Scott Luft, who publishes Cold Air Currents, has some interesting things to say about a new Fraser Institute report on Ontario’s “green” energy experiment.
Among other things, Scott says
LUEC [levelized unit electricity cost] of generation sources is increasingly irrelevant, the utilization rate of all elements of a system is increasingly the most relevant factor in residential costs. Adding wind, for instance, is supposed to make the LUEC of a gas plant higher by displacing the need for it, without being capable of replacing it.
One of the many things I like about this guy’s blog is it is full of zingers like that. On the basis of that quote alone Ontario should get out of the terrible, artificial, and shoehorned wind and solar energy “market,” and fast. But that is not what elite thinking in this province would have us do. The much-ballyhooed Drummond report, written by a bank economist and former head bean-counter in the Canadian federal bureaucracy, gave a pass to the FIT program, which forces the innumerate and destructive economics of “green” energy onto Ontario rate payers.
I wish the Ontario premier had consulted Scott Luft instead. He understands numbers.
Capital costs for a natural gas plant are minimal, it’s fuel cost that matters here. I don’t see where LCOE of gas generation has anything to do with this. The Ontario electricity grid is short of energy (from years of mis-management by Ontario Hydro, Harris, and even McGuinty administrations). Wind has been constructed in two years to meet some 3.5% of Ontario electricity demand. Any Watts at this point are a good thing, and help reduce peak time usage rates (imposed on Ontario consumers in an effort to better manage limited generation resources, and also promote conservation and efficiency … which are sorely needed in Ontario’s grid). Ontario’s limited import ability also sets it back a great deal.
If you know where to build another mega hydro plant, or nuclear plant (and have it connected when it was needed … i.e., yesterday) I’m sure the government would like to know. Otherwise, it’s caught between a rock and a hard place, and FIT has been a major success connecting up flexible hydro, wind and solar in a very short period of time (i.e., when it is needed most to keep retail electricity prices low while serious adults attempt to reduce utilities massive and long standing stranded debt).
EL, thanks. I love the conservation argument. Your point above typifies it: “Any Watts at this point are a good thing, and help reduce peak time usage rates (imposed on Ontario consumers in an effort to better manage limited generation resources, and also promote conservation and efficiency … which are sorely needed in Ontario’s grid)”.
Make up your mind. What do you want? Energy to meet demand? Or conservation?
You want wind and solar, which have zero to do with time of use, since they are not dispatchable. Their non-dispatchability makes them a liability, not an asset. It means they are simply worthless forms of energy, which need to be “backed up” by gas, a fossil fuel.
You have it backwards. You need to honestly ask, and honestly answer, what’s the best way to supply clean and cheap electricity?
Nuclear comes with zero emissions, is half the price of the cheapest wind, and it is available around the clock. But you think wind, which requires massive backup from fossil, is a better answer.
Back to the drawing board.
“Make up your mind. What do you want? Energy to meet demand? Or conservation?”
You invent a false dichotomy here. As conservation lowers demand, more conservation means that you have energy to meet demand “Or” is logically incorrect.
“Nuclear comes with zero emissions”
As has been hashed out endlessly, nuclear is not “emissions free”. It has emissions of many sorts even if one excludes, as you have here, nuclear waste. Oh I know I know, I’m not supposed to worry about that, and it fits in a car so it’s not an issue.
“is half the price of the cheapest wind”
“• The cost of electricity generated from wind is now at record lows: several projects in high resource areas (US, Brazil, Sweden, Mexico) display a levelised cost of energy – excluding the impact of subsidies but after including the cost of capital and maintenance – below EUR 50/MWh ($68/MWh). This compares to current estimated average costs of $67 per MWh for coal-fired power and $56 per MWh for gas-fired power.”
“early-2011 prices for Bruce ‘A’, Bruce ‘B’ and Ontario Power Generation output are, respectively, about $72/MWh, $51/MWh (a floor price that currently is the effective price paid) and $56/MWh. Based on 2010 output quantities from the plants, the average weighted price paid is about $56.50/MWh.”
So the “cheapest wind” is clearly not “half”. More like 20%
I see it’s been some time since these comments, but …
EL, The CCGT plants are costed at 85% capacity factors, run at maybe 30%, and the plan is for under 10%.
More importantly, they are private and have net revenue requirement of around $8000/MW month. You don’t have to replicate Ontario’s mistakes, but you should acknowledge once you contract what is, basically, a capacity rate, the rate/kWh is higher the lower the utilization.
On the residual stranded debt – I was right before the auditor general seemed to have copped my notes. At my giddiest I am more serious than the attempts at dealing with debt have been (Eves and McGuinty).
Maury, I don’t know what figures you suggest, but with renewables I’d point to Arizona’s recent decision to put solar above wind because it matches their demand profile better. In a full accounting, I have little doubt the efficiency of the supply mix is far more important than some arcane LUEC calculation of an average price of a generator that can’t replace another generator.
Wind is not expected to produce significant output during Ontario’s peak demand hours.
This is simply true.
That makes the value far less than the cost.
“but with renewables I’d point to Arizona’s recent decision to put solar above wind because it matches their demand profile better”
Absolutely, and the siting, engineering and NIMBY issues basically go away. If you want to rapidly increase your renewables portfolio anywhere south of the mason-dixon, PV makes a whole lot of sense.
Of interest, for the future, consider the demand profile of the continent as a whole. AZ needs a whole lot of power in the summer, but very little in the winter. Toronto requires the exact opposite. North-south grids seem interesting.