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XYLENE POWER LTD.

ELECTRICITY GENERATION

By Charles Rhodes, P.Eng., Ph.D.

BACKGROUND:
The Ontario Power Authority (OPA), in its 2005 Supply Mix Report, identified that Ontario needs to refurbish or build more than 24,000 megawatts of electricity generation capacity by the year 2025. The Supply Mix Report implicitly assumed continued use of fossil fuels in Ontario for peaking electricity generation, transportation and general heating applications. However, when the constraints imposed by global warming are taken into account, these implicit assumptions are wrong.

In order to minimize gobal warming fossil fuelled electricity generation must be eliminated from the supply mix, except for emergency backup generation. Furthermore, the total required electricity generation capacity will be much larger than was contemplated in the 2005 OPA Supply Mix Report because of the requirement to use non-fossil fuel electricity to displace fossil fuels that are presently used for transportation and general heating.
 

ACTUAL ELECTRICITY LOAD:
The recent peak electricity load in Ontario was reached on August 1, 2006 and was 27,005 megawatts. This peak electricity load will increase in the future due to:
a) Increasing population;
b) Increasing use of mechanical cooling due to CO2 and other GHG atmospheric warming;
c) Increasing need to use electricity to displace fossil fuels in industrial, transportation and heating applications.

During the period 2008 - 2013 there was a reduction in peak electricity use due to increased electricity prices and there was an economic down turn which forced multiple major energy intensive industries out of business. These business shutdowns led to wide spread unemployment.

The IESO has completely failed to take these issues into account in preparing long term electricity load forecasts. The only certain way to meet and contain the load growth is to adopt an electricity rate structure that is sufficient to fund the full cost of environmentally acceptable new generation and its related transmission and distribution. Green House Gas emission minimization requires that all new generation be either renewable (hydraulic, wind, solar) or nuclear. All of these generation types have significant geographical contraints on their locations and must be connected to load centers via transmission/distribution. Since the cost of new transmission and distribution is comparable to the cost of new generation, to minimize overall costs it is highly desirable to remove obstacles to implementation of non-fossil fuel distributed generation.
 

GENERATION CATEGORIES:
All generators and loads can be divided into three categories.

Category I consists of generators and loads that are controlled by their owners in order to maximize each owner's profitability under a published or contracted rate schedule. The rate schedule must take into account the ability of each generator to supply power when needed (generator reliability) and to efficiently use the transmission/distribution system. Presently most load customers and most new small generators are in category I. The category I rate schedule should be carefully designed to minimize the required amount of more expensive category II generation and load. The advantage of category I is that it provides rate stability that allows building owners and other investors to make simple investment decisions relating to electricity generation, energy storage, energy conservation and load management.

A generator or a load customer can improve its efficiency of use of the transmission/distribution system by employing nearby energy storage to make its net power input or output more uniform. This issue is of particular importance for wind and solar generators, high rise residential buildings and commercial office buildings.

Changes in the electricity rate with time should be smooth to avoid sudden changes in electricity supply or demand that may be triggered by discrete time-of-generation or time-of-use rate blocks. At every instant in time the total power generated must be carefully controlled to precisely equal the total power consumed plus transmission/distribution losses. The control system must also keep the local voltage supplied to all load customers at its nominal value +/- 6%. Efficient achievement of this voltage control requires constraint of the net output of almost all generators. A distributed generator control system that adjusts generator output power in proportion to (nominal voltage - local grid voltage) is required to prevent some distributed generators hogging the load at the expense of other distributed generators. The whole issue of category I generator and load constraint for voltage regulation has yet to be addressed by the Independent Electricity System Operator (IESO) and the Ontario Energy Board.

It is important to note that optimum generator and optimum load electricity rate schedules are different. A generator's Capacity Factor (CF) is its average output divided by its peak output. Hence:
0 < CF < 1.
Load Factor (LF) is the average load divided by the peak load. Hence:
0 < LF < 1.
The transmission/distribution utilization is optimum when both the generator capacity factor CF and the load factor LF are close to unity. The electricity price per kWh paid to a generator should increase with increasing daily CF until the daily CF is unity.

