Ontario cancels future Green Energy plans

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OVERKILL

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Under massive pressure from the public and the other parties, plans for future Green Energy projects in Ontario have been cancelled with the excuse that current supply is "strong". Of course it was already strong before all the spending that got us here
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Link to CBC Article

Quote:
Ontario's Liberal government took steps Tuesday to take some pressure off of rising electricity rates, cancelling plans to sign contracts for up to 1,000 megawatts of power from solar, wind and other renewable energy sources. Energy Minister Glenn Thibeault said the move will save up to $3.8 billion of the costs projected in the 2013 long-term energy plan, and will keep about $2.45 a month from being added to hydro bills for homeowners and small businesses.

The Independent Electricity System Operator's planning outlook determined Ontario has a "a strong supply of clean power" for the next decade, added Thibeault.

"It was power that we didn't need right now," he said. "Looking at this prudently and finding ways to continue to have downward pressure on rates, because that's one of the mandates that I've been given by the premier, I acted on it."

The Progressive Conservatives have been demanding the Liberals stop signing long-term contracts for renewable energy projects, and said Ontario's high electricity rates are driving businesses out of the province.

"This government has plowed ahead for years signing contracts for energy we simply do not need," said Opposition Leader Patrick Brown. "The premier has become the best minister of economic development that Pennsylvania and New York has ever seen."

The Tories used virtually all their time in question period talking about individuals and business owners struggling with soaring electricity rates, and claimed Thibeault's cancellation announcement was an admission by the Liberals that their green energy policies were misguided.

"It's bad policy," said Brown. "I just wish at this point, now that they've acknowledged that they've made a mistake, that they would apologize. They made a huge mistake on the energy file and everyone in Ontario is paying for it."

NDP Leader Andrea Horwath blamed rising hydro rates on the Liberals and previous Conservative governments for privatizing parts of the electricity system. Quebec and Manitoba both have hydro rates that are about half of Ontario's because they kept their electricity systems in public hands, added Horwath.

"You can't privatize the electricity system and expect people's bills to go down," she said. "Again we have the government that's making decisions in the interests of Liberals and their fortunes as opposed to regular people."

Thibeault said the previous Progressive Conservative government left Ontario's electricity system in "a shambles," so the Liberals invested billions of dollars in new generation and transmission grid upgrades, which sent hydro rates higher.

He said the government is taking the eight per cent provincial portion of the HST off of electricity bills, but the Tories and NDP counter that hydro ratepayers were getting a 10 per cent reduction on hydro bills until last January.

The government also scrapped the debt retirement charge for household hydro bills and deferred construction of two new nuclear reactors at Darlington, avoiding up to $15 billion in new construction costs. It will also be looking for ways to reduce costs in the next long-term energy plan to be released in 2017, added Thibeault.

"People in rural areas are getting more than the eight per cent (discount)," he said. "They'll be getting a 20 per cent reduction."

Ontario has already signed long-term contracts, most for 20 years, for 18,000 megawatts of power from wind, solar bio-energy and energy-from-waste projects, and is not backing away from its green energy policies, said Thibeault.

"We've seen costs of renewables come down," he said. "The system that we built is the cleanest and most reliable system in North America."


That last line is comedy gold. It was already green and everything that existed when they took office is still operational. All they've done is add billions of dollars in wind and solar, which, arguably, is less green than just leaving things as they were, since we've had excess capacity for as long as I can remember and were selling energy at a healthy profit before all this blundering incompetence, driven wholly by agenda, not demand.



I find it comical that they pander the cost of the shelved Darlington upgrade (2,400MW), which was supposed to be around 12 billion as a "savings". That's more than half the nameplate capacity of all the wind farms they've installed in the entire province, at a small fraction of the cost, and with an actual output (GWh) of several times what the wind farms make. Of course not being part of the Green Energy Initiative and subsequently without subsidized rates, it would have continued the trend of energy sale for profit. The total cost of the Green Energy initiative was supposed to be around 100 billion, so if this has saved us 3.8 billion, we've still spent somewhere in the neighbourhood of 96.2 billion on 4,203MW of installed capacity that generates a grand total of 9,250GWh of power a year. What a BARGAIN!
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Now, if we could only get them to nullify the existing contracts...... Then we'd have electricity prices back to around 2006 levels, or 6-8c/KWh.

