Brian Zinchuk is editor and owner of Pipeline Online
Wind turbines near Drumheller. This is the Wintering Hills Wind Farm this past summer. It was producing zero megawatts out of a capacity of 88 on Tuesday morning. Photo by Katrina Zinchuk
The morning of Tuesday, Oct. 29, saw yet another utter collapse of wind power generation, but this time, it was accompanied by a collapse of solar generation as well.
At 11:09 a.m., Alberta’s collective 5,340 megawatts of wind power generation capacity were outputting 25 megawatts – or 0.5 per cent of capacity. That’s five one-thousandths of theoretical nameplate capacity, across 48 wind farms more than 1,500 wind turbines costing collectively billions of dollars. Of those 48 wind farms, 39 were producing zero power at that moment.
That’s according to minute-by-minute data provided by the Alberta Electric System Operator (AESO).
MC is maximum capacity, in megawatts. TNG is total net to grid. DCR is dispatched, and accepted, contingency reserve. This was at 11:09 a.m. on Tuesday, Oct. 29, when wind output fell to half a per cent of total capacity, again. AESO
As this happened an hour before noon, when the sun was reaching its highest point in the sky, usually solar output is sufficient to backfill low wind output. However, at that same moment, solar output was 153 megawatts out of a total 1,672 megawatts of capacity. That’s just nine per cent output, an hour before noon.
The reason was obvious when looking at satellite weather imagery. Heavy clouds blanketed southern Alberta, where nearly all the grid-scale wind and solar facilities are located in that province.
Nearly all of Alberta’s power was coming from its natural gas plants, which were pumping out 9,225 megawatts of the 9,973 megawatts produced domestically at the time. That’s 92.5 per cent of power generation.
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This is significant, as the proposed federal Clean Electricity Regulations, which are expected to be updated into final form imminently, currently say that all natural gas- and coal-fired power generation that does not have expensive carbon capture and storage integrated with it must shut down by 2035. The current draft says that such fossil fueled power would only be allowed to operated unabated (without carbon capture) for 450 hours a year, which means, if you started on New Year’s Day, that time allotment would be used up by January 19.
Thus, if those regulations were in place the morning of Oct. 29 and followed to the letter, 92.5 per cent of the Alberta grid would have gone unpowered.
At 9 a.m. that morning, the pool price for power in Alberta hit its theoretical maximum of $999.99 per megawatt hour. It’s something that routinely happens when wind power generation bottoms out to next to nothing, and doubly so when it bottoms out and solar power is minimal or zero.
Notice the caption on the right? That showed the theoretical maximum power price was reached at 9 a.m. on Oct. 29. Proposed reforms would make that number $3000 per megawatt-hour. AESO graphic
That maximum price is significant, too, as on Oct. 28, the AESO released its Restructured Energy Market (REM) Update. Significant in its most recent drafts are the proposals to dramatically enlarge the range of pool pricing from -$100 to + $3000 per megawatt. Since extremely low wind conditions typically result in pool pricing maxing out – as it did Tuesday morning, if those proposals are adopted, then it is quite possible and even probable that power prices in Alberta would have spiked to $3,000 per megawatt.
Here’s the hourly price for power in Alberta in September, with 114 hours of zero dollar pricing. Notice the price spikes? It is common for the price to reach near the theoretical maximum. In September, it didn’t, but on Tuesday, it did. What do you think will happen when the maximum triples? Graphic courtesy @ReliableAB
On the other end of the scale, late September alone saw 114 hours where the price of power in Alberta was $0. according to X account @ReliableAB, which posts hourly logs of AESO data. This was due to two of the province’s interties – one to BC, one to Montana – being down for service, coupled with relatively high wind power generation. That is, if you consider 40 to 60 per cent of capacity output being high. Without the interties to rely on to sell excess power, the pool price paid to all generators was frequently $0 per megawatt-hour. That’s less than the price of a Timbit for all the power collectively generated in Alberta during those hours (*exempting any side deals made for power).
But with the proposed reforms incorporating negative pricing, power generators would likely have not only not been paid for their power, but penalized up to $100 per megawatt-hour provided to the grid. So instead of making money at all times for producing something that is intrinsically valuable – power that keeps the lights on – power generators would be financially punished for doing just that, whenever wind actually decides to actually put out a decent amount of power (and still nowhere close to maximum capacity).
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While solar power also plays a part in this, Alberta’s wind capacity, which is now theoretically close to the capacity of the entire Saskatchewan grid, is the largest swing factor in the equation by a long shot.
As late September and early October has shows, generators would be punished by negative pricing whenever wind power actually produces around half of its capacity and demand isn’t high. If wind should actually produce more than that, baseload and peaking natural gas power stations, collectively costing many billions of dollars, will financially suffer whenever that happens. And as Alberta continues to build more and more wind and solar capacity, having doubled both in less than three years, the probability of that happening increases with each new wind farm.
As someone wise in power matters on this side of the border told me, such things will make building nuclear power in Alberta highly unlikely. Who would spend multiple billions on a power plant to get paid zero, or even negative pricing, from time to time, whenever the wind decides to blow hard and the sun is shining?
In pouring through the October AESO REM information package, I freely acknowledge a lot of it was beyond the feeble brain of this lowly former ditch-digger. But the expanded price range just boggles my mind.
This is what the document said regarding the “wider energy price range:”
Under reliability, it said, “Price signal better reflects real-time conditions, attracting supply/demand response when the are most valuable.”
Under affordability, it said, “Negative prices and lower offer caps to protect consumers and promote demand.”
And under the decarbonization heading, it said, “Chances of higher and lower prices promotes investment in flexibility.”
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Okay, what power generation, pray tell will be built that will require pricing in excess of the already existing $999.99 per megawatt-hour to be viable? If they require pricing to hit, say, $2,687 to make a profit, maybe there’s other issues here?
How is tripling the top price in any way making things more affordable for consumers? Will the -$100 occurrences cancel out the +$3000 occurrences? How is more “affordable?”
The last point seems to really tell the tale – this is an opportunity for renewable wind and solar to drive the bus even more than it is already. Those higher and lower prices, over the last three years, have been largely driven by the foibles of wind and solar. That “flexibility” is really to accommodate the wild swings in output seen from wind and solar.
The fact reforms are being considered at all is driven in large part by the United Conservative Party government. But I wonder if they really know what they might be getting, if prices could triple for customers? Other aspects, like “Day-Ahead Marketing,” may be very beneficial. But a $3,000 price cap, which will certainly be reached, and frequently, helps no one in the public. And negative pricing will be a strong disincentive for any baseload power producer, or indeed, any producer.
How long could McDonalds afford to hand out Big Macs for free? And how long would they hand out Big Macs and pay the customer to take them? The absurdity speaks for itself. The same should apply to power markets.
Someone, somewhere in Alberta, will have to cough up the dough whenever the price hits $3,000 per megawatt-hour. And that someone is likely all Albertans and all Albertan businesses. For periods where the price maxes out or gets really close to max for several hours (which it does routinely), the integral under that graph is going to be massive. That three hours at $3000 will be equal to 12.5 days at $30 dollars per megawatt-hour (just above the $27.88 price late Wednesday evening). No one’s going to be happy about that.
Maybe these reforms should be looked at a little harder before being finalized.
Brian Zinchuk is editor and owner of Pipeline Online. He can be reached at brian.zinchuk@pipelinelineonline.ca.
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