Wind power cost 40 cents a kilowatt to generate 26 years ago. The the retail cost of power was 3.5 cents a kilowatt then. Wind power now costs 3.5 cents a kilowatt to generate by wind, with a GE 3.8 megawatt generator. The retail cost of power varies from 4.5 to 6.5 cents a kilowatt in Canada and the US at this time. The industrial cost of utility electric power varies from 8 cents to 11 cents a kilowatt, and the cost of diesel power varies from .129 to .25 dollars per kilowatt depending on fuel cost and size of installation. Coal generated electric power may cost 3.5 cents per kilowatt, but the handling of fly ash raises cost, and it is hard to permit.
The problem with wind power is twofold. For one the utility companies one must sell power to do not want to pay a reasonable price for power, being normally in slight surfeit of it and being pseudo monopolies.
The second problem with replacement wind power, is that it is not on stream all the time, nor ever at a continuous output level. This in fact provide a drain on the inductive system amounting to a perceived load, causing the system to brown out, or suddenly transfer load to faster inductively reacting systems such as gas generation. This can cause more problems thant it helps depending on the percent contribution of the wind system to the grid. The mitigation of this problem, namely storage, in order to smooth out the wind contributed variances, would require chopping, with attendant significant power losses of perhaps 10%. The true availability of smoothed wind power, i.e. delivered constantly, may be about 60% of rated capacity, given 70 per cent normal turning power availability, and storage-to-sine-wave output losses. This does not mean in fact that the cost would increase significantly beyond 3.5 cents, but it would increase. This however, long term and in large installations may not obviate them being built to profit from realistic state rates.
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Right now, putting a wind system into Ontario without a premium being paid by the province -- with the attendant miserly rate of "power payout" by OPG, perhaps 3.5 cents for supplied kw hrs -- a rate that OPG itself cannot possibly achieve on its own as a cost, either by building nuclear, gas or water power generation -- is not economic.
OPG is a tragic "case in point", running far below cost when one factors in the 38 billion dollar debt on their nuclear facilities and the high and unfactored cost of down time and maintenance of the same. The interest on the nuclear debt alone is worth 2.7 cents per total kilowatt hour demanded.
So the true cost to the province is 2.7 cents per kilowatt hour, for all kw hrs consumed from all sources, on carried nuclear debt alone -- ( based on 140,000 gigawatt hours per year provincial usage and an interest maintenance cost of 3.8 billion per annum ... conservationbureau.on.ca )
If you factor in all other admin, salary, rental, maintenance and capex costs for all other forms of power supplied by OPG, and shortage costs eg. inducing of high-cost power-buying -and- fuel costs, it is apparent that the retail price of electricity at 4.5 cents is not real. If you add in upgrade cost in order to compete and not buy power at exorbitant rates and to replace aging lines to lower failure rates there, and increase line capacity and do the same for switching systems, it begins to look like the 4.5 cent price figure is decidely anemic without any detailed calcs. To imagine you can supply all other forms of power and upgrade for 1.8 cents a kilowatt, does not require a genius or a battery of computers to see is not possible.
To simplify, it is as if to say that supply of power, all salaries of 30,000 high paid people, all maintenance costs, all upgrade costs, all fuel costs including uranium, all rental costs, and all capex retirement for everything outside nuclear, would only cost 2.52 billion a year -- that is if OPG and distribution were running at cost. Salaries alone are 1.35 billion per year. Employment costs may be 500 million per year or more. Add administration and rentals, power buying during peak hours, and you are over 2.5 right away. Add fuel, such as coal, gas, diesel and Uranium and I will bet you can double that. Add in upgrade and extraordinary maintenance..
Market cost for power in Ontario is more like 7-8 cents per kw hr.
So what should we pay in Ontario for wind power to a private supplier? Ans: barring other cost additions, and assuming the power is smoothed, by the above figures, 5.5-7.5 cents a kw hr at least. If you can't make it for less, then you must at least buy it for that. Of course the power generation and distribution cost is not what you buy it at, but the generation cost.
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Add in the interest on the capex of the plants and the operating cost and you have a cost significantly higher than what is being charged for power. Some would say the deferral into taxes of the cost is appropriate and expedient politically with regard on the poorer users, but the fact is the price has to be paid by everyone in increased costs and taxes and the deferral of the true cost into taxation not only gives minimal incentive to make the utility more efficient and reduce costs but also maximally raises costs on that portion that is paid in taxation, as it raises the recovery cost of the tax proportionate to the business's need to maintain its rate of return on higher tax costs.
Quotes from opposition party analyses-->
"1. Ontario Hydro’s cost of bringing the Darlington Nuclear Station online was 260% over budget.
2. Ontario Power Generation’s cost of returning the Pickering A Unit #4 to service was 174% over budget"
"Nevertheless, the OPG Review Committee’s base-case analysis assumes a discount rate of only 10%. When we re-ran the Committee’s economic spreadsheet model assuming a 15% discount rate, the cost of the Pickering A Unit #1 re-start rose from 8.82 cents to 10.7 cents per kwh."
"1. The U.S. Department of Energy’s forecast of the natural gas commodity price in 2010 is $3.54 (2004 US$).
2. The New York Mercantile Exchange’s average natural gas futures contract price for the 12-month period ending March 2010 is $4.38 (2004 US$).
"4. The high cost of importing power to replace power from nuclear units running below forecast capacity or shutdown altogether. According to Hydro One, on peak demand days in 2002, the average cost of imported power from the U.S. was 62.5 cents per kwh.15
5. The rise in Ontario’s electricity spot price when the poor performance of Ontario’s nuclear reactors reduces Ontario’s electricity supply.
6. The costs associated with the long-term storage of nuclear wastes.
However, the OPG Review Committee incorrectly assumed that a natural gas commodity price of $4 per Mcf (2004 US$) entails that the cost of producing electricity from a natural gas-fired combined-cycle power plant is 6.5 to 7.0 cents per kwh.
According to the Nanticoke Conversion Study spreadsheet model (produced for OCAA by Diener Consulting Inc.), the cost of producing electricity from a natural gas-fired combinedcycle
power plant running as base load and assuming a natural gas commodity cost of $4 per Mcf (2004 US$) at Henry Hub, is 5.89 cents per kwh (2004 Cdn$)."
Call for market prices in Ontario.. Globe and Mail --->
ontariotenants.ca
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The cost of power is also not factored with OPG is their system "decrepitation" cost, obsolesence rate, or simply depreciation, which is not factored; -- this "necessity of modernization" cost of this increasingy operationally-critical and complex system. The depreciation and upgrade factor alone has to be at least 1.5 cents a kilowatt-hour retail, which is not charged.
This is saying that the extraordinary maintenance, power addition, and upgrade-to-system costs in Ontario are 2.1 billion per year. That seems fair.
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