Please don't discuss the political side of this. The costs, output, and merit of installing heavily subsidized generation capacity when it isn't needed is more of the topic I'm aiming for here. We appear to making the first steps in walking away from this, though tremendous damage has already been done.

A Professor of Law at Queens has already noted that the current 20 year contracts can be nullified without recourse, which would take us down the path Australia has gone with cancelling their heavily subsidized rate contracts. These generators; the 4,203MW of wind and solar, would then bid in at the same market rate as everybody else. I would wager this would bankrupt many of them though.
 
What shortage? According to the pie chart in Overkill's post, wind and solar only account for 5.6% of Ontario's energy.
 
Originally Posted By: Bluestream
Its a giant SCAM!

Next time when you look up and see blue sky thank the greenies. Want proof? Go to China. I wonder how folks that are against green energy would feel if they experienced Chinese pollution.
 
Sounds like the pendulum is swinging back toward a rational energy policy. Besides, the CANDU and related reactors are about the safest designs out there. No point in moving away from safe and reliable carbon-free energy just because it doesn't fit with somebody's agenda.

This conversation would be a lot different if the existing power generation were coal. But since it's mainly hydro from one of the world's largest waterfalls and nuclear from pretty darned safe CANDU reactors, that's a completely different story. Both of those have as close to zero air pollution as can be.
 
The point of the original article is simply that overzealous schedules to build a lot more generators, of both nuclear and renewable type, were reconsidered and put off.

For the planning future they concluded there was not a need for any new generating capacity. Money spent on that would lead to an unnecessary rate increase compared to continuing to run the plants that are already paid for.

They're probably only burning the fracked gas because it is really cheap now and the power can be exported profitably.
 
"All they've done is add billions of dollars in wind and solar, which, arguably, is less green than just leaving things as they were, since we've had excess capacity for as long as I can remember and were selling energy at a healthy profit before all this blundering incompetence, driven wholly by agenda, not demand." - Overkill


Central planning at its finest. And the poor consumer simply tries to keep his lights on....
 
Originally Posted By: KrisZ
About time and good to hear people are realizing the scam and putting the pressure where it needs to be. Unfortunately once the contracts are fulfilled or nullified, we may end up with energy shortage as the solar and wind go bankrupt.


Looking at the above graph, I would doubt that. We are interconnected and generally run a surplus most of the time. If you get a minute, the IESO website is a fantastic resource which allows you to graph supply and demand as well as the supply mix any time during the day and over a set period. We have a rather significant amount of GT installations that are really only used for the peaker role; some 9,942MW worth to be exact. However these GT's only generate 15,400GWh a year of power, which is less than half of what our similar installed capacity of Hydro Electric makes. This is due to their peaker role. They would simply get leaned on more if needed. Ideally, if we do see a demand for increased power in the future they should really just finish the Darlington expansion, considering it as already approved and ready to go.

Remember, you need to have matched capacity of something else installed to prop up the renewables when they aren't running. So that wind and solar is already backed up by something else for when it isn't functioning
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Originally Posted By: mk378
The point of the original article is simply that overzealous schedules to build a lot more generators, of both nuclear and renewable type, were reconsidered and put off.

For the planning future they concluded there was not a need for any new generating capacity. Money spent on that would lead to an unnecessary rate increase compared to continuing to run the plants that are already paid for.

They're probably only burning the fracked gas because it is really cheap now and the power can be exported profitably.