However, in practice a generator's CF is capped by the need for about a 15% generation surplus to meet system reliability and voltage control requirements. The electricity price per kWh paid by a load customer should decrease with increasing daily LF until the daily LF is unity.

In order to financially enable energy storage the delivered cost of electricity per kWh to a load customer needs to be at least three times lower at times when the energy is being stored than at times when the energy is being consumed.

Monthly peak demand metering is somewhat counter-productive because it heavily penalizes the equipment owner during normal maintenance periods, thus reducing the financial incentive for use of energy storage systems and behind the meter generation systems. Daily or weekly peak demand metering is much more effective at incenting maximum load factor in a statistical number of load customers. The best solution is to meet fixed revenue requirements from a charge for weekly peak demand and to meet variable costs from a charge per kWh. In measuring peak demand a sliding 1 to 4 hour averaging window should be used to avoid penalties for random power transients outside the customer's control.

Category II consists of generators and loads that may be dispatched on or off by the IESO on a minute by minute basis in order to match total generation to total load while preventing localized transmission/distribution overloads. Much of the existing central hydraulic generation and central fossil fueled generation falls into category II. Since category II generators and loads are typically dispatched off by the Independent Electricity System operator (IESO) for much of the time, the cost per kWh of electricity from new category II generators is much higher than the cost per kWh of electricity from new category I generators. Similarly the price paid per kWh by category II interruptible loads is much lower than the price paid per kWh by category I loads for reliable electricity.

The category I rate structures should be chosen to minimize the required amount of category II generation and load. If at a particular time of the year category II generation has to run a lot or if large amounts of category II loads must be run, it is an indication that the seasonal component of the category I rate structure is incorrect for that time of the year. Thus operational experience with category II generation and loads should be used to semi-annually fine tune the category I rate structure. As of October 2014 Ontario continues to lose billions of dollars per year due to lack of an interruptible electricity rate structure for category II loads. Addressing this market segment requires changes to both the existing transmission/distribution rates and the existing Global Adjustment.

Category III consists of generators and loads that are normally in category I but are shifted into category II under pressing circumstances when there is insufficient category II generation or load to maintain the grid voltage within acceptable limits. An example of category III is a demand response program that sheds load at the peak load times on extremely hot summer days. Generally the owner of the generator or load receives some form of benefit for allowing his generator or load to be temporarily recategorized to meet pressing circumstances.
 

GENERATION TYPES:
The total electricity supply can be viewed as a linear sum of the following generation types:

1. Run-Of-River Generation:
This distributed generation type consists of run of river hydraulic generators with little or no storage reservoir capacity. This generation type has a high output in the early spring and a low output in the late summer. The annual variation in the output is typically about 4:1. This generation type normally operates at full available capacity 24 hours per day, unless constrained to a lower value by the IESO. The major drawback of this generation type is that for efficient use of both the generation and the transmission/distribution some form of energy storage is needed at the load to match the load profile to the nearly flat daily generation output. To address this problem the load customer's rate schedule must effectively value electricity much more at peak load times than at off-peak times. The economics of run-of-river generation improve if part of the electricity load is winter heating, so that the seasonal electricity generation profile more closely matches the seasonal electricity load profile. Run-Of-River generators typically have working lives of about 90 years.

2. Wind Generation:
This generation type includes wind turbines with and without nearby energy storage.

The main problem with wind turbines without nearby energy storage is that their outputs are highly variable over a day, over successive weeks and over a year. The intermittant nature of wind turbine produced energy reduces the market value of that energy at the point of delivery by a factor of between three and ten. To avoid this problem wind turbines require balancing generation and/or some form of energy storage to level their outputs. Environmentally acceptable forms of energy storage include river fed hydro-electric reservoirs, pumped hydraulic energy storage, electrochemical energy storage and behind the customer meter thermal energy storage.

