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 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).
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?