That's where they've flip-flopped. It doesn't quite read as how it actually played out here. The expansion of Darlington (the nuke plant) was full steam ahead (no pun intended, well, OK, a little one) many years ago. They got all of the approvals and assessments done and it was ready to be built. The final hurdle was the environmental assessment and it went through in May of 2012 to give you an idea of the timeline. At the same time, they were signing 20 year contracts left and right for wind and solar installs (all privately owned) with heavily subsidized rates (some in the $0.40-0.60KWh range). They decided to shelve the Darlington expansion in October of 2013, citing excess generating capacity as the reason that it didn't make sense at the time, however they continued on with signing more of these other contracts.... Which of course are also excess generating capacity
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Both plans didn't make sense if your true concern was excess capacity. We've been exporting power forever. As you can see from the generating graph, more than 87% of the province's power comes from the nukes and hydro electric. The rest could easily be made up with the (as you noted, cheap to operate right now) gas turbines. From a solely monetary perspective and pretending we did want to add the excess capacity, expanding Darlington would have been massively cheaper than all of these subsidized projects. Even if it cost the "up to" cited figure of $15 billion, that's a drop in the bucket compared to what we've spent on the renewables, which make significantly less power. Darlington is also already an existing and active site with four reactors, so it isn't like you'd be building a whole new plant. The property it sits on is already being used for that purpose, nothing would really change.

But what has driven up rates isn't the installation of the renewables. Installing generating capacity alone, while carrying with it hefty up-front costs, does not inherently bring excessive long-term costs.

No, what has driven up the rates is the long-term subsidy of these sites through inflated rates. When you are giving these generators up to 10x the market rate for electricity, that money has to come from somewhere. The way of hiding that cost from the consumer was by wrapping it up in the "Global Adjustment", which is a per KWh addition to our rates that can be changed on a whim, and which is cited as reflecting the cost of "making the world green". It really is nothing of the sort. These projects could have had their installation subsidized and been paid the fair market rate for power with no additional tenured costs. Instead, to provide ridiculous streams of long-term revenue for these private entities (and "friends" of the people in charge....) the contracts that were drafted up are paying these sites up to $0.60KWh, and we even pay them a generous minimum monthly fee if they are not generating or told not to generate.

The problem is, as more of these subsidized sites have come on-line, the greater the differential between the rates consumers pay and the rates we are paying these generators. And since they are so heavily subsidized, excess generating capacity being sold at a profit is no more. You cannot pay a generator $0.40KWh and then turn around and sell it for $0.04KWh and expect to make money. To make up the difference, the Global Adjustment has been going up. And since rates are so high, consumers and businesses have been conserving more and more energy, driving consumption down. In turn, there's less of a revenue source to draw from to pay these generators their differential rate and in turn, this has again driven up rates further. It is truly a case of epic mismanagement with no real thought put into the long-term implications.

Ergo, that's why the savings to the consumer in cancelling these future projects seems so minuscule. Because it is. It isn't the builds themselves that are the problem, but rather the rates guaranteed by the contracts attached to them, and this doesn't appear to be factored in. There will be no progress made on the crisis regarding the cost of electricity in this province until something is done about the existing rate subsidies.
 
20 years is a long time. The wind and solar could cause some of the peakers to be used less and less, resulting in their eventual shut down. Then, when the contracts on wind and solar are done and these get shut down as well, we MAY end up with a shortage. We are currently selling our energy at a loss, but we have the hidden fee on all Hydro One bills to keep things afloat. As more and more people learn about this, they might start putting pressure to remove this fee. If this fee goes away, some of the big plants may be shut down as well, as they will not operate at a loss.

This whole mess may have some long reaching consequences.
 
Originally Posted By: KrisZ
20 years is a long time. The wind and solar could cause some of the peakers to be used less and less, resulting in their eventual shut down.


The peakers are actually used quite regularly, though probably not as much as they used to be. Whenever the wind isn't blowing or the sun isn't shining and there is extra demand, they are coming on-line.

Also, keep in mind that these peaker plants are not private. They are owned by OPG, which is a Crown Corporation. They are not required to make money to operate and profit is not their primary motivator. The same goes for Darlington and Pickering, which are also both OPG sites. This again goes for Niagra Falls and other Hydro Electric facilities.

But yes, 20 years is a long time, particularly when you factor in the lifespan of these things can often be less than that
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Originally Posted By: KrisZ
Then, when the contracts on wind and solar are done and these get shut down as well, we MAY end up with a shortage. We are currently selling our energy at a loss, but we have the hidden fee on all Hydro One bills to keep things afloat.


The hidden fee (the Global Adjustment) isn't just on HydroONE bills. Everybody in the province pays it regardless of their provider. And yes, we are currently selling energy at a loss, but that doesn't mean that HydroONE is losing money, it isn't. Year after year, HydroONE has turned a profit. That was one of the biggest reasons for the opposition of its sale, as it is a profit making Crown Corporation and was providing much needed revenue to the province. The idiotic decision to sell it off was solely for the purpose of making the books look like less of a disaster and not in any way about the long term energy future of the province.

