Tuesday, August 25, 2015

Capacity pricing a rare bright spot for U.S. nuclear as Clean Power Plan and PTC threaten

The topics here are too complex to review in detail outside of a book, but in one blog post I'll try connect some recent articles to demonstrate a recent capacity auction, while positive for reliable generators, is unlikely to halt the impacts of the President's Clean Power Plan (CPP) and currently idled Production Tax Credit (PTC). Combined, the CPP and PTC spell trouble for existing nuclear generators.

Exelon has many nuclear reactors, a number of which are in Illinois. The company recently released financial information which is communicated in Crain's "Exelon's case for how poorly its nukes are doing."
In a bid to build more support for subsidies financed by rate payers, the state's largest power generator provided Crain's with its most detailed look at the financials of the company's six Illinois nuclear stations.
...
Five of its six Illinois nukes are dual-unit stations with costs that are roughly the same—$33 to $34 per megawatt-hour of electricity produced...
At Exelon's plant in Clinton—a single-unit generator between Peoria and Springfield—costs run higher, at $38 to $39 per megawatt-hour.
That probably sounds cheap to end consumers,- but market prices are far different:
Round-the-clock energy prices right now for 2016 and 2017 are a little over $30.50 per megawatt-hour. That's down from about $33 a year ago for those time frames. Capacity prices are on the rise thanks to auction changes PJM has engineered to increase them.
Crain's is totally out to lunch on why PJM changed capacity rules. They get it exactly wrong elsewhere in the article:

Sloppy Electricity Rate Making, reporting and politics

If you follow the economic challenges of an electricity environment with variable intermittent generation being forced onto the grid, you really must read the latest from Severin Borenstein, The Decline of Sloppy Electricity Rate Making
Something is dying alright, just not the utility. It’s the ability of regulators, utilities, and interest groups to push around revenue collection among customers without the customers pushing back.
Read the bill from carefully - important to understand net metering in California 
  • Try to punish high-consuming households by raising their price many times above cost – as has been done in California for the last 15 years – and they will now install solar to reduce their grid purchases, undermining revenue collection.
  • Try to use “demand charges” that are based on a customer’s peak usage — regardless of whether its peak coincides with system peak — and soon they will be installing batteries to smooth their peak, but in many cases without helping to lower grid costs.
  • Try to raise retail rates for most customers in order to offer discount electricity to low-income households and the high-price customers will turn to all forms of distributed generation instead of subsidizing the poor.
  • Try to stick commercial and industrial customers with more of the utility costs and they will invest in CHP and other onsite technologies.
  • Try to encourage demand shifting to off peak with exaggerated peak-period prices during all summer weekdays and the customer will use batteries to shift not just on the hottest high-demand days, but also on days when there is no benefit to society, though still an arbitrage play for the customer.

While Professor Borenstein lays out the limitations of tricks to shift costs to politically weak user groups (as Ontario has done), a more popular figure was speaking against actions such as changing grid charges to reflect the value of connection to a grid:

Thursday, August 20, 2015

Ontario's electricity market gamed: OEB ...and others

The Ontario Energy Board today posted a letter to the head of the IESO (Ontario's electricity system operator) regarding the gaming of one aspect of the IESO's operation.
Dear Mr. Campbell: 
RE: Market Surveillance Panel Investigation Report

The Market Surveillance Panel’s (MSP) Report on an Investigation into Possible Gaming Behaviour Related to Congestion Management Settlement Credit Payments by Abitibi-Consolidated Company of Canada and Bowater Canadian Forest Products Inc. was posted today on the OEB’s website. In its Report, the MSP concludes that the two market participants, through deliberate market conduct, engaged in gaming in relation to Congestion Management Settlement Credit (CMSC) payments at a time when they were operating as dispatchable loads.
...
I would appreciate if you would advise me in writing within 30 days of: a) the steps that the IESO plans to take in response to the recommendation in the MSP’s Report and the timelines for completion of those steps; and b) whether, in the IESO’s view, any actions or market rule amendments, in addition to those reflected in the MSP’s recommendation, should be taken or initiated.
The particulars of the gaming scheme couldn't be as interesting as the head of the regulator requesting the head of the IESO inform of any possible action on gaming 6 months after the February report was produced - but I glanced through for dollar values anyway.

