As the Ontario government’s $1-billion gas plant relocation scandal slips into history, the province’s electricity ratepayers should not assume that the era of big-ticket rate-boosting power projects of questionable value is a thing of the past. Now comes the “Smart Grid” and a host of other projects.
Smart Grid is the new fad taking over power industry policy everywhere – it’s a flexible concept that gives utilities, contractors and governments room to justify ratepayer spending on “Smart Meters,” electric cars, power line automation and the new hot idea of electricity storage.
None of these ideas comes cheap, including pumped electricity storage, a plan making its way through the province’s electric industrial complex. Pumped storage was traditionally used where excess low-cost electricity was available during low-usage periods. The economic logic was that cheap excess power justified the cost of recapturing a portion of the excess for later use.
Ontario Power Generation operates a pumped storage facility near Niagara, built when Ontario anticipated excess nuclear production. Although it wastes one unit of electricity for each unit finally delivered, the storage system reserves some of the nightly water flow over Niagara for daytime use. This time-shifting optimizes power production by the main generators, while maintaining the scenic daytime water flow over Niagara Falls as required under international agreement. If this were stand-alone pumped storage, ratepayers would fare better with it closed.
But a new pumped storage proposal is under active deliberation around the eastern Ontario village of Marmora. The proposal comes from Northland Power for a stand-alone, 400-megawatt pumped storage facility at the abandoned Marmoraton Mine, on property owned by Aecon Construction. Project cost: Somewhere between $660-million and $700-million.
The Marmora project was endorsed by local council members without public notice. With local people in the dark, Northland Power announced it was “very excited to have the support of the people of Marmora.”
The design envisions the former iron ore mine pit becoming the lower reservoir, once most of its existing, spring-fed lake is pumped into an adjacent upper reservoir. The elevated man-made lake would loom above substantial portions of urban Marmora. When Ontario’s grid has excess power, the operator would pump water up from the lower reservoir. During high demand periods, if the upper reservoir is full and water had not filled the lower reservoir, the elevated water could be dropped through reversible turbines.
Advocates for electricity storage schemes have a new sales pitch. They are needed to offset the unreliability of wind and solar power. In Ontario’s electricity business environment, where cost is no object, adding more unreliable wind and solar creates a need for more storage to support grid reliability.
Recognizing that perverse synergy, the annual conference of the Canadian Wind Energy Association in Toronto this week is twinned with one promoting electricity storage. For Northland Power, also a major wind and solar developer in Ontario, this synergy is a core business strategy.
For ratepayers, none of this is working. Wind and solar are not just unreliable. Ratepayers pay unaffordable prices for their chaotic output. Adding the cost of storage puts ratepayers in double jeopardy.
In 2006, the Ontario Power Authority (OPA), the government’s electricity planner, considered pumped storage and its alternatives in detail, concluding that they were not justified. Last August the OPA issued an updated cautionary statement on storage, warning the Ontario Energy Board to “focus on fact-based applications of energy storage and not on perceptions.”
The political parties are jockeying for position. The Conservative MPP for the Marmora area, Todd Smith, has his party demanding “the Minister of Energy explain why his Ministry has delayed in arriving at a contract to produce power for the proposed Marmora Pumped Storage project.” Smith has just been promoted by party leader Tim Hudak.
The Liberals, perhaps aware of their falling status as stewards of the energy file, are balking. In mid September, Energy Minister Chiarelli warned that the capital cost of the project is “quite high” while “many of the benefits…can be provided at lower cost by existing…generators.” He said a cautious approach is needed to “protect ratepayers.”
When Ontario PCs issued their policy discussion paper on energy in May last year, they said the “Government must get back to its proper, limited role.” Now, their political energy is pumping in the opposite direction.
Tom Adams is a Toronto-based energy consultant. Kathy Hamilton is a Marmora homeowner.