WTO Ruling Against Ontario Renewables policy isn't about subsidizing renewables ... yet

The World Trade Organization (WTO) has issued it's rulings in disputes involving Ontario's renewable energy generation sector, finding, as previously reported, against the local content provisions of procurment programs, but not ruling against the feed-in tariff (FIT) program as a subsidy that violates WTO agreements.
In the press:
Richard Blackwell opened his article in the Globe with "Canada will appeal..."
The article quotes a Stuart Trew of some council of some Canadians to opine:

If there is no way to provide incentives for green energy in a free market system, “there is little hope of reducing our greenhouse gas emissions and addressing the climate crisis...”

The ruling on local content has little relevance to the provision of renewable energy.  Japan's successful complaint was about procuring Ontario manufactured renewable energy - not about procuring renewable energy.

The European Commissions welcomed the ruling by stating it wants to export product to Ontario.

John Bennett, of a rumoured Sierra Club in Canada,  is interviewed:

... it is ironic that Japan and the EU were the source of the complaints, because they use subsidies and support for their solar and wind industries. He said he would advise the next premier of Ontario to ignore the ruling “like the Prime Minister is ignoring the Kyoto Protocol.

The Prime Minister that ignored the Kyoto Protocol is the one that initially signed it.  The current Prime Minister gave it all the attention required to withdraw from it.


This Prime Minister should ignore Ontario's request to appeal the ruling.

A spokeswoman for the federal Department of Foreign Affairs and International Trade said that “as this is the first time Canada has received a WTO panel ruling arising solely from provincial policy or legislation, the government of Canada will be appealing the decision as requested by the government of Ontario.”

Proponents for renewables should also want the government of Canada to stop acquiescing to Ontaio's whimsical requests.

There were two disputes heard, with Canada - meaning Ontario - being fournd "in breach of its obligations" on the content requirement, but not on the feed-in tariff (FIT) constituting an illegal subsidy.  While the finding  of breach was unanimous, there was a minority opinion on the FIT that should be treated as a warning to people like Stuard Trew, John Bennett, and the other nice folks who want to keep the FIT scheme running.

...by bringing these high cost and less efficient electricity producers into the wholesale electricity market, when they would otherwise not be present, the Government of Ontario's purchases of electricity from solar PV and windpower generators under the FIT Programme clearly confer a benefit upon the relevant FIT generators, within the meaning of Article 1.1(b) of the SCM Agreement. 

The appeal might have the consequence of getting the entire FIT scheme abolished.
The European Wind Energy Association (EWEA) is urging the European Commission to use the ruling to open up trade to "bring more renewable energy online and drive down costs."

Canada, driven by Ontario's FIT program, is reportedly the only jurisdiction in the world with rising prices for solar photovoltaic modules.

While the majority of the FIT program has been in disarray, and inactive, for some time, the one component where contracts are being offered is the smaller scale solar niche - a niche consultants advised the government to pursue to maximize vote buying.  

Other FIT categories are now seeing growing attrition rates in the planned projects (perhaps a third of all projects holding FIT contracts).  Much of the hesitancy to proceed with projects should be due to the fact Ontario's grid won't be able to accept much of it, but there's also revenue uncertainly being generated elsewhere in the world:

A broad coalition of international PV groups has pleaded with the European Commission (EC) to help soften or reverse the recent outbreak of laws seeking to claw back money and support pledged to solar-energy installations. - Recharge

Efforts to claw back some of the exhorbitant contract costs may come to pass in Ontario too.  "I stole it fair and square" is still presented as a legitimate argument here - it's usually described differently, such as, "the government needs to honour it's contracts."

Which may be true.

That would be a reason for Canada to honour the WTO ruling and ignore Ontario's request to file a baseless appeal that is as likely to lead to rulings threatening subsidies for generation throughout the world as it is to allow a handful of rent-seeking firms to generate some very expensive, temporary, employment in Ontario.

Whose Meter Is It: Dopey Ontario and Smart Meters

Another data management debacle in Ontario.

Smart technology refers to components that can communicate, the communication protocols and networks, the servers, the software, the security protocols, the network architecture controlling access.  Our governments seem to lack the technical expertise in information technology and the bureaucratic backbone to face down poor direction. 

me, January 21, 2011, SMARTINESS: SMART METERS AND SMART GRIDS WITHOUT SMARTS

I've just read through Access to Consumer Data: A Vignette from the Ontario Smart Grid Forum

Beyond the needs of TOU billing by utilities however, lie a wider range of products and services – many of which may be enabled by real‐time or near real‐time metering data. Access to real‐time smart metering data has been a topic of extensive examination and discussion by the Ontario Smart Grid Forum, particularly in the context of enabling the concept of the “smart home”.  Access to real‐time data is the focus of this informational ‘vignette’.

