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Recommendations not (yet) followed, Part II: affordability platitudes are nice, actual affordability better

Decarbonization requires non-emitting baseload: more boring, please

Last time we discussed the process by which Ontario plans and executes electricity system changes. The organization mandated to carry this out, the IESO, is not without critics, and among the very best informed of these is the Power Workers’ Union (PWU), which represents workers in the entire electricity value chain in Ontario—generation, transmission, and local distribution.

The PWU feels, and we agree with them, that Ontario is at a serious juncture in its electrical development and that the IESO is not taking seriously enough some important likely new demand categories, including space heating, which were it to be electrified (it is currently almost entirely served with natural gas) would make Ontario overwhelmingly a winter peak jurisdiction.

For the province to realistically meet heating demand with electricity, the PWU believes much more attention should be paid to zonal baseload requirements, as these would increase significantly under any electrification scenario. Because the IESO has consistently underestimated zonal and overall demands—each Annual Planning Outlook (APO) typically significantly upward-adjusts its predecessor’s estimate of baseload requirements—the PWU wants a fundamental re-think of the entire procurement process. To get this and other areas of concern onto the overall planning agenda, the union has developed a series of public discussion papers, and began releasing them in April. The third was published in early June.

The emphasis in these papers so far has been the planning process, or lack thereof, for new large baseload (i.e., nuclear), the IESO’s flawed forecasting which ignores large potential sources of load growth such as space heating and which even absent heat has produced guesses at future demand that have typically proved wrong upon publication, and—most worrying—the lack of concern for cost accountability through the electricity system.

We’ll focus on the last point, affordability, in this post, which deals with the most recent of the PWU discussion papers.

Affordability: slogans more honoured in the breach than the observance

One of the most remarkable features of communication from Ontario electricity officialdom is the dogged repetition of platitudes about affordability while in the next breath touting plans to insert yet more variable renewable energy like wind and solar into the system. The PWU notes IESO’s intent to procur 5 TWh of new generation under its LT2 RFP, and that the IESO assumes this new generation will be non- or low-emitting due to the federal requirement under the Clean Energy Rule.

Yet the RFP criteria appear to favour VRE, which the IESO as the organization that administers the Global Adjustment must know carries far higher cost than other low- or non-emitting generation like hydro and nuclear . Further, the storage procurement assumes that gas-fired generation would recharge it, which is not only at cross purposes with low- or non-emitting generation but affordability as well.

So there are obvious and reasonable questions about who’s driving the bus, and where it’s going. All we can say for sure is it appears that nuclear has been thrown under it, along with any intention to achieve affordability other than pro forma mentions in executive summaries.

Prudent procurement of Ontario’s needed electricity assets should transparently
reflect the consequential impacts of cost, including total system cost, economic and
social development, and regional needs.
—Power Workers’ Union, “Mitigating Affordability Risks to Ontario’s Electricity System Requires Accountability,” p. 2

A choice of winners and losers, but you can only pick one

From our perspective, IESO’s current approach appears to be a stealth version of the Green Energy Act, which, while enormously off target and frankly disastrous on many levels including electoral/political, was at least up front about favouring VRE through revenue guarantees (effectively power purchase agreements, or PPAs) that ratepayers covered. GEA framers were not picking winners, they were picking losers.

The IESO of all organizations should have grasped this. It’s difficult to understand how after a decade and a half following the GEA they cannot or will not apply their intimate familiarity with the cost impacts of VRE to implementing policy that realizes the current minister’s and government’s desire for affordability in electricity.

The IESO is not wrong that generators must be made whole financially, through sales of electricity. But VRE requires forcible whole-making, where the ratepayers pick up the tab for inefficient generation that’s never in tune or on rhythm with the choir that is the electrical grid.

The IESO was once the pool operator of the vertically integrated monopoly electric utility called Ontario Hydro. Its policy side seems populated with VRE cheerleaders still eager to please a government that lost power, with extreme prejudice, 6 years ago. Its technical side knows the impacts of VRE on minute-by-minute operation of the grid, and knows why increased costs are one of those impacts.

The PWU spells out these system impacts, not just generation curtailments when there are surpluses, but also transmission (rights of way, circuits, and line losses), and asks the IESO—politely but with increasingly evident impatience—to please consider them in its system planning.

Patience the road to wisdom, but we arrived decades ago

PWU’s impatience is warranted. IESO planning in past decades has constituted a filibuster against new nuclear. It is common sense that of all the “options” for new low- or non-emitting generation, nuclear is the only viable one. This should be obvious, yet here we are, with our official electricity planning body acting like it’s starting from a clean slate and everything’s possible. Worse, it appears to assume not only that ratepayers will pick up the tab for IESO’s preferred approach, but also that they should.

PWU concludes this second discussion paper by recommending among other things that IESO (and the government and the Ontario Energy Board) provide “high-quality information” to customers and the public.

This means data. The IESO to its great credit provides a lot of it. Most people have no idea. There is other data too, that could complement IESO’s—data that relates to weather, the driver of heat demand, which will one day be electrified. Few people are aware of the magnitude of heat demand relative to current electrical demand. Fewer still know the breakdown between space and DHW heating, let alone the technological and electrical implications of either or both.

Data and electricity are the new oil

For example, how different would household electrical demand in, say, Alliston be from that in Barrie, 25 km away as the crow flies, in an electric heating scenario? It may surprise you to know that in January, daily minimum outdoor temperature in Barrie is on average 2 degrees below that of Alliston. Monthly maximum difference is around 6 degrees; the 2011 plot zooms in on that difference for that month/year.

The figure shows daily minimums, Alliston in black and Barrie in red, in Januaries since 2005. The IESO has electrical demand data at the granularity to show the impact of electric heating in each area (in this case both Alliston and Barrie are part of the Alectra system). This should be made public like generator output and capability.

We’ll pick that up next time, as we continue our discussion of the PWU papers.

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