Energy Evolution: June 19, 2006
Boxed-In, Ontario Left With Few Power Choices: Saini
A Toronto-based expert in energy efficiency says there is no hope the province can meet its immediate power demands without coal-fired plants, since there have been no serious efforts to conserve power and the province’s regulatory inefficiency means new power supplied can’t be brought on quickly enough.
Satish Saini, an engineer who specializes in energy efficiency and energy management with Toronto-based SancoGlobals, says the successive mistakes made by the current Liberal government in the province and the previous Tory government have set up Ontario for never-ending electricity shortages, which will only be met by importing expensive power from the United States.
“Politics has overshadowed good policies,” says Saini, who has written widely on the province’s power problems.
He says the Tories botched deregulation of the province’s power industry by capping power rates at an unrealistic 4.3 cents a kilowatt-hour (now being gradually phased out) and the Liberals have only compounded the problems by vowing to close down Ontario’s coal-fired power plants, which have a capacity of about 6,500 megawatts MW at their peak -- or about 20% of its electricity.
Their solution to replace this lost power, including kick-starting the development of new renewable power sources such as wind and small hydro and by relying on demand management measures such as encouraging net metering, which allows consumers to control their power use, is essentially too little too late, he says.
While the Liberals have approved 3,000 megawatts of new power through a Request for Proposals (RFP) system, which guarantees producers of the renewable power long-term supply contracts, they can’t possibly compensate for the lost coal-fired power, he says.
“The regulatory system in Ontario is so complex it will take years to get approval for all of that power,” he says. “There’s no way that power will get the approvals that are required and be up and running by 2007-2009 [when the Liberals previously said they wanted the coal-fired plants closed down].”
Last week, as many were expecting, the province announced a plan to slow down its phase out of coal-fired generation.
Saini says he understands the environmental concerns surrounding the coal-fired plants, which are a major source of carbon dioxide emissions and a major factor leading to air quality problems in the province, but it would be best to force Ontario Power Generation, operators of the plants, to invest in technology to clean up these emissions than to shutter the plants entirely.
Those comments echoed similar statements made recently by the Association of Major Power Consumers in Ontario (AMPCO) and by Don Lowry, CEO of Edmonton-based Epcor Utilities Inc., who spoke to a business audience recently in the province. Both AMPCO and Epcor, which operates coal-fired plants in Ontario and wind projects in Ontario, say it would make more sense to invest in clean coal technology than to close down the coal-fired plants entirely.
Saini says the province, which now has about 30,000 MW of power capacity, simply can’t keep up with its growth if it closes the coal-fired plants.
“Ontario needs to add about 3,000 MW a year and that’s impossible, especially given the regulatory process here,” he suggests.
“Based upon the current average annual peak demand growth of 1.3% per year, the peak demand in Ontario is expected to increase from 24,000 MW in 2005 to 30,400 in 2025. If no action is taken to add additional resources, the combination of demand growth and generation retirements would create a gap of roughly 24,000 MW by 2025, roughly equivalent to about 80% of Ontario’s current capacity.”
He says past errors, principally the decision by the Tories to impose price caps, only increased the government’s power system debt of about $40 billion, while removing a “real time” power price signal that would have led to more generating capacity being built. The only way new capacity is being built is through the taxpayer-subsidized RFP approach.
Saini says the system has essentially been re-regulated, but with a patchwork of approaches that guarantee the province will face further blackouts and high electricity rates.
He says the only way energy efficiency will take on a meaningful role is if price signals are used along with more effective public education programs.
“[W]henever one passes through downtown Toronto, [one] can see numerous buildings with numerous lights on and with nobody there,” he says, adding that most of the lights are energy inefficient.
He says he has played a role in getting people in developing countries to switch to more energy-efficient lighting, but there are scant efforts to get Ontarians to do so.
The energy efficiency expert says the provincial government has essentially boxed itself in a corner and is now overly reliant on nuclear power.
“There are many question marks on the performance of these nuclear plants,” he says. “In a 2005 report (produced by former federal Deputy Prime Minister John Manley) on the future of nuclear power in Ontario, [there was an acknowledgment that] the first 40 years in Ontario’s nuclear experiment had significant cost overruns, inefficiencies and breakdowns which can’t be ignored.” The cost of one such nuclear plant (Darlington) skyrocketed from an estimate of $4.07 billion in 1978 to $14.3 billion when it was completed in 1993.
The province had to invest $4 billion, up from an earlier estimate of $780 million, to bring the province’s remaining units back online after they had essentially failed in 1997.
Nevertheless, Saini says the government has boxed itself in and will have no choice but to rely on unreliable nuclear power and on coal-fired plants, or Ontario will essentially “hit a wall,” he believes.