The Smart Grid forum considers smart homes desirable, spends some time noting competition for smart home services is desirable, and quotes a previous report noting:

"Unlicensed third‐party service providers, for example, want access to customer smart meter data so they can design and commercialize new energy products and services for residential, business and industrial consumers.”

Well, one main goal of old school local distribution companies was security, and old school security quite often meant proprietary and unique protocols - which would be the opposite of open access and open architecture.

Ontario’s Advanced Metering Infrastructure (AMI) systems pre‐date many emerging interoperability standards which might assist in the controlled and secure exchange of real‐time smart metering data between third parties and LDCs.   As a result, there is presently no single common approach for third parties wishing to offer products and services that require real‐time smart metering data. This will be a reality in the province for many years to come. In order to overcome this interim barrier, the Ontario Smart Grid Forum recommended in its May, 2011 report, the establishment of a common AMI test bed facility for the province where third parties can develop and test interfaces with the various different propriety AMI standards currently in use in the province.

But ... all the meters are new.
In 2004 data issues were well known to data professionals.
As Canada's long-gun registry (a $2 billion database program), and the eHealth largess in Ontario should have indicated back in the day, our governments aren't strong at data management.

Ontario's desire to be smart grid pioneers through the rapid roll-out of smart meters was done with little inital data design discipline.  This "vignette" demonstrates the premature roll-out has wiped out any early adaptor advantage already.

Green Button Initiative:  A fast‐emerging solution being developed under the auspices of the United States National Institute of Standards and Technology (NIST) Smart Grid Interoperability Panel (SGIP) offers a non‐proprietary alternative to data access.  Its potential adoption in Ontario could be seen as an alternative approach to the AMI Test Bed facility.

Could be.
Hell ya... could be.

Proprietary leanings already killed the Google PowerMeter and Microsoft Hohm projects, initiated back when, for some reason, the IT giants assumed individuals would have access to "their" metering data, perhaps real-time pricing signal and the ability to control their electricity consuming devices across a network, presumably, the one we call the internet.

The 'vignette' shows item 1 of the Smart Grid Forum's progress check as

1. "...[LDCs] should retain the ultimate responsibility for confidentiality of data while it’s residing in their meters."  

The key word here is "their". Consumers could control their own electricity use without any utility involvement beyond a connection to receive metering data, real-time ~ and the utility could push pricing signals securely in real-time separately from the metering.  The Progress Check's second point notes a theoretical desireability of customers having "ultimate control over data release," but that skirts the real-time issue for controllinging consumption.

This small issue, of ownership of the data being collected at the meter, comes more into focus when la 'vignette' notes: 

3. The Energy Services Interface (ESI) between the utility’s systems and those within a customers’ premise needs a clear demarcation point for liability over the data ...

Exactly.
A push interface would resolve liability quite quickly - allowing the customer to register a device they own that could recieve pushed data from the utilities meter:  a one-way push interface to a single point on the consumer side, which the consumer owns and is responsible for securing.

I suspect the security issues are complicated by a desire for push and pull - meaning the ability to control consumption devices in the residence, and the ability to collect a new revenue stream.

I received an offer to join a PeakSaver Plus program last week, from my distribution company.  In order to take advantage of the expensive program you need to have a single family dwelling with a central air conditioner in working order.  That program is funded by money the Ontario Power Authority takes from ratepayers through the global adjustment mechanism.
Ratepayers including food bank users, the former horse owners who have searched for somebody to give their horses as feed prices are way up and revenue likelihoods are way down, and a broad collection of others struggling without a well-functioning central air-conditioning system in a single family home.

Apparently, the smart grid is to enable elitists to implement regressive policies.

Unfortunately for elitists, populists have contrary opinions of what the devises might be good for.

Now that we know the utility can communicate with central air, lets charge triple rates for electricity consumption by central air devices.
It's a huge issue in Ontario, which was for most of it's years a winter peaking jurisdiction.  The growth in summer demand is an issue, and, fortunately, we now have a list of homes with central air which we can charge inflated electricity rates to recover the capacity costs for units needed above the winter peak demand needs.
There are other consumption pigs we could put heavier prices on too - pool pumps, for instance.

It's likely wiser to keep electricity providers as electricty providers and avoid chosing rich people to reward with bling thermostats on the basis that because they use the most they offer the greatest opportunity for reducing demand.

Your utility should be your electricity supplier.

You should have access to the data your utility collects from the meter they charge you from.
Others should not.

The latest communication from the Ontario Smart Grid Forum hints that Ontario's best course is now to adopt the standards being developed, and implemented, in the United States.  If they want to do something intelligent, they'll adopt that course and go the added step of preventing utilities from collecting revenues from any type of meddling with controlling consumption on the other side of the meter.

