XYLENE POWER LTD.

INTERRUPTIBLE ELECTRICITY OPPORTUNITY

DEFINITIONS:

Clean Electricity is electricity that is generated without emission of fossil CO2.

Dependable Electric Power is the electric power drawn by loads that need electricity which is almost always available.

Interruptible Electric Power is the total available clean electric power less the Dependable Electric Power.

Annual Interruptible Electric Energy Supply is the time integral of the Interruptible Electric Power over one year.
 

ORIGIN OF INTERRUPTIBLE ELECTRICITY:
Interruptible Electricity is a byproduct of production of dependable clean electricity. The clean electricity supply capacity varies due to variations in precipitation, sunlight, wind and equipment maintenance. The dependable electricity load varies due to fluctuations in the power requirements of dependable electricity consumers.

In order for the clean electricity supply to be dependable the clean electricity supply capacity must always exceed the dependable electricity load by at least a 15% reserve margin at the peak load instant of each year. However, due to variations in both the clean electricity supply capacity and in the load needing dependable electricity, the difference, which is the available interruptible power, varies over a wide range.

The graph below shows the difference between the clean electricity supply capacity and the dependable electricity load at night during 2016. Some of this interruptible electricity comes from intermittent wind and solar resources and some from dependable hydro and nuclear resources.

Source: OSPE Energy Task Force, April 2017.
 

In practical implementation, although the instantaneous interruptible electricity supply capacity at any instant in time is highly unpredictable, the average interruptible electricity supply over a year is both substantial and quite predictable.
 

BENEFITS OF PROPER EXPLOITATION OF INTERRUPTIBLE ELECTRICITY:
1) Lower cost for charging of battery electric vehicles;
2) Lower cost for operation of comfort heating systems at locations where consumers cannot access pipeline supplied natural gas;
3) Lower cost for production of green hydrogen;
4) Lower cost for production of synthetic liquid fuels;
5) Lower cost for all Ontario electricity customers due to reduced grid annual peak load.

Thus, interruptible electricity has significant value for direct liquid fossil fuel displacement and for charging various forms of energy storage, but has no value as a source of dependable power.

Another potential application of interruptible electricity is for production of electrolytic hydrogen in large highrise buildings. The issue is that during electrolysis of water about 40% of the electrical energy produces heat rather than hydrogen gas.

Today most large highrise residential buildings have hydronic heating systems. The heat rejected by the electrolysis of water can readily be used in these systems to displace natural gas otherwise used for both space and domestic hot water heating. The hydrogen produced can readily be piped to a gas compressor and storage unit located safely outside the building. The resulting compressed hydrogen can be sold either as a vehicle fuel or as a chemical feedstock. Thus 100% of the available electrical energy is usefully used.

Certain food processing industrial environments, that can also usefully use the reject heat from electrolysis of water, provide further potential opportunity for similar reductions in the cost of producing green hydrogen.
 

MAGNITUDE OF FUTURE ONTARIO INTERRUPTIBLE ELECTRICITY SUPPLY CAPACITY:
In 2020 the Ontario electricity system had an interruptible electricity supply capacity of about 20 TWhe / year on total annual electricity generation of about 140 TWhe per year. However, at present this interruptible electricity supply capacity is heavily constrained due to use of about 10 GWe of natural gas fueled electricity generation to meet the annual peak electricity load.

In order for the Ontario electricity system to stop use of fossil fuels the present 10 GWe of natural gas generation would have to be replaced by about 10 GWe of nuclear generation, which would add about:
8000 h / year X 10 GWe = 80,000 GWhe = 80 TWhe
to the present Ontario electricity system interruptible electricity supply capacity. Hence, the total available interruptible electricity capacity would rise about 5X from the present 20 TWhe / year to about 100 TWhe / year as we further decarbonize the Ontario electricity system by phasing out our natural gas plants.

At present more than 80% of total energy use in Ontario is supplied by fossil fuels. Conservation of energy and simple displacement of fossil fuels as electrification of other energy uses accelerates suggests that, even without allowing for an Ontario population increase, the future Ontario electricity system interruptible electricity supply capacity could rise a further 5X to as much as 500 TWhe per year. However, subject to public acceptance, use of urban sited nuclear reactors for more efficient delivery of district heat might reduce that figure to about 300 TWhe / year.

In conclusion, for planning purposes, neglecting any population growth in Ontario, the future Ontario electricity system annual interruptible electricty supply capacity will likely rise to between 300 TWhe / year and 500 TWhe / year. It is essential that this energy be efficiently used.
 

PRIMARY ROLE OF INTERRUPTIBLE ELECTRICITY:
In the presence of fossil CO2 driven climate change interruptible electricity has a crucial role to play in reducing overall electricity system costs. In a clean electricity system the costs are primarily related to capital financing. The costs that must be financed are almost all directly proportional to the required dependable annual peak electric power capacity. Absent availability of fossil fuels for comfort heating in Canada, the required dependable peak electric power capacity will be set by the peak winter heating thermal load, which in turn will be set by the difference between the inside air and the outside air temperatures on the coldest winter day of each year.

The load factor of pure electric space heating is poor. Usually really cold weather lasts for less than 10% of a calendar year. At present most of the peak winter space heating load is met by combustion of fossil fuels. If fossil fuels are entirely replaced by dependable electricity the electricity grid costs will increase about 6X due to the consequent increase in dependable electricity peak demand.

A much less expensive solution for meeting the peak winter thermal load is to use interruptible electricity that is available from nuclear plants during the non-heating season to produce seasonally storable synthetic fuels such as hydrogen, ammonia or nuclear biomethanol. Those stored fuels can then be used on cold winter days to meet part of the peak thermal load, thus reducing the required peak electric power capacity. In addition, the interruptible electricity that is available during the early and late winter can be directly used for space heating.

Thus in the winter the comfort heating thermal load would be met by a combination of:
a) Dependable electricity;
b) Interruptible electricity;
c) Stored synthetic fuel.

In summary buildings will need to be retro-fitted with hybrid heating systems that preferentially operate using dependable and interruptible electricity but which supplement the interruptible electricity with a synthetic fuel.

This overall comfort heating strategy applies whether or not the building also has a heat pump. A heat pump provides the benefit of reducing the overall electricity requirement for comfort heating by utilizing heat either rejected by nuclear electricity generation or available from deep ground water.
 

COMPARATIVE VALUES:
From a monetary perspective interruptible electricity is much less valuble than dependable electricity because there is no certainty as to the availability of interruptible electricity at any instant in time. Hence the retail electricity rate applicable to dependable electricity is much greater than the retail electricity rate applicable to interruptible electricity. Generally the revenue from supply of dependable electricity must be sufficient to finance the capital costs of the electricity system. Typically the blended cost of dependable electricity is about $0.16 / kWhe.

Dependable electricity should be valued for its dependable capacity to meet peak power requirements whereas interruptible electricity should be valued for its capacity to supply average low cost energy.

Many existing electricity systems do not sell interruptible electricity to their customers, although they may opportunistically export interruptible electricity to adjacent electricity systems at a price comparable to the marginal cost of electrical energy production. For clean electricity generation the marginal cost of electrical energy production is typically about $0.007 / kWhe, where this cost represents the value of alternative uses of hydroelectric dam water or the value of nuclear fuel. Often electricity utilities discard surplus interruptible electricity by spilling water from hydroelectic dams, by stopping wind turbines or by disconnecting solar panels.

The value of interruptible electricity lies in its capacity to:
a) Directly displace fossil fuels;
b) Charge battery electric vehicles;
c) Economically produce seasonally storable synthetic fuel for later use;
d) Charge thermal storage.
 

LOAD FACTOR:
For many years the electricity utility practice of discarding clean interruptible energy or exporting it to another electricity utility at a deep discount has been encouraged by the liquid fossil fuel lobby, because that practice greatly increases the sales of liquid fossil fuels oil and propane in the rural comfort heating market. However, a secondary benefit to the electricity system of use of fossil fuels for comfort heating has been maintenance of a relatively high electricity system load factor. If the peak comfort heating load has to be met only by supply of dependable electricity the peak genertion capacity of the electricity system must increase about 5X as compared to its present capacity. Accommodating such a large increase in electricity system peak demand would trigger large costs for generation, transmission and distribution. Thus, optimum use of interruptible electricity to minimize this potential electricity system cost increase is of paramount importance.
 

