$$ Gone with the Wind & Solar

Contributed by Robert Lyman © 2024. Robert Lyman’s bio can be read here.  

Are Wind and Solar Energy Cheaper Than the Alternatives in Ontario?

                                                                         EXECUTIVE SUMMARY

Advocates of renewable energy in Ontario say that these energy sources are so low in cost as to be the ideal sources of electricity generation in future. Indeed, they claim wind and solar energy are so inexpensive that electrical utilities should abandon the use of hydrocarbon-based  (coal and natural gas-fired) electricity generation. Are they right?

New electricity generation plants entail many different costs.  These include the (capital) costs of building the plant, operating and maintaining it, transporting the electricity to markets, and distributing it to the final industrial, commercial and residential consumers. Most consumers care less about the individual cost components than they do about the final prices, or rates, they pay for the electric energy delivered to their homes on a kilowatt-hour basis.

Wind and solar plants increase electricity costs in five ways. They operate at low capacity factors compared to traditional generators. They have a lower  life expectancy than conventional power plants, so they depreciate faster. They incur higher transmission costs as they are usually located at long distances from the cities where the electricity is consumed.

They lower the utilization of traditional generating plants. Perhaps most important , wind and solar plants increase system costs because they are intermittent, meaning that they only produce electricity when the wind blows or the sun shines, not when consumers need it. When renewables fail to produce when needed, utilities need a backup system or a system of storage, which is extremely expensive.

In every country and region that has increased the share of wind and solar energy in its system, the electricity rates to consumers have risen considerably. 

Successive Ontario governments have followed electricity policies that have made matters worse. Notably, they have consistently over-estimated electricity demand and over-built power generation capacity. This has magnified the number of times when wind and solar power was produced when it was not needed to meet Ontario demand. The result was the increasing number and cost both of curtailment payments to contracted generators and exports of power at heavily discounted prices to neighbouring U.S. States.

The Kathleen Wynne and Doug Ford governments introduced a series of taxpayer-funded subsidy programs to hide from ratepayers the true costs of Ontario electricity policies. Those subsidies are not usually counted and recorded as renewables costs, but they are costs to society nonetheless. 

IESO has already provided the Ontario government two reports that should have indicated very clearly the problems associated with pursuit of the “net-zero emissions” or “decarbonization” objective. The main conclusion was that the bulk system expansion needed to enable decarbonization, including transmission, could require an investment in the range of $375 billion to $425 billion.

The continued pursuit of present policy will not only raise prices to unheard of levels but it will lead to a future of rationing, oppressive regulations and economic decline.