In June 2004, the Ontario government issued a “request for proposals,” seeking about 300 megawatts of “renewable energy” capacity.
In November, five successful proposals for wind power were selected, aggregating 354.6 MW.
To put this number into perspective, here are some relevant comparisons for Ontario’s electric power generation in 2005:
If all the new wind power projects come on stream in one or two years, they could add about 1% to Ontario’s nameplate capacity. But the nominal capacity of wind generators is misleading, because wind turbines only produce enough output to connect to the electricity grid about 20% to 50% of the time. The five turbines operated by Huron Wind, each costing $1.8-million, have an aggregate capacity of 9 MW. They achieved 28% uptime in 2004, their third year of operation. The highest-rated turbines in the world (in New Zealand) achieve about 50% uptime.
Proponents of wind power rarely if ever talk about the actual uptime of wind turbines; a search of the wind power Web sites and all the books on wind power in the Toronto Reference Library failed to find a single scientific analysis of this critical dimension. Gas-fired and coal-fired plants, and hydro plants, too, can usually operate at a high percentage of their nameplate capacity, although all power plants require maintenance downtime of perhaps 15% to 20%. (Huron Wind has had serious downtime for maintenance, too). Ontario’s nuclear plants have demonstrated a questionable uptime performance, although the 160 nuclear plants in France and the United States are now achieving good standards of efficiency.
In short, the five wind power plants under construction in Ontario will contribute less than half of 1% to Ontario’s power output, compared with the Lakeview coal plant’s 3%. The remaining 6,500 MW of coal-fired capacity are to be shut down by 2009. The government plans to reach 10% from renewable resources by 2010, a highly improbable target judging by the piffling output from Huron Wind, which has now had three years to demonstrate its success.
The charming wind turbine on Toronto’s waterfront, built at a cost of $1.7-million by Toronto Hydro and its green friends, has an uptime of about 15% to 20%. In two years, it has produced 1,012 MW hours of power per annum, enough to supply 85 homes. This translates into a capital cost per home of $20,000, which probably makes it Canada’s most uneconomic power source. But it makes passersby feel good.
The limited ability of wind power to feed into the electric power grid at a reliable rate means it must connect to a conventional grid powered by fossil fuels or hydro or nuclear power. To be competitive with other sources, its all-in costs of production would have to be very low to offset the fact that the wind doesn’t blow hard enough even half the time. But its costs are high rather than low, apart from the critical transmission costs, which are dependent on the distance from windy sites to markets.
The Ontario government boasts that the cost of its renewable energy projects “will bring $700-million of new investment.” Politicians very often confuse the goal of bringing cheap and reliable electric power to the public with the goal of spending money to “create jobs.”
At a price tag of $700-million for 395 MW of power (the renewable energy package includes about 40 MW of hydro and biomass schemes), the capital cost is about $1.75-million per MW. By comparison, Trans-Alta’s Sarnia gas-fired plant cost about $1.13-million per MW. Then correct for the low uptime of the wind turbines, offset by the fuel costs of gas-fired plants and it turns out that wind power is expensive. Ontario is paying 8 cents per kilowatt hour (kWh) for the output from new wind plants. It pays Ontario Power Generation 3.3 cents per kwh for nuclear, hydro and fossil-fuel base load, and 4.95 cents per kWh for peak hours.
But this does not include the shower of subsidies from both federal and provincial governments. The federal government’s Wind Power Production Incentive is 1 cent per kWh, or about 18% of the price paid by consumers. In addition, capital cost allowances were boosted to 50% for wind power projects, and there are also incentives for municipalities and retail sales tax abatements for households. None of these benefits is made clear in the Minister of Energy’s flowery speeches. Nor do the corporate recipients of subsidies dwell on this aspect of their wind power projects, whether in Ontario or Quebec or Alberta.
Exact comparisons are difficult to make, because the government does not produce hard data on the relative costs of delivering a kilowatt hour of electricity from the different sources. The federal and provincial governments should disclose the exact cost of subsidies, which are a stealth form of charging the consumer while pretending to keep consumer prices low. Right now, the actual cost of power from Huron Wind is buried in OPG’s purchase costs. The largest producer in Canada, Trans-Alta, does not disclose the extent of subsidies from governments, not does Quebec Hydro.
Germany has more wind turbines — 15,000 — than any other country, yet its own energy agency has recently concluded that wind farms are an expensive and inefficient way of generating sustainable energy. The need for alternatives to fossil fuels is very real, but governments should think again about which way to go. Clean coal plants are now a reality in some parts of the world, and advanced nuclear reactors are also under construction in many places. It’s time for reality to replace ideology in energy policy. The Ontario government is stumbling toward longer and more serious blackouts long before an adequate supply of electricity is developed. If it is worried about the effects of coal-fired plants on public health, just wait until high-rise elevators don’t work for a week.
Robert M. MacIntosh is past president of the Canadian Bankers Association.
© National Post 2005