August 2016 likely was a record hot month in Toronto, says Environment Canada. It was a record setter on another related front: electricity prices.
I predict that when the data is officially out, Ontarians will have paid over $1.27 billion for electricity generation in the month of August 2016. This will, by my estimation, make August 2016 the single most expensive month in our electrical history. The current year of 2016 will be by far the most expensive one in our history: I estimate that generation costs in 2016 will exceed $13 billion. They were over $12 billion in 2015. They were $11.7 billion in 2014.
Will we have generated more electricity this year than last? Yes. In 2015, Ontario generators made nearly 155 billion kilowatt-hours of electricity. In 2016 I estimate they will have made close to 160 billion, possibly more. This means the additional five billion kWh will have cost $1 billion, which puts the average cost of each of those kWh at 20 cents.
The provincial auditor general, in her 2015 annual report, looked extra close at electricity and concluded that Ontario ratepayers in 2014 paid enormous, and enormously unnecessary, rates for electricity. Here is a graphical summary of her findings regarding what we paid.
The cost rate was calculated by just dividing the cost by the generation for each fuel type.
Applying the 2014 cost rate to August 2016 output data, here is what last month looked like:
Several things jump out.
- Nuclear produced 57.6 percent — well over half — of the electricity but represented 39.2 percent of the total cost.
- Solar produced 3.5 percent — less than one twenty-fifth — of the electricity but represented 18.6 percent of the cost.
- Gas produced 15.5 percent of the electricity but represented over one-quarter of the cost.
When you consider that all of the solar and most of the gas happened in the hours from 7 a.m. to 7 p.m., you realize that our peak hours coincided with generation that cost between 15 cents and 49 cents per kilowatt-hour.
Why are we paying such prices for solar energy? Because it is considered clean and green.
Why do we ramp up gas in tandem with solar during the peak hours of our days? To state a tautology, because that is how electrical demand looks, not just in Ontario but in every other modern jurisdiction on earth.
We have chosen to meet that very predictable demand with a combination of fossil fuel and an allegedly green source. The green source is there because it allegedly emits no greenhouse gas. The fossil fuel is there because… well, we need the electricity at that time of the day.
In the case of solar, we pay nearly 50 cents per kilowatt-hour to NOT emit greenhouse gases. At the very same time, we pay 15 cents for electricity from a fuel that DOES emit greenhouse gases into our air.
The peak electricity times of the day are easily predictable; they coincide with the other totally predictable energy peaks, the ones you see when you look out the window at a busy city street.
Knowing that electricity demand will ramp up and then ramp down at similar and predictable times every day of the year, and that the ramp up or down will be more pronounced when it is warmer or colder than usual, we have chosen to meet that demand with electricity from two of the most expensive and least efficient sources available.
The dramatic difference between the cost of nuclear versus that of gas and especially versus solar raises an instant question: why are we paying so much money to allegedly avoid dumping carbon dioxide into our air?
Click again on cost rate. Note the cost of nuclear, which emits no greenhouse gas at all. The dramatic difference between the cost of nuclear versus that of gas and especially versus solar raises an instant question: why are we paying so much money to allegedly avoid dumping carbon dioxide into our air? Could we not achieve total reductions in CO2 emissions at a far lower cost?
Indeed we could. Imagine we had an additional, say, 6,000 megawatts of nuclear capacity. That could easily provide for the daily ramp up-and-down on hot summer days like we just experienced in August.
For something like seven or eight cents per kWh, which is the price new nuclear would cost, we could be providing carbon-free electricity during those times of the day when we currently use gas (15 cents plus carbon) and solar (49 cents and no carbon).
“But hold on” I hear you cry. “Isn’t nuclear notoriously inflexible? Isn’t it incapable of daily ramp-up/ramp-down?”
No, nuclear is quite assuredly not incapable of adjusting output to meet daily demand cycles. If it were, tourists in Paris, France would have to climb the stairs to their hotel rooms, and forego afternoon coffee and rides on the metro and the mighty TGV and everything else in that country that requires electricity. Most of France’s electricity comes from nuclear plants.
In Ontario the reactor type most likely to provide future electricity is the Enhanced CANDU 6, a machine capable of running at full reactor power while completely disconnected from the grid. This gives it, says Don Jones, a retired AECL design engineer and expert in Ontario electricity, “zero to 100 percent full power manoeuvrability.”
So yes—Ontario could easily use nuclear to deal with the daily 5,000 to 6,000 megawatt ramp-up/ramp-down to meet the daily demand increase-then-decrease that so predictably occurs in hot months.
Moreover, this extra 6,000 megawatts of nuclear capacity would be able to run flat out from October to May (the heating season), providing zero-carbon heat.
To repeat: we have chosen to pay 15 to 49 cents to get carbon-heavy electricity, when we could be paying around 8 cents and getting carbon-free electricity.
This is why August 2016 was a record setting month for electricity costs.