical, in 2012 the wind turbines connected to the IESO grid has peak production of over 6 million LS; outputting more power than all the homes in the province required during 23 hours (based on 4,354,381 residential customers as indicated here).  Because the LS unit changes hourly, the maximum wind production measured in the LS home unit, is usually between 1 and 4 am.when the LS is sleeping; wind output was below 10,000LS 69 hours in 2012.  Output, from 10,000 to 6 million LS, averaged ~248,000LS, which would be more impressive if the average net export level was not 533,000LS.

Misinformation about Ontario's Electricity Sector pushes into the German blogosphere

I follow, and am frequently impressed, by the Renewables International blog.

Today I am not impressed.

Ontario switching from coal to wind power | Renewables International

Issue 1:

Ontario's grid operator IESO believes total wind and solar capacity will increase by 3.2 GW over the next 18 months. By August 2014, solar and wind power will reach a total installed capacity of 6.8 GW, roughly a fifth of the province's total power generation capacity.
By that point, Ontario will have reduced its coal power down to nearly zero.

Ontario is to have coal reduced to nearly zero by the end of 2013 - and the IESO shows only another 254MW of wind capacity by that time.   

Whatever the other 3GW of wind and solar is for, it is not for replacing coal.

I politely corrected one of the writers of this new article on a statement made regarding Ontario replacing coal with wind in a January article; "Can renewables replace coal?"

My comment attached to that article was not disputed by Pembina's Tim Weis in a later comment, although Weis's interpretation of nuclear's performance remained detached from facts.  

Weis claimed that "Nuclear supply has remained relatively constant since the coal phase out officially began in 2003."  I pulled production figures for production in 2003 from page 50 of Part 3 of Canada's 1990-2009 National Inventory Report and 2012 figures as reported by the system operator.  Coal is down 26.3TWh while nuclear is up 23.2TWh, demand down 10.4 and natural gas-fired generation up 7 TWh (Ontario has moved from importing to exporting heavily).

Those claiming wind has been particularly relevant in replacing coal are delusional or dishonest.

A(nother) reason to be skeptical about wind energy reducing emissions

A recent article on Treehugger related very closely to analysis I've been performing on 2011 U.S. Energy Information Administration data.

Iowa and South Dakota Approach 25 Percent Electricity from Wind in 2012: Unprecedented Contribution of Wind Power in U.S. Midwest | Treehugger

Graph from Treehugger

Defying conventional wisdom about the limits of wind power, in 2012 both Iowa and South Dakota generated close to one quarter of their electricity from wind farms. Wind power accounted for at least 10 percent of electricity generation in seven other states. Across the United States, wind power continues to strengthen its case as a serious energy source.

The entire article can be read at Treehugger
It looks great.

But, "seriously", here's the thing ....

Data Da duh... What are we trying to do about fossil fuels?

It has been a while since I posted to this site, in part because of I've kept busy with my other sites; Cold Air Currents, where I collect, and comment, on articles of interest; and my data reporting site which provides a web portal for some of the views I've created in analyzing Ontario's electricity sector.

For this post I'll use data from my weekly reporting project  to illustrate the value of the fossil fuel villain in electricity generation.  The province of Ontario has been publicizing a desire to eliminate coal for over a decade, and actually looking at the role coal plays in the generation system is helpful in both demonstrating why it's been difficult to discard, and why recent reports are showing the expense involved with attempting to do so.

To illustrate a role played by coal, and natural gas, generation, I created a graph showing the most recent week's hourly Ontario demand (as defined by the IESO) on the right axis, along with the hourly net exported energy and the energy from dispatchable gas and coal generators.[1]

This chart emphasizes a lot on the subjects I've written about it the past, including the systemic cost of introducing, on a must-take all production basis, generation with little capacity value[2].

The graph demonstrates that when power is demanded, the fossil fuel generators produce it.

The HOEP is a market price.

Ontario's Independent Electricity System Operator (IESO) hosted a "stakeholder" summit on March 4th. After stakeholders network they head out with their stakes and renewed enthusiasm - with every ratepayer looking like a vampire

Slide 2 of IESO presentation

Presentation slides from the event are now posted.  There's some interesting information, but what caught my immediate attention was a graph showing both the Hourly Ontario Energy Price (HOEP) and the Global Adjustment (GA) rate, along with the two combined as an "All-in-Price."  A nice little trend line is likely meant to imply the all-in-price has risen nice and gently.