Bowater’s high bid prices were used to obtain CMSC payments that more than compensated Bowater for operating profit reductions by at least $10.3 million. 
... All customers in the wholesale energy market were disadvantaged by paying additional Uplift charges of $0.12/MWh as a result of Bowater’s behaviours.

...Bowater exploited market defects. In so doing, Bowater received $11.0 million in CMSC payments during the Relevant Period, and there was a corresponding disadvantage or expense to the market. Bowater’s conduct constitutes gaming.
and for Abitibi

Sunday, August 9, 2015

From 140% Wind Power Record to Calm

Several international media reported enthusiastically about the 140% wind power record in Denmark during the night of 10th July. However, the wind dropped already the next day
I've not visited Paul-Frederick Bach's blog for a while. This report (.pdf) can be a great introduction to the analysis there or, as it was for me, a reminder to keep going back.
The happy message that Danish wind power production reached 140% of the electricity demand was distributed by several international media, for instance with these headlines:

The Danish Broadcasting Corporation (DR) boosted the success by claiming that wind has covered 140% of Denmark’s energy demand...


On the other hand some people have claimed that the surplus electricity was exported at very low prices, while Denmark had to pay high prices for the import. This note presents facts on production and exchange of electricity in Denmark from 9th to 11th July 2015. The note is based on data, which are published daily by www.nordpoolspot.com and energinet.dk.


Tuesday, July 28, 2015

and you get a solar panel, and you get a solar panel, and you...

Potential Democratic Presidential candidate Hillary Clinton pledged to install half a billion solar panels if elected President in a video that I think misguided, but I'll leave arguing that for a Cold Air post. [1]
The number of pledged panels, and historical reality of the solar incentives being regressive, made me think the fairest, and most educational, way to distribute hundreds of millions of solar panels would be to give each American a solar panel.
An Oprah distribution - but with PV instead of cars because, ya' know, green.

What would people do with their panel commodity?
My guess is most wouldn't want to become generators, but to sell the equipment.

In Ontario, the IESO recently put out a 2016 Price Review questionnaire asking special interests (a.k.a. stakeholders) question about adjustments to what has been, for consumers, an utterly disastrous Feed-in Tariff (FiT) program. This caught my eye in relation to Hillary's PV dreams and the valuation of panels following an Oprah distribution:
There have been stakeholder requests to increase the FIT DC/AC overbuild ratio beyond 120%. Please provide information about the additional generation which can be achieved by building projects that exceed the 120% limit. How should an increased overbuild limit impact the price? If there were no overbuild limit, what would the ideal overbuild ratio be? What would the percentage increase in generation be for this ratio vs 120%?
It appears power purchase agreements (in this case FIT) have value, but it's not clear that solar panels themselves do. [2]

Sunday, July 19, 2015

Ontario's rank Green

ranting on recent Ontario energy news

Ontario's IESO announced the publication of a document from The Smart Grid Forum this past week. I've been critical of the Forum's past work (April 2012, December 2012 and October 2013) which in hindsight may have been too harsh, because it was better than this new nonsense. Here's the highlights from the IESO news scroll:
  • How should smart grid innovation be funded? 
  • What are the different funding models? 
  • What can be done to ensure that innovation remains customer-focused? 
  • Who should bear the risks? 
  • And what can be done to facilitate the commercialization and adoption of smart grid technologies? 
These are just a few of the questions raised in the latest discussion paper from the Ontario Smart Grid Forum, entitled "Smart grid-related innovation: the emerging debate."
I'll paraphrase: "How can WE extract more money from THEM without an expectation that WE provide value?"