Originally Posted By: KrisZ
As more and more people learn about this, they might start putting pressure to remove this fee. If this fee goes away, some of the big plants may be shut down as well, as they will not operate at a loss.

This whole mess may have some long reaching consequences.


None of the big plants will shut down if you are referring to anything owned by OPG. What will probably shut down if the Global Adjustment is scrapped are the wind and solar farms run by operators whose sole existence relies on the obscene rates they are being paid for the power generated by their facilities. Dropping their revenue stream from $0.40KWh for example down to $0.05KWh, if they've mortgaged the farm to build the facility rather than using capital, will probably bankrupt them. But then relying on something that pays 10x the market rate and expecting this to be perpetual wasn't the brightest business decision in the first place. This whole house of cards is a ridiculous farce that was created for the sole purpose of making the province look like it was "into going green", despite the fact we had already done more than all the other provinces, since we burn no coal. Agenda trumped reason, logic and common sense and hence the reason no studies were done to evaluate the long-term implications. If they had been done, none of this would have happened.
 
Solar and wind installations are simply about amortizing the first cost-- as during their operational life fuel cost will be zero and maintenance needs are minimal. There is little unpredictable or risky there. It would make a lot more sense to do it with public financing such as a bond issue which can be obtained at a lot lower APR than a venture capitalist. Those private ownership shenanigans look exactly like that-- shenanigans to make someone rich.
 
Originally Posted By: OVERKILL
Originally Posted By: KrisZ
20 years is a long time. The wind and solar could cause some of the peakers to be used less and less, resulting in their eventual shut down.


The peakers are actually used quite regularly, though probably not as much as they used to be. Whenever the wind isn't blowing or the sun isn't shining and there is extra demand, they are coming on-line.

Also, keep in mind that these peaker plants are not private. They are owned by OPG, which is a Crown Corporation. They are not required to make money to operate and profit is not their primary motivator. The same goes for Darlington and Pickering, which are also both OPG sites. This again goes for Niagra Falls and other Hydro Electric facilities.

But yes, 20 years is a long time, particularly when you factor in the lifespan of these things can often be less than that
smirk.gif


Originally Posted By: KrisZ
Then, when the contracts on wind and solar are done and these get shut down as well, we MAY end up with a shortage. We are currently selling our energy at a loss, but we have the hidden fee on all Hydro One bills to keep things afloat.


The hidden fee (the Global Adjustment) isn't just on HydroONE bills. Everybody in the province pays it regardless of their provider. And yes, we are currently selling energy at a loss, but that doesn't mean that HydroONE is losing money, it isn't. Year after year, HydroONE has turned a profit. That was one of the biggest reasons for the opposition of its sale, as it is a profit making Crown Corporation and was providing much needed revenue to the province. The idiotic decision to sell it off was solely for the purpose of making the books look like less of a disaster and not in any way about the long term energy future of the province.

Originally Posted By: KrisZ
As more and more people learn about this, they might start putting pressure to remove this fee. If this fee goes away, some of the big plants may be shut down as well, as they will not operate at a loss.

This whole mess may have some long reaching consequences.


None of the big plants will shut down if you are referring to anything owned by OPG. What will probably shut down if the Global Adjustment is scrapped are the wind and solar farms run by operators whose sole existence relies on the obscene rates they are being paid for the power generated by their facilities. Dropping their revenue stream from $0.40KWh for example down to $0.05KWh, if they've mortgaged the farm to build the facility rather than using capital, will probably bankrupt them. But then relying on something that pays 10x the market rate and expecting this to be perpetual wasn't the brightest business decision in the first place. This whole house of cards is a ridiculous farce that was created for the sole purpose of making the province look like it was "into going green", despite the fact we had already done more than all the other provinces, since we burn no coal. Agenda trumped reason, logic and common sense and hence the reason no studies were done to evaluate the long-term implications. If they had been done, none of this would have happened.



Well those studies WERE made, but.... Politics.
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