Strange wind, and nuclear goes to solar for new leadership

Sometimes my time served battling the enormous waste on wind in Ontario comes flooding back - such as this weekend reading an article on the promise of renewables in Canada's most tell-you-what-to-think publication It's paywalled, boring and one-sided so I'm not going to link to it, but it did incent me to pull some figures, from the Canadian Wind Industry Association.

I tried to colour Quebec and Ontario as silver and gold in graphing the increase in annual installed capacity through 2014, and subsequent decline, for reasons I hope become clear during a short review of the current situation for industrial wind in provinces across the country.

wishing winds: California's SB 100

I wanted to tie together some articles of interest I've read in a single post - but I instead I'll deliver two blog posts and spare myself the effort of convincing the reader of the connections between:

• California is this close to its boldest energy target yet: 100% clean electricity | David Roberts | VOX
• End of Days: Rocketing Power Prices Spells Armageddon for Subsidised Wind & Solar | Stop These Things (with a big section quoting Judith Sloan's Beginning of the end for subsidised renewables in The Australian)
• Canada's wind power lobbyist re-energizes its spin | Parker Gallant

For those not closely following the electricity scene, Stop These Things and VOX are dissimilar in the extreme. Those that are following are likely lined up with one or the other may have already abandoned reading this post - but don't worry VOX followers, this one only deals with California.

SB 100, the bill sponsored by state Sen. Kevin de León, would set a target of 100 percent carbon-free electricity by 2045. It passed the California Senate last year, passed the state Assembly on Tuesday, and was reconciled by the Senate on Thursday...
...there’s enormous power and symbolism in “100 percent.”
But it’s also important to understand that SB 100 is not some big leap for California...California’s transition to clean energy has been careful and deliberate.

SB 100 is a big deal, in my opinion, specifically because 2045 is not far away in planning electricity generation - and therefore it won't be just another symbolic step. According the Energy Information Administration (EIA), "The capacity-weighted average age of U.S. natural gas power plants is 22 years, which is less than hydro (64 years), coal (39), and nuclear (36)." A building boom in natural gas power plants for 6 years at the start of the century drops that average age to 22 years, otherwise it would similarly show 2045 would be early years for a traditional power plant just being planned today. SB 100 is not binding, but I think it clearly increases the risk for any investor that would plan a generating source with significant greenhouse gas emissions in that state.

Roberts alludes to a possibility the bill won't be signed into law; "Gov. Brown is threatening to veto SB 100 if legislators don’t also pass AB 813, a bill that would set California on the path to joining a larger regional Western power market." He doesn't take the possibility seriously, perhaps because of his belief that, "in what is effectively a climate Dark Ages in the US, California is carrying a torch."

I'm in Ontario - if Americans are looking for a torch, they should look up here.

Can Wind and Solar be significant contributors to a low emission electricity system?

...there is a substantial body of evidence that variable renewable integration costs are hugely dependent on the flexibility of the system to which they are being added.

So claims a new report from a UK Energy Research Centre, which lists many studies after opining on them in The costs and impacts of intermittency – 2016 update. Integration costs are important and I'll write on some of the content of the UK paper in paragraphs below, but first I want to discuss the bias of the work, and a great accomplishment in Ontario.

Taken together, the full range of impacts add weight to the message that electricity systems and markets need to adapt and be reorganised to incorporate large proportions of variable renewable generation most efficiently. 

systems and markets may not be what "need" to adapt.

The key challenge facing policymakers, regulators and markets is how to ensure delivery of a flexible, low carbon system that makes maximum use of variable renewable generation whilst minimising overall cost and enhancing security and reliability. 

It is wrong to state a low carbon system maximizes "use of variable renewable generation."

My estimates indicate in January - usually one of the highest demand months of a year - Ontario generated less electricity with fossil fuels than in any month since at least 1973. Probably the least of any month in my life (I was born the day Dylan shocked Newport with an electric performance).

Ontario suspends procurement of renewable electricity generation

Ontario's suspension of procurement programs for more renewable energy is big news. I'll cite various views on it here, but also editorialize after quoting from the government's press release - with some emphasis added.