On average a wind turbine without nearby energy storage needs about three times as much transmission capacity per kWh generated as does a nuclear reactor located equally far from the load. In Ontario this problem is aggravated by the geographic reality that most of the wind energy resource is in northern Ontario whereas most of the customer load is in southern Ontario. Typically the average transmission distance for wind energy is about four times the average transmission distance for nuclear energy. The extra transmission requirements of wind generation may be a small cost component in Europe, where the average transmission distance is relatively small, but are a major cost component in Ontario where the average transmission distance for wind energy is large.

To strongly encourage wind turbine owners to adopt nearby energy storage, all new generators should be paid for the electricity that they generate in accordance with a rate structure in which the generator compensation rate per kWh increases as the net generator capacity factor increases. Such a rate structure would encourage wind turbine owners to build sufficient nearby energy storage to substantially reduce the output power fluctuations and hence reduce the transmission/distribution cost. Existing wind turbine owners should be offered a contract amendment to upgrade to use of nearby energy storage under the new rate.

Another problem with wind turbines in Ontario is that their outputs are seasonal with the monthly average output in the winter typically being about two times the monthly average output in the summer. To reflect this issue the feed-in tariff should pay much more for a kWh generated during the summer than for a kWh generated during the winter. The economics of wind energy may improve if part of the electricity load is winter heating, so that the seasonal generation profile more closely matches the seasonal load profile.

Another problem with unconstrained wind generation is that a province wide surge in wind at a time of low load can cause stored water in hydroelectric dams to be dumped over the spillway and can cause water moderated nuclear fission reactors to suddenly shut down. When a water moderated nuclear fission power reactor suddenly shuts down the high neutron cross section fission product Xe-135 temporarily poisons the reactor, preventing it from restarting for several days. Meanwhile the wind dies down and the missing electricity generation has to be made up with fossil fuel reserve generation. Hence unconstrained wind generation on an electricity system that lacks sufficient energy storage can lead to more rather than less fossil fuel consuption. In Ontario the IESO still does not adequately recognize this issue and continues to under value manouverable hydraulic generation and energy storage and continues to issue contracts for nearly unconstrained wind generation.

3. Nuclear Generation:
During 2014 and 2015 nuclear power provided over 60% of the grid supplied electricity in the Province of Ontario via CANDU type heavy water moderated nuclear fission reactors. In spite of all kinds of anti-nuclear criticism, electricity from CANDU reactors is the least expensive and most reliable form of delivered energy in Ontario. Wind power, solar power and run-or-river hydro power require large amounts of expensive transmission and storage, the full costs of which must be taken into consideration in evaluating the relative merits of different electricity sources.

Nuclear electricity generators are central in nature because their siting is constrained by their requirement for large amounts of cooling water. To minimize component thermal stress and maximize return on invested capital nuclear electricity generators attempt to operate at a nearly constant output. A major advantage of nuclear generation is that its output is reliable and does not significantly diminish during the summer at times when the air conditioning load peaks. A drawback of water moderated (slow neutron) nuclear fission generation is that its load following capability is poor, so that either external energy storage or a steam turbine bypass is required to achieve daily load following. External energy storage is expensive. Steam turbine bypass wastes both nuclear fuel and available cooling water and reduces return on capital investment.

Maintenance of nuclear generation is normally scheduled for seasons when the anticipated provincial electricity load is relatively low. Over time CANDU reactors should be gradually replaced by liquid sodium and salt cooled fast neutron reactors (FNRs) for more efficient electricity generation, more efficient use of natural uranium, more efficient disposal of nuclear waste and production of synthetic hyddrocarbon fuels. With good maintenance CANDU nuclear generators have working lives of about 60 years, but require major maintenance (fuel channel replacement) at about 20 year intervals. A well designed FNR lasts much longer. A fission type nuclear reactor also needs an extremely reliable grid independent backup power system that can, under adverse emergency conditions, continuously power the reactor cooling system for many months after reactor shutdown.

