Following a detailed analysis of data issued by the Independent Electricity System Operator (IESO) and the Ontario Energy Board (OEB), the Ontario Society of Professional Engineers (OSPE) reports that in 2016, the province exported 14.6 terawatt-hours (TWh) of clean electricity at a net financial loss of more than $500 million.
What does a financial loss of more than $500 million mean?
“This represents a year’s worth of power for more than a million homes, that Ontario has sold to other jurisdictions for less than it costs us to produce,” said Paul Acchione, P.Eng., energy expert and former President and Chair of OSPE. “Ontario ratepayers are essentially subsidizing hydro bills in places like Michigan and New York to the tune of $500 million per year.”
This news comes just months after OSPE reported that in 2016 Ontario wasted (dumped) 7.6 terawatt-hours (TWh) of clean electricity, an amount equal to powering more than 760,000 homes for one year, or $1 billion – a 58% increase over 2015.
Since 2014, Ontario has exported surplus hydroelectric, wind, and nuclear generation to adjoining power grids at a significantly lower price than the cost of production. This occurs because the province produces more clean electricity than it can use, so it is sold to neighbouring jurisdictions at a discounted rate – resulting in a net financial loss. Total energy exports in 2016 were 21.9 TWh compared to 22.6 TWh in 2015.
“OSPE continues to assert that the government must restore the oversight of professional engineers in the detailed planning and design of Ontario’s power grid to prevent missteps like this from happening,” said Acchione.
Engineers Have Solutions
In the summer of 2016, OSPE submitted an advisory document to the Minister of Energy and all three major political parties detailing 21 actionable recommendations to deliver efficiencies and savings. This included reducing residential and commercial rates by approximately 25% without the creation of the subsidy and deferral account under the Ontario Fair Hydro Act.
OSPE also recommended establishing a voluntary interruptible retail electricity market to productively use Ontario’s excess clean electricity. This market would allow businesses and residents to access surplus clean power at the wholesale market price – less than $0.02 per kilowatt-hour (KWh). Clean electricity is best used to displace fossil fuels for thermal storage such as water and space heating, industrial steam, and the production of clean hydrogen fuel through electrolysis. Each of these recommended initiatives would help Ontario achieve its emission reduction targets.
“Engineers know how to fix these problems, but they need to be empowered. Engineers must be given independence in planning and designing integrated power and energy system plans,” said Jonathan Hack, P.Eng., President & Chair of OSPE. “It is imperative that we depoliticize what should be technical judgments regarding energy mix, generation, distribution, pricing and future investments in Ontario. We are concerned that the government does not currently have enough engineers in key Ministry positions to properly assess the balance between environmental commitments and economic welfare when it comes to energy.”
About the Ontario Society of Professional Engineers (OSPE) & the Energy Task Force
OSPE is the non-partisan voice of the engineering community in Ontario, with more than 80,000 professional engineers and 250,000 engineering graduates, interns and students. As part of OSPE’s energy advocacy initiative, its experts share findings to bring attention to the importance of engineering involvement in the planning and design of Ontario’s power system.
OSPE’s 2012 report Wind and the Electrical Grid: Mitigating the Rise in Electricity Rates and Greenhouse Gas Emissions detailed the mounting risk of hydraulic spill, nuclear shutdowns, and periods of negative wholesale electricity prices during severe surplus base load generation.
OSPE’s Energy Task Force has provided strategic engineering input to Ontario’s Ministry of Energy for over ten years. The majority of OSPE’s recommendations have been implemented, saving Ontarians hundreds of millions of dollars. But more can be done by engaging with Ontario’s engineers to optimize Ontario’s clean electrical power system.