Natural gas prices go lower and Ontario electricity prices go higher – 2012 April

April 23, 2012
I haven’t noticed the price of Ontario’s electricity dropping over the past few years despite the lowest ever natural gas prices. Blame the Ontario government’s misguided policy of promoting more and more wind generation on the grid under the protection of the Green Energy Act. Unreliable wind skews the market leading to high take-or-pay payments instead of low market prices going to the gas-fired generators and the need to export electricity at subsidized give away prices. No one would build merchant gas-fired generators in Ontario since they would be operating at low capacity factors and would price themselves out of the market. Nuclear electricity provides around 60 percent of Ontario demand and hydro about 20 percent leaving 20 percent or so for the rest, that is, natural gas and unreliable wind under Ontario Power Authority contracts, with coal coming in at peak loads. Without wind on the grid gas would have a better chance of supplying all the intermediate and peaking load and see more and steady operating hours giving lower generation prices. Of course the present low Ontario demand leading to frequent periods of surplus baseload generation, that are exacerbated by wind, also contributes to the mess the electricity market is in.
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No future for wind in Ontario – thestar.com

April 10, 2012

An article by Donald Jones in the Toronto Star, from March 2009, was an early indication of the problems integrating intermittent generation with Ontario’s baseload nuclear capacity

No future for wind in Ontario – thestar.com.

Although nuclear units can handle the daily and weekend changes in electricity demand, they have limited capability for the kind of frequent power-up and power-down requirements that would be needed for this support. Furthermore, hydroelectric plants may not always be available due to fluctuations in water supply and water management agreements.

Even without restrictions on nuclear and hydro, it makes little economic sense to run reliable suppliers of steady power, with high fixed costs and low operating costs, at reduced output to support the expensive, intermittent and varying output from wind farms.

So, with coal being phased out by 2014, natural gas-fired generation will have to be used to support wind. Due to the simultaneous demands of home heating and electricity generation in the winter, that may lead to gas shortages. So some of these plants may be dual fuelled with gas and oil, which is not a pleasant thought.

The Ontario government is putting too much faith in natural gas for electricity generation, as the United Kingdom did with its “dash for gas” from the North Sea in the 1990s when gas was cheap. Now the U.K. is in terrible shape with its gas running out and the threat of power shortages in the next decade.


Articles by Donald Jones

April 10, 2012

Donald Jones, P. Eng., and Retired nuclear industry engineer, has written articles appearing on a number of blogs, including Rod Adams’ Atomic Insights, Stephen Aplin’s ‘Canadian Energy Issues‘, and Scott Luft’s Cold Air Currents.

Here are links to articles, on various sites, written by Donald Jones, P. Eng.:

  1. IESO – less dispatching of nuclear if you please”
  2. An alternative Long-Term Energy Plan for Ontario – Greenhouse gas-free electricity by 2045“. An earlier version of this article is posted here
  3. IESO – will Ontario’s wind turbine power plants reduce greenhouse gas emissions?
  4. Gas and wind on the Ontario grid – not a chicken and egg thing
  5. Ontario needs more than 2,000 MW of new nuclear despite what the Long-Term Energy Plan says
  6. More wind means more risk to the Ontario electricity grid” – also posted here
  7. Why Ontario has to export electricity
  8. Nuclear and Wind on the Ontario Electricity Grid
  9. Time for the Ontario government to rethink this gas and wind thing
  10. Ontario’s CANDUs can be more flexible than gas-fired generation and hydro generation” – also here, here, and here
  11. Ontario’s future economy dependent on precarious natural gas
  12. Another inconvenient truth
  13. Failure to condemn wind may condemn Darlington B
  14. “No future for wind in Ontario”, Don Jones, Opinion, Toronto Star, 2009 March 2,
  15. “Natural gas prices go lower and Ontario’s electricity prices go higher”

Check for updates to this list at the articles tab

Note:
Articles 1, 3, 4, 7, 8, 10, 12, and 13  also appeared in the Canadian Nuclear Society’s BULLETIN quarterly journal. The BULLETIN also has more articles, written by Donald Jones, that were not on the internet.  They are: