A new Fraser Institute study misrepresents the impact of wind energy on the electricity bills paid by Ontario consumers, according to an analysis by Power Advisory LLC.
The Canadian Wind Energy Association (CanWEA) tapped the consulting firm to analyze a report from the Fraser Institute, which refers to itself as an independent, non-partisan Canadian public policy think-tank.
The Fraser report, titled "What Goes Upâ�¦Ontario's Soaring Electricity Prices and How to Get Them Down," essentially claims that wind and solar power are driving up electricity bills in the province.
The Fraser study further suggests that, in order to keep prices from spiking further, the province should halt all new wind, solar and hydropower projects. In addition, the study says, the province should cancel existing contracts between the Ontario Power Authority and renewable energy projects in order to reduce rates. The Fraser Institute also calls for the province to restart its coal plants, the last of which the Ontario government officially closed in April.
"Wind and solar power systems provide less than four percent of Ontario's power but account for 20 percent of the cost paid by Ontarians, yet the government wants to triple the number of wind and solar generators. That's a good deal for wind and solar producers but a raw deal for consumers," argues Tom Adams, co-author of the Fraser report.
CanWEA has used Power Advisory's new analysis to fire back at the Fraser Institute's claims and stand up for wind power.
According to CanWEA, by focusing solely on the Global Adjustment (GA), one component of every consumer's electricity bill, the Fraser Institute study fails to acknowledge several key drivers of electricity price increases, including the costs of upgrading and renewing aging electricity infrastructure (such as transmission lines and smart meters), and charges such as the Debt Retirement Charge associated with Ontario's past investments in nuclear power.
When all elements of the electricity bill are taken into account, Power Advisory concludes that wind energy accounts for only 4% of a typical Ontario consumer's electricity bill.
As for the GA, CanWEA adds, the main reason it has gone up is that the Hourly Ontario Energy Price (HOEP) has gone down. There is an inverse relationship between the two: When one goes up, the other goes down. While total electricity costs have gone up, the changes in the GA described by the Fraser Institute have been largely offset by changes in the HOEP, CanWEA contends.
The group adds that the Power Advisory report concludes that the Fraser Institute's study methodology ignores the major driver of reductions in the HOEP: falling natural gas prices. The Power Advisory report says reductions in the price of natural gas over time largely explain the increases seen in GA compensatory payments to all generators (including nuclear, wind, hydro, solar and gas) under Ontario's electricity market structure.
CanWEA says that by leaving the main drivers – HOEP and the price of natural gas – out of the Fraser Institute analysis, the think-tank grossly overstates the impact of wind on consumers' electricity bills.
Robert Hornung, president of CanWEA, says that electricity prices are increasing because Ontario is transitioning to a modern, agile and cost-competitive electricity system – which benefits all Ontarians.
"All new sources of power generation will cost more to develop than power plants built a generation or more ago, and wind energy is now cheaper than new nuclear power, cost-competitive with hydroelectric power and does not bear the commodity and carbon price risks associated with natural gas generation," he says.
Hornung adds that Ontario's electricity generation fleet continues to evolve as it incorporates clean and affordable electricity supply in order to safely and reliably meet the province's future electricity needs.
"This transition must continue, and the Fraser Institute's recommendation to restart some of Ontario's coal-fired generation fleet flies in the face of our clear need to reduce greenhouse gas emissions to address climate change," he says.