CLIMATE CHANGE:
Global warming makes it imperative that mankind cease use of fossil fuels. Hence the comfort heating load must be met by clean energy. An obvious readily available source of some of that clean energy is interruptible electricity. To the extent that interruptible electricity is available at the instant when the comfort heat is needed then at that instant interruptible electricity can be used to meet the comfort heat load. At other times, when interruptible electricity is insufficient or is not available, the comfort heat load must be met by combustion of a stored synthetic fuel. This synthetic fuel should be produced using the interruptible electricity during seasons when the interruptible electricity is not required for comfort heating.

If the seasonally storable synthetic fuel can be delivered to the thermal load via a pipeline then that synthetic fuel could be hydrogen or biomethane. If the seasonally storable synthetic fuel must be delivered to the thermal load via tanker trucks then more suitable liquid synthetic fuels are likely anhydrous ammonia or biomethanol.

Note that benefits in terms of reduced CO2 emissions and reduced fossil fuel costs are much greater if interruptible electricity and synthetic fuels are used to displace liquid fossil fuels instead of displacing natural gas.
 

RURAL HEATING COSTS:
Presently piped natural gas is available to over 90% of Ontario residences. Most of the remaining residences are rural, are distant from the natural gas pipe network and are heated by some combination of:
a) Electric resistive heat;
b) Ground source heat pumps;
c) Furnace oil;
d) Propane
e) Biomass (firewood)

In part due to an increasing fossil carbon tax the cost of furnace oil and propane are rapidly becoming prohibitive. These costs could be mitigated by direct use of interruptible electricity. The future costs of liquid fossil fuels can likely be further mitigated by use of synthetic liquid fuels. From a rural electricity grid capacity perspective it is highly desirable to incent consumers to avoid switching from furnace oil or propane to pure electric resistive heating.

In many places in Ontario the ground is granite which makes the cost of a ground source heat pump system prohibitive.

The best alternative is to use interruptible electricity available during the non-heating season to produce a synthetic liquid fuels for use during the following heating season. Typically the synthetic fuel synthesis process is only about 50% efficient, so synthetic fuel production should take place at locations, such as in high rise residential complexes, where the heat rejected by the fuel synthesis steps has economic value.
 

INTERRUPTIBLE ELECTRICITY BENEFIT REALIZATION:
The presently available interruptible electricity supply in Ontario is about 20 TWh / year. This interruptible electricity supply is projected to decrease to about 10 TWh / year when the Pickering Nuclear Generating Station is retired but thereafter is projected to increase to over 300 TWh / year as new nuclear reactors are commissioned to displace existing fossil fuel loads.

As a result of past poor Ontario government energy policy, which has continued for over a decade, each year the province of Ontario has wasted about $2 billion in economic benefits by either discarding surplus interruptible electricity or by exporting this surplus interruptible electricity at bargain basement prices. This surplus interruptible electricity should instead be used to charge battery electric vehicles, to directly displace liquid fossil fuels that are currently used for comfort heating and to produce seasonably storable synthetic fuels. Doing so would substantially reduce both future costs and Ontario CO2 emissions.

The simplest way to realize these benefits is to give retail customers access to interruptible electricity and to simultaneously change the way electricity is priced for retail electricity customers.
 

NEW ELECTRICITY RATE:
Adoption of the new electricity rate should be voluntary. For an average retail consumer, with no change in load profile, both the new and the old rate should result in the same electricity revenue.
 

ELECTRICITY RATE COMPONENTS:
1) The new retail electricity rate must include both dependable and interruptible electricity components.

2) During the time period when interruptible electricity is being supplied to the consumer the electrical energy should be priced at about $0.02 / kWh, slightly above its average export market value but below the marginal cost of natural gas.

3) The electricity rate should have a constant component to reflect actual local distribution costs that are almost the same for small customers in the same rate class and are independent of actual electricity use.

4) Ideally the remaining electricity system revenue requirement should be met by using interval electricity meter data (smart meter data) to charge retail electricity customers for their coincident monthly peak kWe demands measured at times when interruptible electricity is not being supplied to the consumer. The appropriate small customer electricity rate is about $30 / (peak KWe - month), where the peak demand is averaged over 2 hours. Alternatively an artificially higher per kWhe rate can be used which reflects the peak demand charge.