The efficiency of conversion of nuclear heat into electricity varies by nuclear reactor type. A liquid metal cooled fast neutron reactor can achieve a net full load efficiency as high as 40%. A typical light water moderated nuclear fission reactor operates at a net full load efficiency of about 33%.

A hidden benefit of nuclear technology is the low worker accident rate. Construction and maintenance of energy systems is full of potential dangers. The nuclear industry has been very successful in reducing risk to its work force.

4. Solar Generation:
Distributed solar generation produces electricity during the day but not at night. Solar generation is useful for helping to meet the normal increase in load during the day. Solar generation is uneconomic for supplying electricity at night because of the high cost of the required energy storage system for supplying electricity at night. In near polar regions solar generation is also seasonal, although the peak daily output of a solar generator is usually nearly coincident with the peak daily electricity demand. The working life of a solar generation system is strongly dependent on the specific technology and materials used. A major advantage of solar power is that it can be easily connected behind customer meters, which enhances its value from the perspective of the load customer and makes it invisible to the electricity distribution utility. Another advantage of solar power is that it is highly distributed and mechanically simple, which gives it inherent reliability.

5. Load Following Hydraulic Generation With Storage Dams:
This generation type consists of hydraulic generation from storage dams that hold back large lakes of water. Daily load following generation supplies the power difference between the low load in the middle of the night and the peak load during the day. The load following generation compensation rate must include a bonus sufficient to fund the extra costs of load following generation. Otherwise the daily load variation must be met by higher cost IESO constrained generation (Category II generation). There are constraints on hydraulic load following generation imposed by average river flow, reservoir area, permitted change in reservoir level and maximum and minimum limits on downstream river flow. The working life of large load following hydraulic generation installations is over 100 years.

A variation on hydraulic load following generation is pumped hydraulic energy storage where water is pumped uphill during periods of low provincial electricity demand and then runs downhill to generate more electricity during periods of high provincial electricity demand. There is much potential future opportunity for pumped energy storage between Lake Erie and Lake Ontario provided that the political obstacles can be overcome.

Electricity rates based principally on kWh consumed severely under value load following hydraulic generation with dammed storage. In a non-fossil fuel world intermittent energy sources such as wind and solar are entirely dependent upon load following dammed hydraulic generation for supply of dependable power.

6. Constrained Generation and Constrained Load:
Constrained generation and constrained load are used by the Independent Electricity System Operator (IESO) under dispatch control to regulate the electricity system voltage and frequency. The preferred generation and load type for this purpose is hydraulic generation in combination with pumped hydraulic energy storage because of high efficiency, good response rate, high turndown ratio and low GHG emissions. Hydraulic load following generation is subject to both daily and seasonal energy storage constraints. If insufficient hydraulic generation is available to the IESO, other forms of generation/load must be dispatched. A significant requirement for dispatchable generation or dispatchable load indicates that the electricity rate structure is incorrect. Directly controlled generators and loads are the subject of complex and expensive contracts. If possible, it is better to resolve a projected long term generation or load shortfall via an adjustment to the electricity rate structure than it is to rely on more expensive dispatched generation and/or dispatched load.

7. Reserve Generation:
Reserve generation normally does not operate at all except for test purposes and for providing generation to replace other generation that is not available due to an unplanned equipment failure. Normally the capacity factor of reserve generation is zero. However, to ensure system reliability reserve generation must be ready to function immediately, with no advance notice, to make up for any failure of other generation and/or transmission to operate as planned. Reserve generation may be fossil fueled.

Part of reserve generation needs to be instantly available to meet generation shortage due to a safety trip in another generator. This type of reserve generation is kept in synchronization with the grid and is sometimes referred to as "spinning reserve". Spinniing reserve is also used to attenuate oscillations in the transmission voltage.
 

