Thursday, January 21, 2010

How McGuinty's Plan Will Cost You Billions

Dalton McGuinty and Samsung have signed an agreement so that Samsung will provide 2500 MW of solar and wind electricity to Ontario for 20 years. The Globe and Mail points out that the Ontario government has offered Samsung a 'generous sweetener' of $400 million. But this is chump change compared to the truth, if anyone bothered to do basic math. The real cost is going to soar over $10 billion.

How can I be sure? Basic math and physics.

The Context:

The rates that Samsung will be paid for the electricity are 13.5 cents / kWh and 44 cents /kWh for wind and solar electricity respectively. Current rates are more like 6.5 cents /kWh

That means that the government will be paying an additional 7 cents and 37.5 cents / kWh than they normally do for the privilege of having wind and solar electricity.

The Assumption 1:

Suppose that Samsung decides to build 2500 MW of wind farms then (which would cost Ontario the least). And suppose that these farms produce 2500 MW consistently at a 100% capacity factor.

The Calculation 1:

Every hour then these wind farms would produce 2500 MWh.

Every year these wind farms would produce 21 900 000 MWh.

At an additional cost of 7 cents / kWh this then would mean that the Ontario government would be paying out $1.533 billion. (watch your units here kWh is not equal to MWh)

Over the 20 year life of the agreement, this amounts to $30 billion. (rounding down)

The Assumption 2:

Now assume that Sumsung builds 2500 MW of solar panels and has a similar 100% capacity factor.

The Calculation 2:

Same as before, only this time use 37.5 cents / kWh as the additional cost.

That's $8.2125 billion a year. Over the 20 year life of the agreement, this amounts to $164 billion (rounding down).

The Correction:

Some of you might have realized however, that solar and wind farms don't have a capacity factor of 100%. So, ironically, the one argument against solar and wind farms (that their electricity production is unreliable) is now the only argument limiting the costs that Ontario will pay. In reality wind and solar have capacity factors of about 33%, or a third. So that reduces the costs by a third as well.

This also reduces the electricity that is produced and requires the construction (and/or maintenance) of coal and gas fired power plants in order to act as 'backup' when the sun stops shining and the wind stops blowing. These 'backup' generators have to be kept warm and ready to connect back to the grid at a moment's notice in order to avoid brownouts, consuming gas and coal even if they are not producing electricity. But I won't account for those costs here.

YOUR Bottom Line:

You, the Ontario taxpayer, are going to be on the hook for between $10 billion and $54 billion over the next 20 years in order to buy windmills that won't generate electricity during the calm or during storms, and solar panels that won't generate electricity during the night. And will require additional capital investment in fossil fuel based power plants.

For those interested, per year, that works out to between $500 million and $2.7 billion in additional taxes.

Because government money comes from somewhere.

It comes from you.

Are you feeling lucky?


Joe said...

Is that 10 billion before or after the 100% redundancy in backup generation since it is impossible to store electricity and wind and solar are fickle in their production times and volumes.

Martin said...

I note that Haldiman Co.(one of the identified areas for development) is one of 46 councils in Ont. calling for more studies on health and economic issues before constructing more wind turbines. With passage of the Green Energy Act, all such local concerns can be ignored. If only a portion of the billions proposed for mirrors and windmills could be assigned to updated scrubbers for the coal plants, or expanded nuclear facilities, how much better off would future generations be?
Wind and solar power as a replacement for fuel fired electricity is a fantasy world. McGuinty will be gone in 2 years, but this legacy could haunt taxpayers for years.

Powell lucas said...

Dopey Dalton strikes again. I hope the voters of Ontario are beginning to wake up to what happens when you elect a socialist.

william said...

How about we demand cheaper electricity from our politicians.

I would like to be paying 5.5 cents per/kwh within the next 4 to 5 years, lets tell McDopey if he can't do that ...then he's fired and we'll hire someone who can.

I don't care where it comes from ..coal, nuclear, natural gas, windmills, solar or a mix of all, I just want CHEAPER electricity..
It can be done.

Just NOT with the present bunch of THEIVES running the show now, telling the sheeple instead of ASKING the people.

The Grey Lady said...

Jeeze I have got to get off grid ASAP, funny thing is I have researched both solar and wind and sort of decided they were toooooooo expensive and tooooo unreliable for my family to have to depend on. Cali yeah, vages yeah, Arizonia, yaeh, Ottawa Valley? Not so much..Go figure Dalton and all his experts couldn't come to a conclusion that me and my hubby reached over the dinner table.

The Grey Lady said...

Oppps, I wish I could spell...

Kevin said...

Welcome to California North where every dopey idea they invented was quickly adopted here. I am sure we will follow them into bankruptcy too. Unbelievable

Eric said...

Joe: The $10 billion is after the 33% is factored in. If we assume it is 100% then the number is $30 billion.

Martin: The cost of 2000 MW (capacity factor 90%) of nuclear electricity for 40 years is $25 billion at most.

The Grey Lady: You will be charged through additional taxes, even if you're off the grid. The electricity bills will probably go up, but likely the government will recoup the money through other taxes as well in order to give the appearance that electricity prices are low.

Joe Citizen said...

The McGuinty Gov't of Ontario recently announced a "green" energy deal with Samsung to manufacture Solar and Wind Turbine devices in Ontario giving them a 437 million dollar subsidy to do so.

"The sense around the place is that it's just one-man rule. The morale in caucus is lower than a gutter snake in a puddle on a back country road." according to an insider.

The subsidy will be paid by adding the cost to our hydro bills.
Dalton says that ratepayers can expect big increases in their hydro bills and that they may as well accept it and get used to it. We were told years ago to reduce our consumption of electricity and I think most of us have already done that. They are installing "smart" meters and we are once again advised that we had better make drastic cuts in our consumption. Excuse me? Low income families are already cutting their consumption to the bone and we are asked to do more? We are told that we should do our laundry at night when the rates are lower. Right! The single wage earner expects his wife or husband who is not working to not do any laundry during the day, but do it at night. She can also cook the meals for the following day at night.Never mind about all the arguments with the kids, urging them not to take showers every day, constant harassment of family members for not turning the lights off when they leave the room. The kids getting their backs up because dad is an ogre who won't let them use the computer or watch TV in the afternoon.

The old retired people with low incomes are expected not to use their air conditioners during the day, when it is hottest. How about the poor old duffer on a small income who likes to use his power tools during the day to keep busy and keep from going insane out of boredom. He has to decide whether to give up his hobby or purchase decent food.This demand from the gov't for everybody to cut their power consumption shows just how out of touch they are with the little people of this province. This whole scenario has gotten out of hand. The little guys are already cutting it to the bone. Those with high incomes continue to use as much as they want or need, as this situation is only a slight inconvenience at worst for them. I imagine that the stress of all this on poor people has made a significant contribution to the breakup of families because of the arguments between spouses and children. Congratulations to all of the self righteous granola crunchers....and to you too Dalton.By the way, if any of you is planning to commit suicide by slitting your wrists in the bathtub because you can't pay your hydro bill, please try not to use too much hot water.

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