Contributed by Michelle Stirling, Communications Manager © Dec. 14, 2017

On Dec. 13, 2017 the government of Alberta made loud proclamations of ‘record-setting success’ on the first renewables auction.  They claim power prices will remain affordable. As usual, only part of the picture is being presented. Presently, coal-fired power is about 2¢ a kWh. Wholesale power prices will triple. Why isn’t that mentioned?

alberta renewables auction record setting dec 14 2017

 

In May of 2016, we had asked an Alberta power market expert for a forecast on subsidies to renewables under the Alberta Climate Plan. (that text cut and pasted below; original post here).  Here are updated comments based on the results of the Dec. 13, 2017 Alberta government announcement:

“Based on the Dec. 14, 2017 auction results the subsidy would be lower (than the May 2016 forecast). The wind producers will be topped up the $37 MWh from the actual market price which in 2017 has been about $22 MWh or a $15 MWh difference. It still adds up to a lot of money over 20 years.  Keep in mind that the $37 MWh price is only for the 600 MWs from this first auction and these represented the lowest bids.   Given that the Gov’t of Alberta wants to build a 5,000 MW renewable portfolio, there will be several more auctions to come in which the subsidized price could very well be higher than $37.”

What is NOT talked about by the Government of Alberta and what is invisible to the average person are the infrastructure costs that go with this kind of drastic power generation and market transition.  Putting wind and solar on the power grid is not just about the wind/solar farms themselves, but all the behind-the-scenes integration and additional natural gas power plant requirements, as well as changes to the way the market works.

Power generation experts say:

“What makes renewables expensive is integrating these technologies into the grid. Grids can handle small amounts of renewables but the levels proposed by governments with environmental ambitions are overwhelming. These require massive expenditures in transmission, peaking power, and possibly storage. Even if wind and solar were free, the integration expenses could cost more than all other forms of generation once you pass a certain tipping point. Another cost is market reform but this would only apply in areas where there are competitive markets. In Alberta for example, the AESO has decided that renewable subsidies will make our once thriving energy market unsustainable. This has led them to introduce a capacity market which will lead to $10’s or maybe $100’s of millions in transition expenses along with years of uncertainty. Lastly, what gets lost in all this is the actual carbon reductions or lack thereof. The current state of storage technology is insufficient to back large quantities of renewables. This is leading to investments in relatively inefficient natural gas peaking facilities that negate the carbon benefits of renewables. Arguably, we may be better off from both a carbon and economic perspective by just investing in efficient base load natural gas and completely forgetting about renewables. Existing infrastructure could be used and market changes wouldn’t be required. Regardless of the chosen path, we are a long, long way from a 100% renewable energy grid.”

There is much evidence from other jurisdictions to support these statements.

Ontario Professional Engineers report there will be an increase in CO2 emissions as more wind is added to the grid. (Alberta has no nuclear; coal is also too inflexible to back up erratic wind.)

why will emissions double ont eng 2015

Wind Aware Ireland just published a report showing that despite adding lots of wind to the grid to reduce emissions, those expectations have not been met.

https://www.yumpu.com/en/document/view/59534715/costs-of-wind-energy-report 

 

Here is a typical example of wind output in Alberta under the current capacity.

wind 2015 from ken

Power generations experts say:

“The problem with wind is its randomness, wind is completely uncorrelated with demand. If they add another 5,000 MW then the total would be 6,500 MW. Typically this amount of wind would randomly experience 80% or higher ramps one or more times per week. This would be the equivalent of ramping 6.5 Sheppard plants from off to full to off again. These plants are unable to do this over the long term. They may end up having to put in simple cycle units instead which, from a CO2 perspective, would pretty much defeat the purpose of adding wind. But it’s never really been about reducing CO2, it’s all about building wind. And now solar with the new government statement about going 50% solar. “

In the following image, you can see how there are also often long periods of NO WIND WHATSOEVER. In that time, conventional thermal (coal/natural gas) have to do the heavy lifting.

clive 4 days no wind

Source: AESO – chart shows Jan 2017 and 4 days of no wind generation.

The challenge in Alberta phasing out coal and replacing it with natural gas is that natural gas will become the largest single dispatchable (on demand) fuel source (despite there being a number of different suppliers.

