My most recent posts on this blog have played on the theme of clean, cheap electricity as an environmental and societal benefit. Using the Electric Power Carbon-Price Matrix, I have compared electricity systems using the criteria of carbon emissions and price. I have proposed the C-P Matrix as the way for jurisdictions to plan electricity infrastructure investment in order to achieve those environmental and societal benefits. And I have illustrated that, though every jurisdiction aims to be in Quadrant IV of the C-P Matrix—i.e., to have electricity that comes with low carbon emissions and is affordable; see the chart on the right—only some jurisdictions, France and Ontario for example, have succeeded in achieving those dual benefits. Others, notably Germany and Denmark, have failed, spectacularly.
I am a proud Ontarian. Ontario is the most beautiful place in the world, in my humble opinion. We are a beacon, and a destination, for immigrants the world over. When immigrants arrive, as my paternal and maternal grandparents did in the first half of the Twentieth Century, they immediately begin to experience the benefits of living in a place like this. Ontario is one of the best places in the world to live. And a major component of that is our plentiful electricity.
Going back to the Carbon-Price Matrix: as I have pointed out in previous posts, electricity was recognized as a vital public good ever since it became possible to make it and bring it into people’s homes. Electricity is the greatest social equalizing force in human history. People instantly understood that it was a force for good, and once they understood that with some effort it could become available to everyone, efforts began to actually bring it to everyone.
Bringing power to the people was not just a matter of snapping fingers. Electrification was an enormous effort, spanning decades and costing hundreds millions of dollars. Tens of thousands of kilometers of transmission lines had to connect large generators at one end to paying customers at the other. While most of the customers were in cities, which made bringing power to them a matter of economy of scale, many more were in rural areas and were far more costly to serve. Because it was not fair that only city dwellers had electricity, rural customers eventually, after major political efforts like Franklin Roosevelt’s Rural Electrification Administration, were connected to the grid.
Who paid for all this? And how did they pay for it? Briefly, all electricity customers paid for it. For the most part, in most modern developed countries, electricity was priced so that everyone could afford it. This necessitated further economies of scale, which inevitably resulted in some form of the regulated monopoly utility, under which a company is granted a monopoly in exchange for being obliged to serve all customers. Under this model, the utility can charge customers a rate that covers the utility’s costs of making and delivering electricity and gives it a reasonable and predictable profit. This was a stunningly successful delivery model, and it could not have succeeded if electricity generation was too expensive. This instantly ruled out inefficient generation types like wind.
Electricity is the greatest social equalizing force in human history. Its introduction to the modern world in the 20th Century was stunningly successful. It would never have become so widespread, and could never have freed so many people from the bondage of grinding manual labour, if electricity generation had been too expensive. This instantly ruled out inefficient generation types like wind, which cannot produce electricity at affordable rates.
It is not difficult to see from this that city customers essentially paid for rural electrification. More precisely, electric utilities essentially paid for the lines to their high-cost rural customers by using the revenues they got from their low-cost city customers. This is essentially how the entire North American grid, the largest machine in the world, was financed.
The Ontario part of that giant machine has its own history. Originally it was based on hydroelectric power, which is why the electric utility that emerged mid-Century was called Ontario Hydro. Ironically, just as the utility was officially named Ontario Hydro, in 1974, it was undergoing a remarkable transition from hydroelectric to nuclear power. Within about two decades, Hydro’s generating base became a predominantly nuclear one, and the underlying technology for that was the CANDU nuclear reactor. Look in Tables 1 and 2 in the upper left sidebar. All the megawatt-hours in the Nuclear category come out of the machines that Ontario Hydro began building in earnest in the early 1970s.
Eight of those CANDU units are at the Bruce generating station on Lake Huron. The Bruce nuclear generators represent well over 6,000 megawatts of capacity, and an hour ago were collectively cranking out 6,126 megawatts of carbon-free electricity, nearly a third of the total output of the 147 generators and wind farms that report to the Ontario system operator. This gargantuan output makes the Bruce station the biggest clean energy centre in the Western Hemisphere: nuclear energy does not put a single gram of carbon into the atmosphere. Keep that in mind, because it is important.
The Bruce station has its own remarkable history. In the early 2000s it was taken over by a private partnership that fixed four of its reactors (at a cost of billions of dollars) and returned them, one by one, to service beginning in 2003.
In return for investing their billions of dollars, the Bruce Power partners receive a fixed price for the power the station generates. This allows them to sell power to Ontario at below the average cost, and gives them a profit.
Ontario’s carbon intensity per kilowatt-hour (CIPK) of grid electricity was, in the same hour, 91.7 grams. That is low. Look at the chart below: Ontario’s CIPK in 2010 was around 113 grams. And, as you can see, Ontario was firmly in Quadrant IV of the C-P Matrix.
At noon today, when the Bruce station was cranking out its 6,126 megawatts of power, Ontario’s entire nuclear fleet was cranking out 11,244 MW. Which means Bruce was contributing over half of Ontario’s nuclear power. And since the 147 generators and wind farms reporting to the Ontario system operator were collectively cranking out 18,777 MW of power, that means the nuclear fleet was contributing more than 60 percent of Ontario’s electricity.
Because Bruce Power, the partnership that runs the Bruce station, sells power to Ontario at below the average price, and because it such a big part of the reason why most Ontario power comes with zero carbon emissions, Bruce Power is a big part of the reason Ontario sits so easily in Quadrant IV of the C-P Matrix.
This is how Ontario can pay for new nuclear reactors and stay in Quadrant IV for decades to come.