Ontario will immediately suspend the second round of its Large Renewable Procurement (LRP II) process and the Energy-from-Waste Standard Offer Program, halting procurement of over 1,000 megawatts (MW) of solar, wind, hydroelectric, bioenergy and energy from waste projects.
This decision is expected to save up to $3.8 billion in electricity system costs relative to Ontario’s 2013 Long-Term Energy Plan (LTEP) forecast. This would save the typical residential electricity consumer an average of approximately $2.45 per month on their electricity bill, relative to previous forecasts. No additional greenhouse gas emissions are being added to the electricity grid.
On September 1, 2016, the Independent Electricity System Operator (IESO) provided the Minister of Energy with the Ontario Planning Outlook, an independent report analyzing a variety of planning scenarios for the future of Ontario’s energy system. The IESO has advised that Ontario will benefit from a robust supply of electricity over the coming decade to meet projected demand.

Before listing mainstream media articles of interest covering the announcement, I'll emphasize this "Cold Air Currents" blog was created to post articles I found interesting - while my "Cold Air" blog was entirely my original work. On this topic, I am an expert, so I'll be both editorialize more than usual, and probably be a little scattered as this announcement touches on many broad themes that deserve (and mostly have) independent articles.
I wrote the last procurement would add $100 million to Ontario ratepayers bills each year, for 20 years - which makes the government's new $3.8 billion savings claim seem reasonable. I was more generous than the government's new press release in attributing minor carbon reductions, with an implied cost of $446/tCO2e.

Following is a summary of press coverage - ordering the sources from most reputable on the topic, to least.

Diablo and the end of California nuclear

This morning Forbes posted Rod Adams' NRDC Announces PG&E Has Agreed To Kill Diablo Canyon:

The Natural Resources Defense Council (NRDC) has just issued a press release stating that they have signed a deal with [Pacific Gas and Electric Company], IBEW local 1245, the Coalition of California Utility Employees, Friends of the Earth, Environment California, and the Alliance for Nuclear Responsibility.
There is an implied quid pro quo. The groups will support PG&E’s request for an extension from the California Lands Commission of its land use permit that allows access to ocean cooling water at the Commission’s June 28 meeting. In return, PG&E will agree to withdraw its 20-year license extension application at the Nuclear Regulatory Commission . Instead, it will aim to retire the two-unit site when its current licenses expire in 2024 and 2025.

The involvement of the NRDC is noteworthy as it is the same special interest group that the New York Times credited with writing the Clean Power Plan - which I do not credit with being a plan for particularly clean power.
Outsourced government seems to be reality, as the agreement is basically opponents of nuclear power waving their ability to bring the power of government to bear upon the nuclear operator if the nuclear operation promises to disappear by 2025.

The President of the NRDC, Rhea Suh, formerly of the Department of the Interior within the Obama administration, wrote some strange things on the agreement in California’s Last Nuclear Power Plant:

For years, some have claimed that we can’t fight climate change without nuclear power, because shutting down nuclear plants would mean burning more fossil fuels to generate replacement electricity.
That’s wrong, of course, and now we have the proof.
Today, California’s Pacific Gas and Electric became the first power company toannounce plans to replace an aging nuclear reactor with sound investments that make us more energy efficient and help us get more clean power from the wind and sun.

 That's batshit crazy right there.

Economists opine on tools to reduce greenhouse gas emissions

I've noted a flurry of opining on pricing emissions, perhaps because I'm Canadian and the small, homogenous eco-econo group heard a blast that disturbed the herd, but two recent works from south of the border also caught my attention.

Carbon pricing under binding political constraints, by Jesse Jenkins and Valerie Karplus, provides an explanation of why a straight carbon tax is rarely implemented - and when it is, generally at very low levels.

...persistent political economy constraints motivate a search for climate policies that are politically feasible, environmentally effective, and economically efficient. As in many other domains of economic regulation, second best (and third and fourth best) climate policy mechanisms abound. By paying close attention to the distributional impacts of different climate policy instruments and their interaction with potentially-binding political constraints, economists, political scientists, and policy makers can help design climate policy responses that are both palatable enough to be implemented today and economically superior to alternative second-best instruments.
... we implement constraints of varying severity on:

1. the maximum feasible CO2 price itself; 
2. the maximum tolerable increase in final energy prices; 
3. a maximum tolerable decline in energy consumer surplus; and 
4. a maximum decline in fossil energy producer surplus.

The full paper contains many, many equations. The stated "main objective of this exercise was to put an analytical framework around," and I think that's achieved more in noting the contraints than in the attempts to measure them. The authors' conclusion invokes scenarios where public opinion could be moved towards increasing the price of CO2, as the first best option, but...