GENERATOR COMPENSATION RATES:
The importance of the above categories of generation and loads lies in the electricity rates / kWh. The compensation rate / kWh for category I generators is much lower than the compensation rate / kWh for category II generators. Similarly the energy cost / kWh for category I loads is much higher than the energy cost / kWh for category II loads. Category II equipment must be economic at about half the capacity factor or half the load factor of Category I equipment. Reserve generation is contractually constrained off almost all of the time, so constrained off generators must be paid for capacity in order for the owners to finance equipment that is seldom utilized.

The Category I generator compensation rate should also be based on an annual average constraint of about 33%. This average constraint approximately matches the Ontario annual load factor. This constraint also provides power margin so that every generator can contribute to local voltage regulation.
 

COST:
There has been some debate as to the optimum mix of electricity generation in Ontario. The position of this author is that for reliability there must be sufficient nuclear generation to meet the peak summer load under conditions of low wind and minimal hydraulic generation. Then at other times of the year excess generation should be used to produce synthetic hyudrocarbon fuels, fertilizers, etc. production of which can be shut down under ther terms of interruptible electricity rates at peak load times. The electricity rate for unreliable interruptible service should be less than one third the rate for on-peak service. In principle it is prudent for Ontario to invest in both wind generation and nuclear generation so as to have protection against long term risks that could occur with either technology. As long as there is sufficient seasonal energy storage and electricity transmission capability, potential non-fossil fuel electricity should not be wasted. A vast amount of new non-fossil fuel primary energy is required to displace fossil fuels in North America.

The real issue with wind generation is the cost and availability of the required transmission and balancing hydraulic energy storage. Wind generation in Ontario is distant and seasonal, which means that wind generation requires much more transmission and balancing energy storage than does nuclear generation. If transmission and energy storage costs are neglected wind generation appears superficially less expensive than nuclear generation. An issue that the OPA and the government of Ontario has failed to face is that the compensation rate for hydraulic generation with sufficient energy storage for balancing wind generation is insufficient for the growth in such hydraulic generation and its related transmission to match the growth in wind generation. A related issue is that the present electricity rate structure over values kWh and under values peak kW capacity to such an extent that this price structure does not financially enable construction and operation of energy storage.
 

CONSTRAINTS:
Solving the hydraulic generation and energy storage shortage requires the Parliament of Canada and the Legislature of Ontario to address the issue of the necessary variations in lake levels and river flows. In many cases there should also be agreements made with affected aboriginal peoples. In the case of the Great Lakes these issues must also be addressed by the United States federal government and by the governments of the individual states adjacent to the Great Lakes.

Unfortunately the present political structure in the USA is incapable of making rational decisions on the simplest of matters affecting public welfare and energy. The US gun murder/injury rate is orders of magnitude higher than in any other developed country. Polls indicate that over 90% of the US population wants improved security with respect to guns but still the US Senate and Congress cannot agree on the simplest of measures to prevent proven criminals and other dangerous persons having easy access to guns. The US government at this time is simply not able to make rational decisions.

Further, the Canadian MAPLE nuclear reactors, which were intended for medical isotope production and which cost the Canadian tax payers hundreds of millions of dollars, had to be abandoned after US politicians blocked export to Canada of suitably enriched uranium.

In these circumstances Canadians cannot rely on the USA either for rational decisions with respect to Great Lakes level control or for reliable supply of enriched nuclear fuel.

The present political realities related to increasing hydraulic generation and Great Lakes pumped energy storage prevent further effective growth of wind generation in Ontario. Hence for the forseeable future electricity load growth in Ontario should be met with nuclear power. CANDU nuclear reactors can be fueled with natural uranium and thus do not rely on the USA for supply of enriched uranium fuel. However, there is merit in Ontario investing in development of a Canadian fast neutron reactor technology to the extent that this technology can be fueled by reprocessing of existing and committed spent CANDU fuel bundles.

In the future when more rational politics prevails there is a large inventory of fuel available for CANDU reactors and Fast Neutron Reactors by reprocessing of spent light water fuel presently in dry storage in the USA.
 

This web page last updated June 27, 2016.

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