Ontario’s Electricity Dilemma – Achieving Low Emissions at Reasonable Electricity Rates

Ontario’s Electricity Dilemma – Achieving Low Emissions at Reasonable Electricity Rates


Unexpected Surprises 

  • Green energy costs (including integration costs) are higher than expected and not dropping as fast as in other jurisdictions.
  • Demand is not rising as fast as planned when capacity commitments made.
  • New gas plants not as flexible as coal plants.
  • Higher integration costs and higher than expected emissions for wind/solar backup service.
  • Refurbishing old plants 2x more expensive than expected – discovery work.
  • Unfavorable WTO trade ruling means fewer jobs here in Ontario.
  • Smart meters did not flatten nor reduce peak loads to the extent antcipated due to ineffecive TOU price plan (see 2014 Auditor General of Ontario report and 2011 OSPE smart meter submission to the OEB).
  • Recession in 2008-09 created surplus genera,on capacity in North America and drove electricity market prices well below total cost of production.
  • Global Adjustment (GA) rose rapidly. GA 2 to 3x greater than market price.

Why Are Electricity Rates Rising So Fast in Ontario

There are 6 major drivers of rapidly rising rates in Ontario:

  • Incremental cost of wind/solar energy compared to displaced generation. Over 1 B$ in 2014, rising to over 3 B$ in 2021
  •  Losses for curtailment and exporting at very low price.
  • Conservation and demand management programs have reduced financial value during periods of excess capacity (2013 Long Term Energy Plan predicts excess capacity will persist from 2009 to 2019).
  • Higher costs for refurbishment of older plants.
  • Higher costs for power system upgrades to accommodate renewables and Bruce A restart.
  • In the GTA area residential “energy” rates have risen about 70 to 90% in the 7 years since 2008 depending on when the utility switched you to TOU rates.

Why Will Emissions Double as We Add Wind and Solar Plants

  • Wind and Solar require flexible backup generation.
  • Nuclear is too inflexible to backup renewables without expensive engineering changes to the reactors.
  • Flexible electric storage is too expensive at the moment.
  • Consequently natural gas provides the backup for wind and solar in North America.
  • When you add wind and solar you are actually forced to reduce nuclear generation to make room for more natural gas generation to provide flexible backup.
  • Ontario currently produces electricity at less than 40 grams of CO2 emissions/kWh.
  •  Wind and solar with natural gas backup produces electricity at about 200 grams of CO2 emissions/kWh. Therefore adding wind and solar to Ontario’s grid drives CO2 emissions higher. From 2016 to 2032 as Ontario phases out nuclear capacity to make room for wind and solar, CO2 emissions will double (2013 LTEP data).
  • In Ontario, with limited economic hydro and expensive storage, it is mathematically impossible to achieve low CO2 emissions at reasonable electricity prices without nuclear generation.

Full report in pdf

For Ontario you can fill in most of the developed world with the very few exceptions where hydro power generation is feasible 

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