There has been much effort made in the media to lead the public to believe that their electricity bills have been spiralling due to the cost of subsidies to wind and solar initiatives of our energy conservation programs. The 80 cents/kilowatt hour (kWh) for solar is frequently cited as the greatest offender, even though that rate only applies to rooftop solar with a capacity of 10 kW or less. In total, such installations currently amount to just 34 MW out of the 37,000 MW of installed generation in the province.  Not mentioned are the subsidies paid to our private natural gas generators, or those paid to Bruce Power, when the market price doesn’t meet their guaranteed price (which is almost all the time). The latter subsidies involve 70% of the global adjustment monies paid out, simply because they pay for the delivery of much more power. In fact, the Ontario Power Authority paid out $1.35 billion in 2010 to meet gas and nuclear power purchase agreements.
So how significant are the subsidies to renewable energy and the monies paid for conservation in a typical residential electricity bill anyway? To answer that we had better clarify what a typical electricity rate is per kilowatt hour delivered to your home. There has been much confusion about that as well.
A typical electrical bill consists of a charge per kWh of electricity used, plus a charge for transmission and distribution, plus a fixed fee to the utility, plus a regulatory charge, plus a debt retirement charge, plus HST, less the 10% the Province has just given us in the clean energy benefit. It is a complicated system to be sure. To get an estimate of a representative rate, we looked at a typical home that heats with natural gas and uses 800 kWh of electricity per month, and we compared that to a similar house with electric heat that uses typically 2500 kWh of electricity per month (averaged over 12 months). Although the costs per month obviously varied ($105 vs. $303) the cost of electricity per kWh “all in” was the same, about 13 cents.
So how much of that is due to renewables and conservation?  In 2010, the Ontario Power Authority paid electricity resource costs of $317 million for conservation programs, and $269 million for renewables. That is a lot of money – but you must realize that it is recovered over a total Ontario consumption in 2010 of 142 terawatt hours (that’s 142,000,000,000 kWh), which amounts to 0.4 cents per kWh (split roughly equally between conservation and renewable subsidies). So the cost of conservation and all the renewable subsidies in 2010 amounted to 0.4 cents of the 13 cents we paid for a kWh in our homes. A significant amount, perhaps, but hardly the bogeyman that it is so often made out to be.
In fairness, it must be acknowledged that this 0.4 cent amount will rise as more green energy comes on line in future years, but in 2010 that is what it was. During these times when we are publicly discussing a long-term electrical energy plan, I think it is important to be honest about the current cost of electricity.
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Three questions:
1. Is there an analysis that shows the \renewables\ and the conservation/demand-side investment payoff separately? They should not be combined as the utility of the (much cheaper) conserved watts is greater and has other benefits:
A watt that is never used need not be extracted, generated, transmitted, measured or vended at wholesale, regulated, stepped up or down for delivery, distributed, billed and vended at retail, repaired by utilities in an outage, nor can it shock anyone or damage equipment or start a fire. Thus the economic value of a conserved watt is much greater than a generated watt. Combining supply- and demand-side payoff calculations undervalues any demand-side reduction significantly. And you can quote me on that.
2. Is there a way to adequately model the demand and supply *timing* so as to avoid misleading aggregates? That is, to calculate the investment’s impact in reducing peak demand, which is economically far more valuable than reducing non-peak demand? (Why electric cars are a *very* good idea as they turn petrochemical demand into off-peak low-carbon demand).
3. Has anyone added conservation and demand side wattage to morbidity calculations like these?
http://nextbigfuture.com/2011/03/deaths-per-twh-by-energy-source.html
I’ve seen one too many incompetent analyses where negawatts don’t show up at all, and too many conservation and demand side debates hijacked into yet another \renewables\ debate.
I think Ontario should be putting a billion dollars a year at least into its demand side improvements including just banning wasteful devices, and less every year into generation until they’re subsidizing no generation at all. Full cost accounting will do in coal and tar sand I’m sure, and ordinary cost accounting has already killed off nuclear.
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The interesting thing is how much ideology costs. The costs of ‘privatizing’ ontario hydro will haunt us in terms of guaranteed pricing but also the future decommissioning costs we will pay. We simply outsourced the profits and in-
sourced the costs. I’m sure this is way more than 0.2 per kwh
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Hey where can I get $.13 per kwh mine averages .20 in Belleville and $.23 in Bancroft.
