Wind%and%the%Electrical%Grid%/%OSPE%Study%FindingsWind%and%the%Electrical%Grid%/%OSPE%Study%Findings% 5% Context%! Ontario Green Energy Act in mid 2009 changed the nature of electricity

Wind and the Electrical Grid -‐ OSPE Study Findings 2

²  OSPE and Energy Task Force role in policy advocacy

²  Why Ontario wind generation is out of step with electrical demand

²  Why wind generation is difficult to integrate into Ontario’s electrical grid

²  Why electricity market prices collapse and even go negative in Ontario

²  Why Quebec’s hydroelectric storage capacity is not available to Ontario

²  Why wind generation results in higher GHG emissions in Ontario

²  Why nuclear generation is needed for low GHG emissions

²  The economic impact of load following (dispatching)

Outline of Presenta:on


²  The Ontario generation (other than solar) and customer demand data was obtained from the IESO website (http://www.ieso.ca). Analysis done in 2011 but demand in 2012 and 2013 was similar.

²  Electricity production cost data was obtained from Ontario FIT rates and the Projected Costs of Generating Electricity, 2010 Edition, Organization for Economic Co-operation and Development, median case with carbon tax removed.

²  You can download OSPE energy policy documents and this slide presentation at:

http://www.ospe.on.ca/chappres

Data Sources for Today’s Presenta:on


OSPE and Energy Task Force Role

²  Energy policy affects business opportunities and that affects engineering job opportunities.

²  To bring an engineering perspective to the attention of public policy makers to help improve energy policies.

²  Non-partisan contributions from OSPE members with diverse engineering backgrounds.

²  OSPE’s role is NOT to do actual engineering but to call attention to policy issues that need engineering input.


Context

²  Ontario Green Energy Act in mid 2009 changed the nature of electricity production.

²  Opened up the electrical grid to private sector producers of wind, solar and other forms of renewable generation.

²  Introduced OPA FIT program & rules. ²  Created many design and operating challenges because

engineering factors were not considered during development of the Act.

²  Ontario has more base load capacity than it can use (11,000 MW minimum demand but over 17,000 MW of installed base load capacity in 2013, and growing).

²  Ontario has very little storage to absorb intermittent (variable) sources like wind and solar generation. Flexible backup is needed.

Wind and the Electrical Grid -‐ OSPE Study Findings

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Ontario Electrical Demand Profile for 1 Year

ßBase load is provided by: -‐  Must run natural gas -‐  Must run hydraulic -‐  Must run nuclear -‐  Must run CHP -‐  Night ,me wind

ßPeak load is provided by: -‐  Solar -‐  Day,me wind -‐  Flexible nuclear -‐  Flexible hydraulic -‐  Flexible CHP, bio-‐energy -‐  Flexible natural gas


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Ontario Electrical Demand Profile for 1 Day

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Wind Genera,on Does Not Align With Demand

²  Because of Ontario’s proximity to the Great Lakes, wind is primarily driven by the solar cycle and associated weather patterns.

²  Wind is highly variable in Ontario.

²  Wind is strong at night when demand is low

²  Wind is strong during spring and fall when demand is low

²  Wind is weak in the summer when demand is highest



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Ontario Wind Output Sep 2010 - Sep 2011 Total Production by Hours of the Day Installed Wind Capacity of 1,412 MW

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Total System Demand vs Wind Generation Output - Normalized to 100% of Peak

( lowest demand week in 2011 )

Total Demand incl. exports Wind Output

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Total System Demand vs Wind Generation Output - Normalized to 100% of Peak

( highest demand week in 2011 )

Total Demand incl. exports Wind Output



²  Wind drops below 10% of installed capacity across the province approximately 20 days a year for at least 24 hours at a time.

²  By 2021 Ontario will not have 7,500 wind turbines of approximately 1 MW each. It will have one 7,500 MW wind turbine.

²  Wind capacity requires a much higher system reserve (backup) than conventional power plants.

²  Wind capacity in Ontario requires approximately 90% of flexible backup supply to meet reliability needs compared to 15% for conventional power plants.


The Impact of a Backup Supply for Wind ²  Because the backup supply needs to be available all the time,

wind is effectively a displacement energy source – it displaces the backup energy source.

²  Consequently the economic value of wind energy is the displaced fuel cost of the backup energy supply (3 cents/kWh for gas, 0.5 cents/kWh for hydroelectric and nuclear).

²  When wind displaces gas we also reduce CO2 emissions by 400 kg per MWh or 400 g per kWh.

²  The FIT rate for wind generation is 11.5 cents/kWh or about 4x its day-time value and 23x its night-time value. That’s not including transmission upgrade costs.

²  The high premium for wind energy causes the global adjustment portion of electricity prices to rise which then increases the cost of electricity to consumers and businesses.


²  Our base load generation resources, especially nuclear, are inflexible.

²  Nuclear does not lower output enough when demand is low (Bruce Power is the exception – they recently 2,400 MW in total, out of a nameplate capacity of 6,300 MW).

²  Ontario has no seasonal storage and very little daily storage (approx. 2,000 MW for a few hours).

²  The poor alignment of wind production with demand combined with inflexible nuclear and lack of storage makes integrating wind generation into the grid difficult and costly.


²  Load demand has not grown as much as predicted due to the global recession and loss of manufacturing and resource jobs.

²  Conservation programs are causing the night-time load to drop.

²  Air conditioning loads are causing the peak load to rise in the summer.

²  Grid operating capacity factor is now only 63%. Which means 37% of our grid assets are underutilized.