Meredith Fowlie delivers a warning that policies taken outside of pricing carbon have been to the detriment of carbon prices, in Time to Unleash the Carbon Market?

David Keith on cheap solar - and other notable stories of the past week

I suspect this will be the hot energy post of the coming days.

blog post on cheap solar power, why it matters, where are the limits, and why i need to eat crow: https://t.co/BRmV5CfDgt @ENGSCI137x

— David Keith (@DKeithClimate) April 24, 2016

An "only Nixon can go to China" moment could come from Keith's Cheap Solar Power:

..one can now build systems in the world’s sunny locations and get very cheap power.  

Implication 

What does this mean? 

Implication #1: In sunny places, solar will reshape commodity power markets.
Examples

• Power prices will have a mid-day low. This is already happening in California, where it’s called the “duck curve.” It will soon be the norm in other high-sun demand centers, and the changing power price structure will shake utilities and industrial customers.

• Wind suddenly looks less interesting. The capacity factors, global build rate, and costs for wind power have been nearly flat for five years.

• Nuclear and CCS will have a harder time competing. For example, there are nuclear builds in the middle-east (e.g., UAE building Korean reactors), but with cheap solar it will be hard to compete against solar with gas backup.

• Gas for load following and low-capex peaking looks ever more important. 

Implication #2: There will be opportunities to bring electrical demand to where power is cheap. 

One option is look for products that have very high energy cost and are easily transportable, and build solar farms and production together in high-insolation sites.
Four options are aluminum, ammonia, desalination, and transportation fuels.

Read the entire post at The Keith Group

Not sure northern, nighttime demand peak climates should rejoice over the implication power intensive industry should look for sunnier climates.

Weekly roundup:ISO's, CSP, nuclear, at the Post,

Solar thermal troubles, no plans for new nuclear, big overbuild due to variable renewable electricity sources (vRES)...

Things from around the web that caught my attention this week included the article I co-wrote with Tom Adams being the first story at the top of the National Post home page for a couple of hours Thursday.

There's a lot I could ramble on about connected to the article, but the one I'll pick to emphasize is communication. It was terrific to collaborate with Tom Adams. Our histories are different, with me being perceived as pro-nuclear, and Tom not so much. My favourite comment received regarding this week's column was "Never thought I would "like" an article (co-)authored by Adams."

Well, there's reason to like most of the posts at tomadamsenergy.com

On the nuclear topic...

Sierra Club cuddles up to coal

Some people never learn.

An article on the Sierra Club's latest coalition begins:

How does one of the country’s biggest environmental groups decide to partner with one of the country's biggest coal-burning utilities?

That isn't the question people familiar with the Sierra Club's history would ask. From a Time report: 

...between 2007 and 2010 the Sierra Club accepted over $25 million in donations from the gas industry, mostly from Aubrey McClendon, CEO of Chesapeake Energy—one of the biggest gas drilling companies in the U.S. and a firm heavily involved in fracking—to help fund the Club’s Beyond Coal campaign.

How do they decide to partner up?

Money, I presume.

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:

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]

sunset on solar?

"Guidance for Q1, coupled with past performance indicates the Company may have entered a death spiral."

I don't want to be an alarmist, but I don't mind being a non-conformist and it's hard not to notice stories on producers of solar panels coming in clumps, so...

Yingli Solar Drops A Bombshell | Seeking Alpha | May 17, 2015:

...given the size of Yingli's debt, the Company is likely to spend all of 2015 in whittling down its debt to more manageable levels. Due to this reason, we find it unlikely that the Company can keep up with its peer group in terms of cost reductions, sales growth or project build out.
Also, more significantly, the Company will be unable to invest in new off-China manufacturing capacity to avoid U.S. tariffs. With JinkoSolar, Trina Solar (NYSE:TSL), and JA Solar (NASDAQ:JASO) set to embark on new tariff-free capacity, we believe that there is a high chance that the Company will be routed from the U.S. market in the second half of the year.
All of these developments look grimmer now in the context of the 20-F filing...
Given, the weak situation that the Company is already in, Yingli, in its current form, seems to have entered a death spiral. The Company may survive for the benefits of debt holders and controlling shareholders, but the most common stockholders and ADS holders will likely be wiped out soon.

In December Forbes showed Yingli as the #2 solar equipment maker in the world.
These things happens in competitive industries, but Yingli's is not the only solar valuation story in the news lately.