Graphic from most recent Long Term Energy PlanThere are some ugly entities from Ontario's past re-emerging, re-energized. Note between 2011 and 2013 the government claims a reduction of about $3 billion a year from moving away from the nonsense they are now moving back towards.

Monday, June 29, 2015

U.S. Surpeme Court decision goes against EPA mercury rule - inefficiently.

Much attention is being given to a U.S. Supreme court ruling which likely won't mean much - because it avoids attempts at being substanive.

Here's the brief overview from Brad Plumer:
The Supreme Court just threw a wrench into the Environmental Protection Agency's efforts to regulate mercury pollution from coal plants — one of the most sweeping environmental policies of President Obama's first term.
In a 5-4 majority opinion written by Justice Antonin Scalia, the Court ruled that the EPA didn't properly consider costs when crafting its mercury rule, which was finalized back in 2012 and would require coal-fired power plants to spend an estimated $9.6 billion per year cleaning up mercury and other toxic air pollutants.
The mercury rule will remain in effect for now, but the EPA will have to review and reconsider it in the months ahead. A final decision on how to proceed will be left to the DC Circuit Court, which has to follow this guidance from Scalia: "EPA must consider cost—including cost of compliance—before deciding whether regulation is appropriate and necessary. It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost."
Image from the Fraser Institute
Let me be clearer.
The EPA's accounting of benefits came after the regulation was planned and, since the expensive regulation is considered to be about mercury, and mercury abatement isn't seen to have much benefit at all, any cost benefit analysis based on only mercury would kill the regulation.

Britain, Canada to strengthen cooperation on nuclear energy

Some CANDU news that might indicate steps towards "solving the UK's plutonium challenge"

Britain, Canada to strengthen cooperation on nuclear energy | Reuters:
image from Candu Energy
Britain and Canada signed a memorandum of understanding (MoU) on Monday to strengthen ties between the two countries' nuclear energy industries.

The MoU was signed in London by Canada's High Commissioner Gordon Campbell and Lee McDonough, director of the Office of Nuclear Development for the UK Department of Climate Change.

It is aimed at enhancing cooperation on uranium supply; reactor design, construction, operation and decommissioning; alternative and advanced fuel cycle design; research and development and workforce skills.

Canadian reactor maker Candu Energy and GE Hitachi Nuclear Energy Canada are exploring solutions for the reuse of Britain's civil plutonium and recovered uranium stockpiles in its heavy-water reactors."
Candu Energy is owned by SNC-Lavalin, who made the news recently in leading a consortium announced as the preferred candidate to run another segment surviving AECL, Canadian Nuclear Laboratories.

Friday, June 19, 2015

Energy Policy in the Age of Wishful Thinking

Matthew L. Wald movd from the New York Times to th Nuclear Energy Institute earlier this year - a move I should have paid more attention if this one piece I came across is any indicator.

Energy Policy in the Age of Wishful Thinking | Matthw L. Wald | Nuclear Energy Institute:

...as wind has become a star performer, it’s turned the rest of the grid into Ginger Rogers. You remember Ginger Rogers? She wasn’t the star. Fred Astaire was the star. But Ginger Rogers had to do everything that Fred did, except backwards and in high heels. The rest of the grid has to march forward and backwards as wind leads, compensating for wind’s intermittency. Eventually that’s going to cause problems.

And revolutions cause casualties. Some nuclear plants are a casualty of cheap gas. And wind. So we’ve got low-carbon generation killing off zero-carbon generation. Wind is an odd situation too; we’ve got zero carbon wind driving prices down on the grid, sometimes below zero, and threatening zero-carbon nuclear.

I’m not a scientist, but this is not the way to solve the carbon problem.
Continue reading at th Nuclear Energy Institute:

Tuesday, June 9, 2015

Profitability and transit costs

As Ontario is selling off it's profitable electricity company claiming the money is to be "invested" in transit, I thought I'd post a link to a view of transit as a public investment in another North American country.


The graphic is from How Much Money U.S. Transit Systems Lose Per Trip, in 1 Chart - despite the title it's an article more informative than the 1 chart: