Wynne laying eggs in the Chatham-Kent Pot
The IESO, operator of Ontario's electricity system, recently launched the first major contracting initiative for new industrial wind turbine (IWT) capacity in years, and the municipality of Chatham-Kent was quick to show support for projects within its borders. There are all sorts of messy issues involved in the Large Renewable Procurement (LRP) beyond those of concentrating IWT's in one area, but they are relevant issues only if one is concerned about value; there's no evidence that the IESO is, but this post will review the value proposition of the projects proposed in Chatham-Kent.
The proposed projects, as described by renews in Thumbs-up for 200MW North Kent:
These are two quite separate programs. The GEIA is a long-standing contracting of wind and solar electricity intended, in January 2010, to kick-start an industry with a rapid build-out. The current agreement is downscaled because it didn't do that (for background see my Not Honouring Ontarians: Wynne's Green Energy Contracts - in which I show my contribution to saving $3.1 billion) . Currently of note is that renew's "1169MW of wind projects" does coincide with the revised GEIA's "Targeted Generation Capacity of 1,369 MW overall", but that target included 300 MW of solar capacity. This may not be bad for ratepayers, as the GEIA shows pricing likely to be $105/MWh for wind and $295 for solar, but it, again, is not what was intended in the GEIA version that was revised because the initial agreement's intent was not being realized.
The second project in renews' article will be bid into the IESO LRP (large renewable procurement).
I find the LRP offensive in terms of what is clearly intended to be a false community consultation - but I find the same is true of every "conversation" the duly elected Premier claims to desire, so I won't hover over the point except to say that the industry had far more meetings in the development of their LRP than the single public meeting demanded of project proponents under the LRP.
My larger concern with the LRP is simply that the IESO is not capable of evaluated the worth of electricity generation - and that's true not only of the future supply they intend to contract, but current and past supply too. While the relative value of wind generation continues to drop across the already over-supplied province, the concern is particularly relevant to Chatham-Kent.
The LRP contract will cap the number of hours an IWT can be curtailed before being compensated for the avoided supply. The language is:
If I understand that correctly, it works out to curtailment of about 4% of the output from an IWT producing at a typical 30% annual capacity factor. This is an unnecessary implementation of a poor metric. The 4% likely comes from what the IESO thought the annual curtailment was in 2014 - the first full calendar year where they had the ability to curtail IWT output. This, from the IESO's 2014 Electricity Production, Consumption, Price and Dispatch Data, appeared in January 2015:
I noticed this at the time because I estimate hourly curtailments and was quick to see if my methodology was supported. The total of my hour estimates was a little higher, at 0.4 TWh (400 GWh), than the 0.31TWh (313 GWh) figure implied by the IESO (6.8TWh consisting of 95.4% of a total of 7.13 TWh). There was a change to the IESO's report off of which I estimate over the year so I was not surprised to be a little high, but recent additions to the IESO's very same 2014 Electricity Production, Consumption, Price and Dispatch Data page indicate I was closer than they initially were:
This relates to Chatham-Kent because my estimates are by installation, and summing them up by region to compare the 1st quarter of 2015 to the 1st quarter of 2014, wind curtailment is sharply up and it is most sharply up in the section of the province containing Chatham-Kent, where the massive South Kent wind farm is now producing electricity. Despite a lower wind resource in the first quarter of 2015 resulting in lower unit output, curtailment grew in the west region by ~26GWh while generation grew by 204GWh, so over 10% of the additional production was being curtailed even during a high demand winter period.
[caption id="attachment_406" align="aligncenter" width="660"]
view as a webpage at http://goo.gl/VMb67v[/caption]
There are strong reasons to suggest the IESO will contract more turbines for Chatham-Kent. They aren't procuring capacity for any reason other than they were told to by a government unable to address its Green Energy Act policy error, and they are being provided sites allowing them to check a task off their to-do list. They won't be hindered by their Large Renewable Procurement strategy, which measures price, but protects against the need to ascertain value.
The proposed projects, as described by renews in Thumbs-up for 200MW North Kent:
The Municipality of Chatham-Kent has agreed to support the construction and operation of the two-phase North Kent proposal.
The 40 to 50-turbine 100MW first phase will fulfill Samsung’s deal to build 1169MW of wind projects under the Korean company’s Green Energy Investment Agreement [GEIA] with the province,..