The advantage of a peak demand based billing is that it is more efficient in terms of interruptible electricity utilization and it more accurately reflects actual electricity system costs.

The advantage of pure kWhe billing at times when interruptible electricity is not being supplied is that it is less complex for a utility to explain to its consumers.

5) We understand that the OEB is currently considering a very simple deep discount night time rate for single family residential. This rate will be administratively simple but will not enable capture of interruptible electricity available at other times. This proposed simple rate also does not address the possible future need for the utility to disable interruptible loads due to unforeseen circumstances.

6) The OEB should also offer the more complex rate described above to customers who are willing to pay for the additional capital equipment, the more advanced controls and the more sophisticated metering required to capture all of the available interruptible electricity.
 

ELECTRICTY RATE CHANGE:
1) Implementation of this new electricity rate structure is essential for long term financing of nuclear electric generation.

2) Implementation of this new rate structure will require a lengthy gradual transition during which time adoption of the new rate should be voluntary.

OSPE (Ontario Society of Professional Engineers) has pointed out that this transition can be accelerated because at present, for most urban residential consumers who are mainly concerned about charging battery electric vehicles, more than half of the potential cost benefits can be realized just by using a timer to enable the consumer's vehicle charging circuit between midnight and 6:00 AM. This use of a simple timer with a low overnight TOU rate simplifies the rate adoption by most single family residences but does not adddress future load management requirements that will becone essential when a large number of consumers adopt the voluntary price plans.

The timer idea is a potential future threat because it does not provide a means for the IESO or the local Distribution Corportion (LDC) to disable the interruptible load if and when required. While that is not a pressing issue in 2022 it may become important in the late 2020s after the Pickering NGS is retired but before more clean generation is available. The issue is that during that time period Ontario will likely be heavily reliant on natural gas electricity generation. There is no certainty that seven years hence sufficient natural gas will be available or that it will be cheap. Hence we recommend that, in authorizing a present pure time-of-use rate, the OEB notify all potential users that at some future date the time control may need to be upgraded to more sophisticated control.
 

SOPHISTICATED CONSUMERS:
There are rural residential consumers who do not have access to piped natural gas. These consumers presently burn heating oil or propane, both of which have recently become very expensive due to increases in the price of petroleum, increases in the fossil carbon tax and projected additional oil pipeline surcharges. For these consumers the present full potential value of interruptible electricity cost savings are about $3000 / year / residence.

These rural residential consumers are frequently sophisticated and will likely be eager to achieve the full cost savings that are potentially available via direct electronic communication with the IESO or their LDC for interruptible power control. However, the parties must accept that deployment of the required communication system is a complex task that will likely need to be led by commercial parties.

Sophisticated consumers, including those operating energy storage systems, displacing liquid fossil fuels, or in the businesses of producing synthetic fuels, need suitable near term communication, metering and billing. These consumers will want to use interruptible electricity to the maximum extent possible whenever it is available. However, the number of these sophisticated consumers is relatively small as compared to the number of urban consumers who are primarily interested in charging battery electric vehicles. Hence the sophisticated consumers should not create a significant administrative burden for the LDCs.

The sophisticated commercial parties will likely drive the development of the necessary communication, metering and billing systems necessary for full utilization of interruptible electricity. If the interruptible electricity control signals originate from LDCs the detail of the equipment may vary from one LDC to the next. If the interruptible electricity control signals originate from the IESO the communication, metering and billing arrangements should be standardized across Ontario.

With respect to sophisticated consumers the OEB should simply establish an interruptible electricity rate that makes good sense from the electricity system perspective and then let private industry in consultation with the affected LDCs and the IESO figure out how best to implement it. For sophisticated consumers the OEB need not concern itself with the details of communication, metering and billing. The system will be fully automated and any well defined rate structure can be programmed into a computer.

A potential long term implementation issue is the maximum time between the IESO issuing a command for an interruptible load change and the resulting actual load change on the Ontario electricity grid. In the near term this time delay may be determined by limitations of existing utility owned equipment.
 

This web page last updated February 14, 2022.