Natural gas is a market commodity, subject to wild fluctuations.

image gas prices already volatile clive

Many people think that if you add more wind and solar, then this will solve the problem of wind dying down from time to time.  This is not true.  Wind is a regional phenomenon.  Euan Mearns discusses how “Wind Blowing Nowhere” is the reality.

Also, adding LOTS of wind and solar to the power grid, simply means you must have equivalent conventional power to back it up.  Germany added 90 GigaWatts (GW) combined wind and solar and they are still running on #coal.

wood mackenzie how much does 90GW wind solar reduce winter peak

jan 2017 german electricity production fraunhofer to match image of peak demand

Above image shows German power generation by source matching the time frame of the image of it. The dark brown and beige represent coal. The amber represents natural gas. Their other baseload supplemented by nuclear, biomass and a small amount of hydro. 

To appreciate the difference here, Alberta has 16,626 MegaWatts (MW) capacity on the grid.  Germany added 90 GigaWatts (GW) of wind and solar and still relies on coal for most of its baseload power. Why? Because coal is the cheapest, most affordable, most abundant source of power in the world.

Amount: 1 gigawatt (GW) of power
Equals: 1,000.00 megawatts (MW) in power

With this information in mind, have a look at the original forecast from May of 2016. One thing is certain. Albertans will be paying billions of dollars for ineffective, expensive, unreliable wind power generation. And we will be paying it for decades.

For up to date market reports of generation by source (updates every 15 mins):

http://ets.aeso.ca/ets_web/ip/Market/Reports/CSDReportServlet 

Alberta Government Subsidies to Wind and Solar Will Cost YOU Billion$

By Michelle Stirling, Communications Manager @May 2015 in consultation with power generation industry experts

Pembina Institute recently blogged that:

“The challenge for renewable energy projects is not securing the fuel, the sun and wind are free. [Bold added]…”

Pembina goes on to explain that the Alberta Climate Leadership plans says:

two-thirds of Alberta’s [existing coal-fired power] generating capacity will be replaced by renewable energy, one-third will be replaced by natural gas.”

Stop right there. That might be what the Climate Leadership plan says, but practically speaking Alberta’s existing coal-fired capacity will have to be replaced 100% by natural gas, because wind and solar are intermittent forms of power generation.  Sometimes wind and solar can generate 100% power – and sometimes nothing at all. But consumers expect on-demand power 100% of the time – with no power quality issues like surges, drops or brown-outs.

Pembina makes a point of saying:

“By 2030, renewable sources like wind and solar will account for up to 30 per cent of electricity generation.” That’s what Alberta’s Climate Leadership plan says. “

That ‘free’ wind and solar will end up costing YOU billions.

Why?  The Pembina blog outlines how low the current power prices are in Alberta. The only way for wind and solar companies to make it in this market is to have government subsidies in the form of “Renewable Energy Certificates.”

Renewable Energy Certificates (REC) are subsidies – tradeable certificates of value – rather like printing paper money in return for power generation from wind, solar, geothermal, biomass or other deemed ‘renewable’ source that is not directly from hydrocarbons.

We asked industry experts about what this would mean in real dollars from Alberta taxpayers’ pockets. Here’s an example.

If the REC value was set at $35/MWh and the Government of Alberta wants to replace 4,500 MWs of existing coal output with 2/3rds renewables, that means 3,000 MWs equivalent.

So 3,000 MWs subsidized at $35/MWh = approx. $900 million a year in cost subsidies paid by the Government of Alberta – you, the taxpayer.

Based on this very rough calculation, it seems this amount could be over and above the costs included in the Alberta budget released in the spring of 2016. If so, the deficit forecasts would increase by almost another $1 billion per year.

And for what? Power that is not clean, green or free. Why would we want to go to power generation systems that increase costs and risks and reduce reliability?

~~~

Activists call coal and natural gas ‘dirty and polluting’ sources of electricity. They forget to mention to you that wind and solar need 100% back-up from conventional generation.  And remember that every wind or solar device consumes masses of materials and fossil fuel energy, just to make and install each turbine or panel.

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