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It only costs me $0.15/kWh and I live in a condominium.
Any time I’ve looked at a GTA hydro bill they are typically between $0.09/kWh and $0.11/kWh.
The less electricity you use the more the fixed monthly account fees drive the cost per kWh up.
MrC
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[...] reposting a recent entry from the blog of Ontario’s Environmental Commissioner, Gord Miller, to put Ontario’s green energy strategy –Â largely, its feed-in-tariff [...]
@Craig
You make some excellent points and this level of analysis is critical to a smart energy service.
The issue with conservation, valuing demand reductions, as yet is that the negawatts arent having an impact because they arent acuratelty measured. So the demand may be decreasing marginally at various consumption points across the province due to efficiencies/conservation, but the generation output may not drop to meet that.
This is a reflection of the grid and the reason Ontario is trying to push ahead with the Smart Grid. When demand and supply can communicate accurately and instantly then real savings can be seen from efficiency. This applies to your question on peak loads as well.
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[...] of Ontario, the independent, government-appointed environmental watchdog, takes this on. (Link) Â The cost of energy conservation in Ontario in 2010 boils down to this: Â only 1.5% of cost of a [...]
Another simple way of looking at things
Assuming
1. 0.1% of the consumed energy is being produced by renewable sources… the article above estimates 0.092% (i.e., 34/37000) but I’ve rounded up to keep the math simple
2. the average residence consumes 800/kWh/mo(*), that works out to 9600 kWh/a… but, again, to keep the math easy, I’ll round that up to 10,000 kWh/a
3. the average residential cost of electricity is 15¢/kWh… giving an annual bill of $1,500/yr
4. an increase of 8%(**) in the average hydro bill –> $120 (i.e., 8% of $1500)
This means that the 10kWh/yr of renewable energy (i.e., 0.1% of 10,000) are being ‘blamed’ for a $120/yr increase on your bill… that works out to a whopping $12/kWh of renewable energy. But, at most 80.2¢/kWh, gets paid to the generator.
Clearly, feed-in tariffs for renewable energy are not solely responsible for your hydro bills going up.
Al
__________
At the OCRI/Ottawa Cleantech Initiative presentation on 31/5/2011, Roger Marsh, Chief Conservation Officer, Hydro Ottawa:
* indicated that Hydro Ottawa estimates residential consumption between 700-800 kWh/month… I chose the higher number to keep the math simple
** estimated that Hydro bills would increase by 7.9% for the next 5 years and 3.5% thereafter. I raised it to 8% to keep the math simple in the example above.
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Hilarious.
What about the FACT that Ontario Hydro raised rates 25% (thats about 12% on your bill) just to pay for the increased number of wires needed to deliver all this silly electricity? Thats only for 2011 – 2012. Then the real increases hit, as we are forced to buy more and more power from irrational sources such as wind (paid at least 13.5 , but with tax breaks is about 18c/kwh) and solar at 80. When the price is about 3c wholesale. The contracts for the companies that can actually make electricity all day long – you know when you turn on switch you assume the lights will come on are at about 6c/kwh. Yes the spot price is even below that price, which means that Ontario needs NO MORE POWER of any form.
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The government should not pick winners. It can’t. The government CAN lay down taxes on pollution, and let innovation pick the real winners. For instance, the best place to put a solar panel in Ontario is Phoenix, Az. If you took all the money invested in solar in ontario, and spent 1/3 of it there, and saved the other 2/3, the amount of carbon reduction would be 3 times higher – solar power is 10 TIMES more effective at lowering carbon in a place like sunny coal powered arizona, than it is here in partly clear Ontario, where we already have some of the cleanest power in the world.
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I think Ontario should be putting a billion dollars a year at least into its demand side improvements including just banning wasteful devices, and less every year into generation until they’re subsidizing no generation at all. Full cost accounting will do in coal and tar sand I’m sure, and ordinary cost accounting has already killed off nuclear.
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@Tom 9,10
You are ignoring the plain facts.
You compare 80cent/kw solar prices (only a tiny fraction of small MicroFIT solar projects get this rate 0.01%) with a wholesale price of 3cents. Solar only produces during peak times during the day, when spot prices are far higher… also its on hot sunny summer days when solar generates the most power – exactly the same time spot prices for electricity skyrocket. Average prices include nighttime – not comparable to solar at all. The math clearly shows renewable energy only having a tiny impact on electricity bills. Think nuclear refurbishment, transmission upgrades, updated infrastructure, HST… The ECO office has crunched these numbers for us.
