Renewable Energy Integration in Ontario: An Update

October 2012

• In the absence of more-flexible nuclear output, surplus baseload generation would cause renewable energy to be dispatched off.
• With Bruce Power’s apparent 2,400 MW of CSVD flexibility, renewable energy will still have to be dispatched off.
• At the end of 2015, hourly scenarios exist whereby wind could produce up to 6,500 MW - with none effectively consumed in Ontario but at a cost to Ontario ratepayers of $705,000.

###pthe challenge presented by integrating renewable energy – particularly wind – into Ontario’s electricity grid. The highly
variable nature of wind output is an ever-present challenge and while installed wind capacity is on the rise, flexible coal-fired generation is being taken out of service and being replaced by a much less flexible natural gas-fired fleet.

Ontario’s Independent Electricity System Operator (IESO) has an ongoing stakeholder engagement process (SE-91) that deals with the issues related to renewable integration. With more and more renewables coming online, the SE-91 process is ramping up. As the process moves forward, it is becoming increasingly clear that a key strategy for incorporating renewable is to implement mechanisms for paying generators not to generate.

Inflexible Nuclear, Renewables

In the absence of more-flexible nuclear generation and renewable generation that can be curtailed, surplus baseload generation (SBG) is dealt with via exports, baseload hydro maneuvering (varying water flows over a very narrow range or by spilling water) and nuclear maneuvering (reducing reactor output). Hydro maneuvering can be for short durations while nuclear maneuvering can affect unit output for a number of hours. When these measures cannot deal with the quantity of SBG present, the last resort is to shut down a nuclear unit. This can take the unit offline for two to four days. In a previous article, Aegent noted the Ontario wind fleet’s propensity to operate at up to 95% of its nominal installed capacity. In January 2012, the IESO estimated this value at 96% and noted that the Ontario wind fleet could reach 6,800 MW by the end of 2015. So at that time, wind could produce up to 6,500 MW – any time. At that same time, the IESO provided an end-of-2015 SBG example that took into consideration Ontario’s practical export limit of 3,000 MW. Exports were already scheduled at 1,900 MW and so 1,100 MW of wind exports could be accommodated. Allowing the remaining 5,400 MW of wind to run would be viewed as unacceptable, as it would require the shutdown of 7 nuclear units at approximately 800 MW each. There would be no other way to take the wind output into the grid.

Dispatching Renewables

In the short-term and with less wind installed, the IESO presented scenarios comparing nuclear maneuvering versus renewable dispatch, where SBG was: Below 900 MW - Under this scenario, nuclear dispatch-off would be of shorter duration and lead to replacement of some energy by hydro that would otherwise be used for peaking. Later, natural gas-fired generation would replace the hydro energy that had been used earlier and was no longer available. Above 900 MW - Under this scenario, nuclear dispatch-off would be multi-day, requiring more continuous replacement of some energy by hydro. Later, there would be corresponding, longer-duration requirements for more natural gas-fired generation (replacing the replacement hydro energy). Dispatching-off renewables was clearly envisioned as a possibility and with the limited flexibility of the new gas fleet and the environmental preference for dispatching off wind over the hydro-early/gas-later scenario, dispatching off renewables was more likely a certainty.

More-Flexible Nuclear At the May 2012 SE-91 meeting, the IESO discussed Bruce Power’s future ability to introduce more flexibility into the equation, via 300 MW of condensor steam discharge valve (CSDV) reductions – a steam bypass process to reject heat energy from a unit’s conventional thermal loop. On the surface, this appears to have the potential to provide a total of 2,400 MW of new flexibility. The practical reality is that CSDV may not be possible simultaneously at more than two units at each of the Bruce A and B plants, so the maximum CSDV flexibility from Bruce Power may never exceed 1,200 MW. The CSDV flexibility will help in the short-term - by dispatching off nuclear at $52 and $74/MWh, instead of wind at about $125/MWh and solar at approximately $ 430/MWh. But as the wind and solar fleets grow, both of those resources (primarily wind) will be dispatched off more and more. Financial Impacts When Ontario’s renewable fleet is largely built out by 2017/2018 and coal is retired and replaced by less-flexible gas, the dispatching off renewables should help the system to function well enough but there will be significant financial costs that may not be apparent to ratepayers.

Generators will be paid the following (using today’s contracted rates) to not operate:

Let’s revisit the end-of-2015 SBG scenario mentioned earlier and include the changes discussed:

• Planned exports = 1,900 MW
• Practical export limit = 3,000 MW
• Wind = 6,800 MW of capacity, operating at 6,500 MW
• Solar = 0 MW (assume early, non-daylight hours)
• Spot market / export price = $30/MWh
• CSVD available = 600 MW at each of Bruce A and B

For the 6,500 MW of wind then, the following would take place:

• 1,100 MW could be accommodated by exporting it, paid $125/MWh and fetching $30/MWh in export revenue
• 1,200 MW would be accommodated by dispatching off 1,200 MW of nuclear (via CSVD and at an average price of $ 63/MWh)
• 4,200 MW of wind would be dispatched off and paid $125/MWh

In that particular hour then, there would be 6,500 MW of wind injected into the grid, with none of it notionally consumed in Ontario and a net cost imposed on Ontario consumers of $705,000. Transparency Required This is one end of the hourly extreme but the numbers certainly could add up, given that at least one source projects SBG to occur in up to 50% of all hours by 2016.  In order that consumers can develop accurate projections of expected energy costs, it is important that the IESO and other agencies disclose all types of related dispatched-off data and related costs.

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