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Analysis - Ontario curtailments could help wind

CANADA: New market rules allowing Ontario's independent electric system operator (IESO) to curtail wind output in times of surplus supply could save rate payers money and aid the integration of new wind capacity.

The IESO introduced a new system on 11 September requiring wind and other renewable producers to respond to dispatch instructions from the system controller every five minutes, just like conventional generating technologies. Previously, the IESO was required to accept all energy produced by wind facilities.

This created challenges at times when the province already had more base-load generation than it could use or sell into other markets, said IESO spokesman Jordan Penic.

"When that happens something has got to give," he says. Typically, the default was to curtail nuclear generation. But once a nuclear unit goes down, it takes 72 hours to ramp back up again, requiring the IESO to buy costlier gas generation to pick up the slack in the interim. Wind, says Penic, is much more flexible.

"In the situation where we are able to dispatch wind, move it down for a short period of time and avoid that nuclear shutdown, then the system saves money."

The IESO expects to save as much as C$200 million (US$194 million) a year from operating the system more efficiently, he said.

Surplus supply is a growing problem on the Ontario grid, with falling electricity demand and new sources of already contracted generation coming online. By mid-September, 2013 had already seen 158 hours when the province had more must-run generation than it could use. With an estimated 3GW of wind feed-in tariff (FIT) projects and another 280MW of transmission-connected solar expected to come into service over the next 18 months, the situation was only going to get worse.

"We expect that wind dispatch will only become a more useful tool through time," said Penic.

One of the issues that had to be thrashed out in implementing the new rule was how wind producers, whose power purchase agreements never contemplated the prospect of lost income because of curtailment, will be compensated. The Ontario Power Authority (OPA) has made a standardised offer to contract holders to address the issue, said spokesman John Cannella, and has so far successfully concluded negotiations with most. "Because the OPA continues to negotiate with other wind suppliers, the terms of the contracts must remain confidential," he said.

He did say, however, that producers will have to absorb a certain portion of the lost output, but would be paid at their contract rate if the curtailment exceeds certain limits.

While wind producers will take something of a financial hit, Brandy Giannetta, CANWEA's Ontario policy manager, said the new dispatch system will make it easier to manage wind and, ultimately, allow for more capacity on the grid. "This is a tool that allows them to better integrate an increased amount of wind, and renewables in general."

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