²  We have too much base load capacity at night and weekends especially during the spring and fall.


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Why Electricity Prices Can Collapse

²  Ontario uses an auction market to set the market clearing price to determine which plants run and which ones shutdown.

²  If a plant cannot shutdown for technical or economic reasons, it must lower its bid price into the auction to ensure it is chosen to run.

²  Nuclear plants have high shutdown costs because the reactors cannot be re-started for 3 days after a shutdown.

²  Inflexible nuclear units must bid large negative prices into the auction market to ensure they keep running.

²  However, during very low demand or strong wind periods this can result in very large negative market clearing prices.

²  This has alleviated to some extent now that Bruce Power and wind and solar plants begin to load following at a slight negative price.


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Why Hydro Quebec’s Storage Cannot be Used ²  There are technical and economic reasons why Quebec storage is

not available for Ontario use.

²  Ontario will need about 7,000 MW of storage to effectively integrate 10,000 MW of wind and solar generation.

²  The present tie-lines to Quebec are limited to 2,000 MW.

²  To utilize storage we need to both store (send) energy during low demand periods and later receive energy during peak demand.

²  Storing energy is easier - water is held back at Quebec’s dams.

²  Receiving stored energy during peak hours is a problem because Quebec’s dams have not been sized to supply both Quebec’s peak load and at the same time to return Ontario’s stored energy.

²  Cost to upgrade the transmission lines and dams is prohibitively costly.


Addi,onal Wind Genera,on Can Increase GHG Emissions

²  Hydroelectric and nuclear generation do not emit GHG’s.

²  Prior to the new dispatching rules for wind and solar that were implemented on Sept 2013, inflexible nuclear units had to be shutdown during periods of low demand and strong wind.

²  Nuclear shutdowns last 3 days. So for the subsequent 2 days after the wind subsides you need to back up the lost nuclear and wind output with natural gas which emits 400 kg of CO2 per MWh.

²  IESO estimated a nuclear shutdown strategy to manage surplus generation will result in $180 - $225 million in extra fuel costs and 1.6 to 2.0 million tons of CO2 emissions in 2014 alone (IESO FPFG, Jan 24, 2012, SE-91 Renewables Integration presentation).


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Low GHG Emissions Impossible Without Nuclear

²  Ontario has negligible remaining amounts of cost effective storage, hydroelectric, bio-energy, and geothermal capacity.

²  Wind and solar do not emit CO2 but they need a backup source for periods when the wind and sun are not available.

²  Gas fired generation is currently the backup supply of choice in North America due to low gas prices of $4 per million BTU.

²  However, gas fired generation emits 400 kg of CO2 per MWh.

²  To achieve low GHG emissions you need a zero GHG emitting backup for wind and solar.

²  Flexible nuclear plants are the only economic zero emitting technology available to Ontario at present. Storage is still much too expensive.


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Low GHG Emissions Impossible Without Nuclear

²  Solar has only a 13 to 15% capacity factor and wind has only a 30% capacity factor. The grid has a 63% capacity factor. The difference must be made up by gas fired backup generation.

²  A wind-gas powered grid emits about 200 kg of CO2 per MWh.

²  A solar-gas powered grid emits about 300 kg of CO2 per MWh.

²  Ontario is currently operating at about 80 kg of CO2 per MWh thanks primarily to hydroelectric and nuclear generation.

²  If we used flexible nuclear plants with load following capability to back up wind and solar we could drive emissions even lower, close to zero kg of CO2 per MWh.


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The Economic Impact of Load Following (Dispatching) ²  The real “all-in” cost to supply additional demand is the levelized

cost of electricity (LCOE). LCOE is the total cost of production divided by the energy produced by that plant during its life.

²  Capacity factor has an enormous impact on LCOE.

²  LCOE is not the wholesale market price (HOEP) nor the retail price of electricity (TOU).

²  Our retail prices for electricity overcharge for base load energy and undercharge for peak load energy.

²  This discourages demand at night and encourages demand during the day – the opposite of what the grid needs to operate efficiently.

²  This encourages poor u,liza,on of the grid (lowers the capacity factor) and increases the cost to produce electricity.

²  Energy policies that improve grid capacity factors will help lower electricity costs and GHG emissions.


Why We Don’t Like to Dispatch Solar & Wind Gen’n Abbrevia:ons:

²  LCOE = the levelized cost of electricity = total life:me costs divided by energy produced.

²  DF = discount factor ²  CCGT = Combined

Cycle Gas Turbine ²  M.BTU = Million

Bri:sh Thermal Units ²  CF = Capacity Factor


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Summary

²  We need to include engineering considerations into the development of energy policy.

²  We need to better integrate our renewable generation sources to avoid wasting their environmental benefits.

²  In the longer term we need to:

²  manage demand to align be4er with available supply (smart grid). ²  improve electricity pricing to encourage be4er grid asset u,liza,on. ²  improve nuclear flexibility (load following) to reduce GHG emissions. ²  incorporate storage where it is cost effec,ve.


Ques:ons ?

Notes: This presenta:on can be downloaded hUp://www.ospe.on.ca/chappres Would you like to become a member of OSPE? Visit: hUp://www.ospe.on.ca/?page=JOIN

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www.ospe.on.ca

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Wind%and%the%Electrical%Grid%/%OSPE%Study%FindingsWind%and%the%Electrical%Grid%/%OSPE%Study%Findings% 5% Context%! Ontario Green Energy Act in mid 2009 changed the nature of electricity