What is the true value of reliable electricity? Ask someone who is about to be reconnected after a blackout

I have been part of a very interesting listserv discussion lately, on the value of reliable electricity. As I pointed out last article, in Ontario we have a topsy-turvy system for pricing electricity: we pay the least efficient and least-reliable generators the highest per-kWh price. The ones that have literally for decades provided affordable power on demand get the lowest prices. This system threatens to turn the power-at-cost model on its head. I believe that will prove extremely detrimental not just for our economy but for our society.

The listserv discussion involved exactly how to price reliable power. Should ratepayers pay a premium price for reliability? My initial answer to that question is emphatically no. Electricity is a public good, like water, and should be affordable to the poorest ratepayers. (The idea that cheap electricity is bad because it encourages richer ratepayers to “waste” electricity is a red herring. Nobody wastes electricity. Some people just use more of it, just like some people drive more, or use more Internet.)

Still, we need electricity. Things have changed since the first and second waves of electrification in Ontario. In those waves, we used hydropower then nuclear to meet the skyrocketing provincial demand for electricity. We did so because hydro and nuclear were cheap sources, and capable of providing enormous amounts of power on demand. Power on demand is the cornerstone for a modern society and economy.

Today, we have mostly tapped out hydro. This leaves only thermal sources available to meet future demand. (Wind is not thermal, but also is not capable of providing power on demand, so I will leave it out of the discussion.) And of the available thermal sources, only nuclear and natural gas are truly viable.

A power reconnection scenario: which would YOU choose?
You have lived with an electricity blackout for a couple of days, and the power crew finally arrives on your street to hook you back up. But just before flicking the switch, the crew chief presents you with some choices for the technologies that generate the electricity.

You can choose:

  1. Nuclear-generated electricity, 100 percent reliable, at 6 cents per kilowatt-hour and no carbon emissions.
  2. Wind-generated electricity, 30 percent reliable, at 11 cents per kWh and no carbon emissions.
  3. Solar-generated electricity, 17 percent reliable, at 40 cents per kWh and no carbon emissions. (Let’s say the sun has set by the time the crew chief presents you with the choices.)
  4. Gas-generated electricity, 100 percent reliable, at maybe 6 cents per kWh, or maybe 12 cents, depending on the price of gas (which is very volatile), and 500 grams of carbon per kWh.

You have been without power for two days. Which of the above generation technologies would you choose?

Of nuclear and gas, only nuclear makes power-on-demand that is also zero-carbon.

So really, only nuclear can meet our economic, societal, and environmental requirements for electricity.

This is why I support the deals Ontario has made with Bruce Power. Yes, Bruce Power sells electricity to us at a slightly higher price than Ontario Power Generation, the other nuclear utility, does. Yes, Bruce Power uses OPG’s reactors to make electricity. And yes, both companies are equally capable of operating—and refurbishing—nuclear reactors, and thereby providing the lion’s share of reliable, zero-carbon electricity to the province for literally decades at a time.

But the work of operating and refurbishing nuclear reactors is time and capital intensive. OPG is a public company, owned by the province of Ontario and therefore subject to a far higher level of far more politicized scrutiny than Bruce, which is a private partnership. So when politicians decided it was in the province’s best interest to bring the laid-up Bruce reactors back into service, it was politically expedient to privatize the plant and cut a deal with the partnership. In doing so, the province essentially put a price on reliable electricity. That price was what it cost Ontario to make it worth while for the Bruce partners to put up their own capital to pay for the refurbishment. I understand that, and agree with it.

The same exact considerations are being discussed right now, between OPG and the province. OPG owns and operates the Darlington nuclear station, another enormous power provider that the province cannot do without. Darlington’s four reactors are up for refurbishment beginning next year. That is going to cost money, and OPG cannot just put up capital. It has to try to pay with money from its other revenue-generating assets.

For all of this, OPG needs permission, first from the provincial energy regulator. If that permission is not forthcoming, then Plan B is to change the regulatory rules. That draws in the second counterparty, the province. i.e., the provincial elected government. That means that every request for every financing idea to pay for the Darlington refurbishment will be reviewed in a very politically charged environment. Which will be interesting, given the current minority government situation at Queen’s Park, with by elections coming up (tomorrow), whose outcome will determine the timing of a general election.

Again, the Bruce Power deal was easy by comparison. In that deal, the exact same basic issue was discussed: how to get the plant refurbished at a price that ratepayers can afford and that gives those putting up the capital a reasonable return on that investment. Because it was a contracted price, rather than a regulated one, the negotiation was hammered out in a far less politicized environment. Underlying the whole thing was the recognition by both parties that the plant is a vital provincial asset, which provides a vital commodity.

That same recognition underlies the current discussions about Darlington between OPG and the province. This recognition may be spreading to the wider public, in light of the Toronto Ice Storm at the end of 2013. Ontario needs electricity. That electricity has to be 100 percent reliable, and it has to be affordable.

Nuclear is both reliable and affordable, and has the added enormous benefit of coming with exactly zero carbon pollution.

The public is, I believe, not far from recognizing all of these attributes.

To help the public recognize this, nuclear proponents in Canada have to step up and make the point.

18 comments for “What is the true value of reliable electricity? Ask someone who is about to be reconnected after a blackout

  1. Bas
    February 12, 2014 at 11:28

    “…The idea that cheap electricity is bad because it encourages richer ratepayers to “waste” electricity is a red herring…”
    If you compare the amount of electricity (and also gas for heating) used by households in countries where electricity is expensive, then you see that expensive electricity indeed implies less usage, hence less heating of the earth.