Also – your claims about Arizona sun production are made-up. Ontario actually rates quite well for solar resources. While not as sunny as Arizona, we have long Spring/Summer days when its hot and clear winter days when its cold. Far better than Germany – who is the world leader in installed solar PV. All of your stats are false.
Remember one thing about wind/solar under the FIT: The producer only gets paid for electricity produced. If the wind doesn’t blow, or its a cloudy day, the producer makes nothing. Renewable energy is surprisingly reliable in Ontario – and outdated thinking and misinformation notwithstanding – it will form a huge part of our grid in the future.
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Solar in Ontario is paid $0.60 to $0.80 per kWh. That includes all overhead on the installers side, their profit, installation costs, etc. In addition to that $.80 there are huge costs in administering these projects in Ontario Hydro and the government. Also the hydro delivery company has to pay for monitoring these panels, interconnection switching, inspection, etc. The cost of this will in my estimation double the per kWh price of solar in Ontario, to around $1.50. With this price, or even just the 80 cents, Solar power is producing several times the carbon per kWh as our present system. A dollar of economic activity is worth about 300 grams of CO2. That 300 grams per kWh (which is conservative – I would be its way higher) puts solar about 1/2 or so the carbon impact of nat gas, at a completely non sustainable – non economical $3000 per ton of carbon saved.
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“Solar in Ontario is paid $0.60 to $0.80 per kWh”
Nope. The base rate for large installs is 44 cents:
http://www.fit.powerauthority.on.ca/Page.asp?PageID=924&ContentID=10543
“In addition to that $.80 there are huge costs in administering ”
Nope. The admin cost on the system side is one time, and borne by the system owner. All ongoing costs are billed by the LDC back to the owner as well. Toronto Hydro, for instance, charges $63 a year to print the second piece of paper.
“Also the hydro delivery company has to pay for monitoring these panels, interconnection switching, inspection”
Nope. The system operator pays for 100% of this, from installing the disconnects to paying the ESA for inspections — just for the record, the hydro company has nothing to do with inspections.
“The cost of this will in my estimation”
Given that every statement you made up to this point is incorrect, clearly “your estimation” should be discounted. I’ll give it a 100% haircut. But you still have one more claim to make…
“A dollar of economic activity is worth about 300 grams of CO2″
Nope. Solar panels cost *negative* CO2 per dollar spent:
http://www.guardian.co.uk/environment/green-living-blog/2010/nov/12/carbon-footprint-spending-pound
So, you’re batting zero.
Well done!
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Tom:
Where are you getting your information from? In the future you should cite reputable sources, not spew garbage as you have been doing.
Adam: You’re mostly right, but the best production from PV happens on sunny COLD days, given the relationship of the IV curve.
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The price for electricity east of Ottawa, here is how I calculate…..amount of bill divided by the Kw i used not the one lost in the wires….I don’t care about those Kw. October 2011, $0.18 November 2011, $0.19 December 2011, $0.21 it will get over $0.25 not before long.
There are not many discussion about all those standby power station needed to assist all those solar panels when a cloud goes by or the sun doesn`t shine, people need electricity…. what`s going to happened in 10 years when those people realize they will never make money with their solar installations, then will the government build power station…..
The problem with Ontario Hydro is in a tower somewhere at the top…those people don`t know how to run a company. You would think with the amount of money there are getting they would be qualified. Just think….. they are selling something that every Ontarian use and every Ontarian will pay for eventually (when older) and they can`t make any money with that. Take a shoe company like Rebook they make money and a profit every year, and remember on a small % of Ontarian buys them. WOW
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http://umbrellaenergyniagara.blogspot.com/
This Blog pertains to my Net Metering project in the Niagara Region.
It’s a large read but i think you will find the numbers are correct.
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It is so refreshing to find a discussion of this caliber taking place with regards to Ontario’s Feed-In Tariff Program and the province’s energy diet as a whole. I am admittedly a huge supporter of the Program and a stakeholder on multiple levels, making it all the more reassuring to read such elegant debate. Perhaps by next week, we’ll have an entirely new set of numbers and policy points to distill.
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