The developer plans to submit the 20 to 40-turbine North Kent 2 scheme to the upcoming 300MW call for wind power in Ontario’s large renewable procurement program.
These are two quite separate programs. The GEIA is a long-standing contracting of wind and solar electricity intended, in January 2010, to kick-start an industry with a rapid build-out. The current agreement is downscaled because it didn't do that (for background see my Not Honouring Ontarians: Wynne's Green Energy Contracts - in which I show my contribution to saving $3.1 billion) . Currently of note is that renew's "1169MW of wind projects" does coincide with the revised GEIA's "Targeted Generation Capacity of 1,369 MW overall", but that target included 300 MW of solar capacity. This may not be bad for ratepayers, as the GEIA shows pricing likely to be $105/MWh for wind and $295 for solar, but it, again, is not what was intended in the GEIA version that was revised because the initial agreement's intent was not being realized.
The second project in renews' article will be bid into the IESO LRP (large renewable procurement).
I find the LRP offensive in terms of what is clearly intended to be a false community consultation - but I find the same is true of every "conversation" the duly elected Premier claims to desire, so I won't hover over the point except to say that the industry had far more meetings in the development of their LRP than the single public meeting demanded of project proponents under the LRP.
My larger concern with the LRP is simply that the IESO is not capable of evaluated the worth of electricity generation - and that's true not only of the future supply they intend to contract, but current and past supply too. While the relative value of wind generation continues to drop across the already over-supplied province, the concern is particularly relevant to Chatham-Kent.
The LRP contract will cap the number of hours an IWT can be curtailed before being compensated for the avoided supply. The language is:
the Annual Cap shall be equal to a notional amount of Electricity, measured in MWh, equal to the Contract Capacity multiplied by 100 hours, multiplied by the number of days in such period, and divided by 365
If I understand that correctly, it works out to curtailment of about 4% of the output from an IWT producing at a typical 30% annual capacity factor. This is an unnecessary implementation of a poor metric. The 4% likely comes from what the IESO thought the annual curtailment was in 2014 - the first full calendar year where they had the ability to curtail IWT output. This, from the IESO's 2014 Electricity Production, Consumption, Price and Dispatch Data, appeared in January 2015:
I noticed this at the time because I estimate hourly curtailments and was quick to see if my methodology was supported. The total of my hour estimates was a little higher, at 0.4 TWh (400 GWh), than the 0.31TWh (313 GWh) figure implied by the IESO (6.8TWh consisting of 95.4% of a total of 7.13 TWh). There was a change to the IESO's report off of which I estimate over the year so I was not surprised to be a little high, but recent additions to the IESO's very same 2014 Electricity Production, Consumption, Price and Dispatch Data page indicate I was closer than they initially were:
This relates to Chatham-Kent because my estimates are by installation, and summing them up by region to compare the 1st quarter of 2015 to the 1st quarter of 2014, wind curtailment is sharply up and it is most sharply up in the section of the province containing Chatham-Kent, where the massive South Kent wind farm is now producing electricity. Despite a lower wind resource in the first quarter of 2015 resulting in lower unit output, curtailment grew in the west region by ~26GWh while generation grew by 204GWh, so over 10% of the additional production was being curtailed even during a high demand winter period.
[caption id="attachment_406" align="aligncenter" width="660"]
view as a webpage at http://goo.gl/VMb67v[/caption]There are strong reasons to suggest the IESO will contract more turbines for Chatham-Kent. They aren't procuring capacity for any reason other than they were told to by a government unable to address its Green Energy Act policy error, and they are being provided sites allowing them to check a task off their to-do list. They won't be hindered by their Large Renewable Procurement strategy, which measures price, but protects against the need to ascertain value.
The Power Purchase agreement for North Kent has reportedly been signed by the IESO.
ReplyDeleteToday Recharge news reports: "Pattern Development and Samsung Renewable Energy signed a 20-year PPA for the 100MW first phase of their North Kent wind project with Ontario’s Independent Electricity System Operator."
-http://www.rechargenews.com/wind/1397604/pattern-rolls-in-canada-with-100mw-north-kent-ppa
Assuming the signing was Monday, the South Kent location looks to have been curtailed for 10-hours that day. At the end of April 12-month totals for Ontario's exports, net exports, and curtailed power will all likely be records since market inception, with the average price near a record low.
The IESO's first contract signing is not good. Worse, there's no indication they could evaluate whether or not it was.