Darlington Refurbishment is the best option.

The Canadian Nuclear Safety Commission (CNSC) is currently holding hearings on licensing related to the continued operation, and refurbishment, of the Darlington nuclear generating station.  There are many groups, and individuals opposing the extension on all sorts of grounds, but the main tactic of anti-nuclear campaigners is to argue that other options were not explored before choosing nuclear.
What might be considered to replace the Darlington nuclear generating station?

The Globe and Mail's Richard Blackwell wrote an article, as the hearings started, that told of a nuclear industry attacking a solar industry. "Solar industry urged to push back against nuclear 'attack'" accused the Canadian Nuclear Association (CNA) and the Ontario Power Workers Union (PWU) of "labelling renewables such as wind and solar as “intermittent” and expensive, and encouraging more investment in nuclear."  



There are good reasons for Darlington's supporters to label solar as "intermittent."  In 2011 there were only 15 hours when Darlington's capacity factor was below 70%.  OPG reported the 'capability factor' of Darlington to be 95.2% in 2011, which was a record, but not far above it's average for the past decade of ~89%.

There is little reporting on hourly production of solar production.  I've grabbed an average hourly output for an array in London, Ontario, and adjusted it to an 18% capacity factor.  The most common output level is 0, which is the output level for all winter peak hours: in 2011 the winter peak was 22,733 MW, but surprisingly the highest demand levels where solar would have been unproductive were just after sunset on some hot July evenings.  Demand dropped from 24,869MW to 23,600MW between hours 20 and 22 on July 21st, off the day's, and year's, high of 25,450 at hour 16.

The Ontario Power Authority last reported it's contracts for "in-service" and "under development" solar capacity as 2,018MW.  That would seem to be in the ballpark for the difference between winter and summer peaks, and summer daytime and summer nighttime peaks.  Above this level, solar capacity would need to be accompanied by another technology if the stability of Ontario's grid is to remain - whether that be gas, coal, or some as yet unknown storage capability.  All options should be accounted for as an additional cost of intermittent supply.   Without additional supply costs, an infinite amount of solar PV capacity could not replace Darlington's output over half of the time.

The problem in pushing back against arguments that solar is intermittent and expensive is that solar is intermittent, and if you are trying to replicate the production of Darlington, it is expensive.

Wind also cannot be relied on for supply (I've written on the subject extensively).

In order to estimate the costs of replacing Darlington, I've looked at the wind and solar capacities required to generate the same annual output as Darlington (roughly 30TWh): I've used 3173MW of solar capacity operating at an 18% capacity factor, and 9376MW of wind capacity operating at a 29% capacity factor.  I've based figures on 2011's actual figures for Ontario Demand, wind turbine locations in service prior to 2011, Darlington's hourly production, and the generic solar profile (in the absence of any useful government reporting).  The total capacity breakdown is the required renewables' capacity using a proportional mix expected from Ontario's Long Term Energy Plan (LTEP - 2700/8000MW).

The distribution of hourly generation is much different.  The spreadsheet embedded below shows the forecast average generation (by month and hour of day) from the 12,549MW of renewable (wind/solar) capacity, less the actual generation from the 4 units at the Darlington nuclear facility.




Surplus baseload generation (SBG) would often be less of an issue under this scenario, where renewables replace Darlington, except in the shoulder months, or months of unusually strong wind output - and these are already the periods of the most significant SBG events.

To achieve the same annual production of Darlington wind and solar only produce more than Darlington 40% of all hours.  During those hours, the wind/solar mix would produce ~8.5TWh more than Darlington, of which 3.8TWh could replace a fossil fuel source and 4.8TWh could not (within Ontario).  During the other 60% of the hours, either nothing would replace the difference to Darlington's output, or fossil fuel based generation would.

Attempting to replace Darlington's generation with an equal output of generation from wind and solar would increase emissions in Ontario.

The distribution is also problematic in that while most months will see higher production during afternoons, the expected annual peaks are in hour 16 of July, which is an hour that the modeling shows as losing generation if 12,549MW of renewable capacity replace 3,512 MW of Darlington capacity.  In both years I applied the model to, there is an additional need for ~1500MW of capacity to meet peak demand in the renewables scenario.
In order to replace Darlinton's production by emphasizing wind and solar, four times Darlington's generating capacity is required.

My estimate of average cost for the renewable generation needed to replace Darlingon, based on feed-in tariff contract rates, is $195/MWh, with a minor increase for the procurement of extra natural gas-fired capacity, and ignoring the significant costs required to build out the grid - and ignoring the generation that would need to be curtailed due to grid congestion.