    Regarding reliable electricity delivery to the customer, check Germany. With an average total outage time of 30minutes/year, they were already one of the most reliable.
    But since wind+solar took steam that figure halved towards 15min/year (NL still 30min/year, France and UK 60min/year).

    One of the reasons, the distributed nature (thousands of generators) of electricity generation with wind+solar and its excellent predictability.

    • February 12, 2014 at 12:47

      If you compare the amount of electricity (and also gas for heating) used by households in countries where electricity is expensive, then you see that expensive electricity indeed implies less usage, hence less heating of the earth.

      This is fantasy thinking.  The heating of the earth due to electricity is overwhelmingly due to related GHG emissions, not the electric energy itself.

      One of the reasons, the distributed nature (thousands of generators) of electricity generation with wind+solar and its excellent predictability.

      From fantasy into delusion, and also question-begging:  predictability does not mean availability when needed.

      • February 12, 2014 at 12:57

        I’d skip fantasy and go straight to delusion.

    • February 12, 2014 at 12:53

      good grief. Germany’s electricity is reliable today because most of it comes from coal. It was reliable before 2011 because a lot of it came from nuclear plants.

      And guess what — it was cleaner before 2011.

    • February 12, 2014 at 13:07

      … expensive electricity indeed implies less usage… .

      Really, huh. Then why did Germany make 413 billion kWh with combustible fuels in 2012, up from 372 billion in 2000. Their household price went from 12 cents in 2000 to 34 cents in 2012.

      I’ll tell you why. Because they need real electricity, not the imaginary kind.

    • John ONeill
      February 17, 2014 at 21:46

      France makes about a sixth as much CO2 per kilowatt hour as Germany, so greenhouse gas forcing is that much lower. But France also uses electricity for home heating, whereas Germany uses more gas. So methane leaks from the distribution system, as well as the CO2 from the home heating, are added to the output from lignite power plants. Greenpeace frowns on resistance home heating on the grounds that burning fuel for heat in situ is more efficient, but that doesn’t apply if nothing is burnt to make the electricity in the first place.

      • February 18, 2014 at 11:49

        France is missing some bets.  One concept I saw years ago was to cover a large mound of earth so that water didn’t percolate through it, then just use the bulk and thickness of earth on top to insulate it as a mass store of low-grade heat.  Such heat could be used in winter for space heating, maybe DHW too.

        Mounds of earth full of tubes heated somehow (resistance heat would do, but compressed air heat pumping would likely have a far greater CoP) could be an answer to France’s need for “dump loads” both for its present nuclear and projected “renewable” capacity.  Let the nukes run at 100% all the time, and they become even more economic.

        • February 18, 2014 at 12:01

          Exactly — a “low tech” way to store heat. We have SBG problems here in Ontario, that could be solved in just this way. Instead of maneuvering nuclear reactors, or shutting them down, just run ’em 100 percent of the time. It’s a question of location and cost of engineering the system I guess.

          We could use that heat right now in Ottawa (Ontario), where the outside temperature, 274 Kelvins, is warm compared with the previous sixty-odd days.

          • February 18, 2014 at 18:43

            Steve, would anyone hire me to create a DSM-controlled auxiliary heater to provide just such a dump load during the heating season?  It’s not even a particularly difficult application, one guy could write the spec and the first release implementation.

          • February 19, 2014 at 09:00

            Poet, I bet somebody would. Can you contact me offline?

          • February 20, 2014 at 01:28

            Mail sent, with skeleton outline.

    • robjoh
      February 18, 2014 at 16:26

      If you compare the amount of electricity (and also gas for heating) used by households in countries where electricity is expensive, then you see that expensive electricity indeed implies less usage, hence less heating of the earth

      It also means more combustial fuels. Sweden gets 33% of it energy from electricity and Denmark only 17%. Sweden gets only 30% of it energy from fosile fuels, Denmark gets 70% of it energy from fosile fuels.

      The drive for expensive electricity is stupid as it means that other forms of energy is cheaper.

      • February 18, 2014 at 19:13

        I’ve brought this up to Greens before.  The idea that people will use dirty fuels if electricity is too expensive bounces off their skulls with an almost audible “ping”!

        • robjoh
          February 20, 2014 at 04:34

          I’ve brought this up to Greens before. The idea that people will use dirty fuels if electricity is too expensive bounces off their skulls with an almost audible “ping”!

          True, but the greens do not look at numbers and facts. They are a religious group worshiping fantasy ideas.

          • February 20, 2014 at 17:37

            I’ve noticed that they get upset if you mention that aspect.

    • Robert Budd
      March 3, 2014 at 20:16

      Reality is these people aren’t sitting in the cold with two sweaters to “save the planet”. They are scrounging around the planet looking for biomass to burn.
      If you read German newspapers you will see articles pointing out the unsustainable increase in wood cutting/burning that goes with ever higher electricity costs. And to go with that the decrease in air quality and increase in health care costs.

  2. Brad Fiander
    February 13, 2014 at 20:01

    Bas,

    Correlation is not causation. While you may argue that the increased penetration of DER has not hurt reliability, there is no evidence that more DER have been the cause of that improvement.
    As a utility engineer, I can say with confidence that the Customer Minutes of Interruption metric (CMI) is largely driven by distribution system issues like weather, equipment failure, undergrounding and system design. Bad weather and equipment failure force CMI up, while more undergrounding and looped feeds bring CMI down.
    In Germany, it is possible that the weather was really good a resulted in a record low CMI. Or perhaps the distribution system improvements that were required to connect much of the DER (Distributed Energy Resources) eliminated much older failure-prone equipment.

  3. February 14, 2014 at 02:33

    A forward thinking government would stop subsidizing wind and solar and give reward dollars to nuclear and hydro which are both sources of base load power and both are emissions free. I agree Steve it is backwards.

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