Comments on the Affordable…

Comments on the Affordable Energy Act

Electricity subsidies

A February 2022 report from Ontario’s Financial Accountability Office, Ontario's Energy and Electricity Subsidy Programs (https://www.fao-on.org/en/Blog/Publications/energy-and-electricity-2022), estimated that over the 20-year period from 2020-21 to 2039-40, nine electricity and energy subsidy programs will cost the Province a total of $118.1 billion.

The Renewable Cost Shift is currently the largest program. It “subsidizes the cost of over 33,000 renewable energy contracts with wind, solar and bioenergy generators, most of which are 20-year contracts entered into between 2009 and 2016." However, over time, "the cost of the program will decline as the contracts expire.” The second largest program is the Ontario Electricity Rebate. At present it provides a typical residential ratepayer with a $50 reduction in their estimated monthly electricity bill -- just under 30%. This program, if it continues, will soon become the largest subsidy.

These subsidy programs have attracted criticism. An October 31, 2024 Globe and Mail editorial highlighted “the $7.3-billion that the province says it will spend this year in rebates to households, poor and rich alike, for their electricity bills,” calling them “the granddaddy of big-ticket bribes.”

Bill 214 proposes, as the first of the goals and objectives in the Minister’s integrated energy resource plan, “the affordability of energy for consumers and the cost-effectiveness of planned energy resources.” While the estimated $118.1 billion in energy subsidies in the 2020-2040 period could reduce consumer electricity costs, most of these consumers are also taxpayers.

Transferring money from taxpayers to current energy generators, and then rebating that money to ratepayers, would appear to be a cumbersome and unnecessary scheme. This interferes with market signals. It could lock in unwise investments in new generating infrastructure, negate the goal of cost-effectiveness, and put Ontario’s long-term economic health at risk.

In particular, “the prioritization of nuclear power generation to meet future increases in the demand for electricity” may run contrary to the goal of cost-effectiveness of planned energy resources, when many other options are available, as discussed below.

Distributed energy generation

In Ontario, electricity supply infrastructure relies on a centralized approach. Large power plants provide electricity to population centers (Toronto, Ottawa, Hamilton, Kitchener, London, Oshawa, Windsor, etc.). They necessitate complex transmission and distribution systems. Large-scale centralized energy systems can be expensive to develop and maintain and can face multiple constraints and issues.

Ontario’s electricity generation is dominated by the nuclear power plants owned by the provincial crown corporation, Ontario Power Generation (OPG). The world’s largest nuclear generating station, at the Bruce Nuclear site, is owned by OPG and operated on a long-term lease by Bruce Power.

Distributed energy systems produce electricity closer to the point of use. Various terms are used in scientific literature, including distributed generation, decentralized generation, and on-site generation.

Distributed energy systems can be tied to the grid, or off-grid. Roof-top solar panels, the classic example of distributed generation, can be either grid-tied or off-grid. I have friends with sophisticated off-grid systems that include solar panels and battery storage, and even small wind turbines.

Distributed generation offers efficiency, flexibility, and economy, and is thus regarded as an integral part of a sustainable energy future.

Admittedly, grid-tied distributed generation is not a panacea. Ontario’s relatively mature electrical grid may need tweaking to handle the two-way power flow associated with distributed energy systems. With the high generating capacity of photovoltaics on sunny days, electrical utilities sometimes must cope with over-voltages in transformers, feeders, and beyond – significantly reducing the lifespan of the equipment.

Power utilities cannot directly control the extent to which the generated electricity from residential photovoltaic arrays is used, so this form of energy input to the system is sometimes called “Behind-the-Meter.” The term “Behind-the-Meter” is also applied to the small-scale energy storage systems (i.e., batteries) that are routinely installed in customers’ premises.

The growing popularity of electric vehicles can also cause problems in distribution systems. The uncoordinated charging of EVs in each house risks overloading distribution transformers. An electric overload occurs when several power-hungry items of equipment are plugged into the same line. It can take as little as two EVs to be connected to the same transformer for that asset to either blow out or reduce its life by 90%.

Bidirectional charging

On the other hand, EVs also have potential to strengthen the grid if they are equipped for bidirectional charging. With bidirectional charging, the batteries in our vehicles can not only provide fuel for the road but energy for our homes and even for our shared electrical grid. Bidirectional charging with EV batteries provides resilience benefits, demand-response capabilities, and backup power decarbonization.

In one-directional charging, an alternating current (AC) is converted to direct current (DC) energy stored in the EV battery to power the car. This conversion can happen within the charger or in the vehicle, depending on which device is equipped with a converter. With a bidirectional charger, the converter can transform the car’s DC energy back into AC electricity for use by another recipient.

Vehicle to grid (V2G) bidirectional charging allows an EV to send energy directly back to the grid. This can make a local power grid more energy efficient and can generate revenues for EV owners who are paid to help maintain grid reliability. Vehicle to home (V2H) bidirectional charging turns an EV battery into a backup power source for a house. This can be attractive during power outages.

The typical electric car battery holds about 60 kilowatt-hours of electricity, enough to power a home for roughly two days. V2H bidirectional charging typically relies on technology that is built into the charger.

Conventional diesel backup generators, although increasingly popular, do not always function during grid power loss, and are not carbon pollution-free.

Hybrid systems

Because photovoltaic and wind resources are variable and intermittent, storage devices are needed to increase reliability. Various storage technologies such as batteries, flywheels, compressed air, and pumped hydro storage can be integrated with renewable sources to improve the stability of the system. While battery storage systems often come first to mind in dealing with the variable and intermittent nature of photovoltaic- and wind-generated electricity, and are widely used due to their simple installation, constancy, and higher conversion efficiency, they may entail higher costs, shorter lifetimes, and disposal issues compared to pumped hydro storage.

Coupling wind and solar with pumped storage in “hybrid systems” can improve system reliability. Such hybrid systems are increasingly being used worldwide.

Ontario is fortunate in having existing hydroelectric resources that can be employed in hybrid systems. Hybrid systems that combine wind, photovoltaics, and hydropower - including pumped hydro storage -- should be given serious consideration in Ontario’s electrical grid.

Pumped hydro storage is well established and reliable. It has potentially fewer environmental issues than battery storage, which requires large inputs of critical minerals and poses significant waste challenges.

There is limited deployment of pumped storage in Ontario. In fact, the Canada Energy Regulator says that the only pumped hydro storage facility in all of Canada is Ontario Power Generation’s Sir Adam Beck Pump Generating Station, a 174-megawatt facility that pumps water from the Niagara River into a 300-hectare reservoir. But this single facility has a greater storage capacity than what currently exists in all of Canada’s newer, emerging storage technologies, such as batteries.

Wind-photovoltaic-hydro hybrid systems should be considered as a priority investment. Hydro-Québec recently announced plans to triple wind power generation in the province by integrating more than 10,000 megawatts into the grid by 2035. It also plans to add 3,800 MW to 4,200 MW of new hydropower generation, including by increasing the capacity of existing generating stations through the addition of pumped hydro storage.

More efficient use of existing hydro generation stations through pumped storage should be preferred to construction of new dams and new hydro generating stations, because the latter entails significant environmental costs. Furthermore, existing sites offer a financially viable alternative since most of the capital cost emanates from the creation of new infrastructure.

Pumped storage need not mean large-scale facilities. There is potential for using non-hydropower dams to support renewable energy penetration, especially in remote areas. Overall, energy generation from renewable sources provides an efficient, clean alternative to fossil fuels and nuclear power for on-grid and off-grid electricity. Hybrid systems with photovoltaics, wind, and hydro with pumped hydro storage have considerable potential in Ontario.