Slide 38 IPSP Stakeholder Consultation Supply Presentation

The Ontario Power Authority's 2011 hearings in preparation of an Integrated Power System Plan (IPSP 2) did cost out a range of supply options.  The cost of "Nuclear Modernization" (refurbishment) was estimated in the $50-$90 range - and that does not require procuring additional fossil fuel generation and utilizes existing grid assets.  Even at the high end of the Darlington's refurbishment estimates, the option is over $3 billion a year cheaper (total market value is currently ~$10 billion), and has fewer emissions.

$3 billion is roughly the figure that utilities today would be expected to make annually off of an equity valuation of $30 billion dollars, which is roughly the old Ontario Hydro debt before it was broken up, and the 'residual stranded debt' (RSD) and formerly related debt retirement charge (DRC) were created..

There always seems to be a group that figures public power is depriving them of $3 billion.

The DRC hasn't been going to pay down the RSD for years, but that should come as no surprise to those who have looked at the activities around Ontario Hydro in the 1990's, as Darlington's 4 units were coming online.  In 1992 Premier Bob Rae abandoned the "power at cost" mandate of Ontario Hydro, and around that time rates were also frozen.  In the following years cost cutting brought down Ontario Hydro's debt (during the rate freeze), but performance at the generating stations also worsened with the cuts, which lead to the shuttering of 7 nuclear units.  The write-down on the units became a large part of the RSD.
Emissions soared - from under 16 Mt CO2 eq in 1994 (as Darlington became fully operational) to over 41 Mt CO2 eq in 2000.
Emissions came down since the turn of the century with the return, by 2006, of 4 of the 7 shuttered nuclear units  - recently 2 more of those units, now refurbished, again became operational, at a contracted cost to ratepayers of 6.8 cents/kWh (~$68/MWh).

The generation source that could be cost competitive with a refurbished Darlington is Combined Cycle Gas Turbine (CCGT) running at high capacity factors with natural gas pricing at or below historical norms ($7/MMBtu) - and without a carbon price.  CCGT is not competitive operating at low capacity factors, meaning it is not competitive when burdened with serving renewable generators in a support role.

Replacing Darlington in a manner that may be cost competitive with the refurbishment option, with natural-gas fired supply, would essentially double Ontario's emissions from the electricity sector.

Replacing Darlington with renewables/gas would add approximately 30% to the cost of electricity in Ontario, and it would also increase emissions.

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Notes:

At the instigation of the Ontario Energy Board, Scott Madden Management Consultants were contracted to provide OPG with a benchmarking study, which was delivered in 2009.  That study showed the "3-Year Total Generating Costs per MWh ($/Net MWh)" from Darlington at only $30.08/MWh (page 5 of OPG Nuclear 2009 Benchmarking Report).

Annual production from Darlington would have a generating cost of ~$900 million, and a street value in Toronto in excess of $2 billion.

November Stats: Global Adjustment climbs to two-thirds of charge

The IESO's second estimates for November put the global adjustment rate at $55.68/MWh for November, which is more than double the weighted average HOEP rate of approximately $26.52.

November saw new rates for customers under the OEBs Regulated Pricing Plans (RPP) that should average $79.32/MWh, so November's charges, if not adjusted downwards, would reverse the summer's trend where customers with RPP rates paid more than customers without them - business exposed the the commodity charge (HOEP + GA) will see rates rise almost 14% from November 2011.

One month ago I wrote that the IESO's month-end global adjustment estimate looked low:

They'll need to revise upward their estimate of $542 million by close to 10% if the final ends close to my estimate of  $585 million.

They did not.  The October final was not changed significantly - but now November's $588.2 million estimate exceeds my $531 million estimate by a similar amount.  It looks to me like they've moves the costs forward.  The 12-month total for the global adjustment is now over $6.5 billion dollars as it increases at a quicker pace than anticipated by Ontario's Auditor General in his 2011 Annual Report (pg 94)


The overall value of the total market continues to be relatively stable, as does demand.  The impact in transferring charges from the HOEP rate to the global adjustment does cause Ontario rates to go up because export customers don't pay the global adjustment - meaning in November export customers paid 1/3rd of the price Ontarian's did.  The annualized difference between what export customers pay for all net exports, and what Ontarians pay for the same amount of electricity, is approaching $500 million dollars.

Exports did rise steeply in November, as did nuclear production with the return of 2 Bruce A units.  The increased nuclear output did also result in a decline in coal-fired generation and in gas-fired generation
Wind powered generation was down significantly from both October 2012 and 2011's November - 'wind down/coal down' following the 'wind up/coal up' relationship of the preceding periods.

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My estimates on production costs are here
My preliminary monthly reporting,now for November, is here