Clearing an Ontario roadblock -- Short term transmission solution

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The renewable energy lobby in Ontario has come up with a plan to keep investment flowing into wind power development while the province waits for much needed new transmission capacity. If investment stops in the short term, Ontario's long term goals for wind power (main story) are at risk, points out David Timm, Ontario policy manager for the Canadian Wind Energy Association (CanWEA).

A prime windy area on Lake Huron, known as the orange zone, has been declared off-limits to further wind development because existing transmission capacity is needed for a C$4.25 billion nuclear reactor restart program to bring two Bruce Power generating units on line in 2009. Their generation combined with already contracted wind in the area will exceed existing transfer capacity. Although a 180 kilometre, double-circuit 500 kV transmission line is planned and will add 3000 MW of capacity, the earliest it will be in service is December 2011.

The decision to stop further wind development until the line is built has effectively disqualified hundreds of megawatts of projects from participating in the province's program of fixed-price power purchase prices for small scale renewables and is now expected to have an impact on Ontario's recently announced plan to buy another 2000 MW of renewable energy from large scale projects (Windpower Monthly, September 2007).

CanWEA, together with others, is proposing a solution to the roadblock. Under the proposal, no newly contracted projects would be allowed to begin commercial operation in the orange zone until 2009. Between 2009 and December 2011, there would be a 1175 MW cap on projects allowed to connect in the zone, equivalent to about 500 MW of new facilities plus generation currently under contract in the region. The first 200 MW of new projects to connect would not face financial penalties, while the remainder would give up the equivalent of half of the federal Ecoenergy for Renewable Power (ERP) payment. That equates to a penalty of C$5/MWh designed to help cover the costs of potential constraint payments the Ontario Power Agency (OPA) will face if generation outstrips the ability to get it to market.

Financial solution

"Someone will have to be constrained. What we're proposing helps to reduce the OPA's financial risk of constraint payments," says Timm. "This is not a technical issue. It really comes down to a financial issue. It's about an acceptable level of financial risk."

With its current power contract commitments in the region, the OPA is exposed to "risk of constraint" payments of C$42 million a year until the transmission issues are alleviated. Once the refurbished nuclear units are on line, Bruce Power plans a maintenance program on other units. If transmission is not in place by the time all eight Bruce units are available to generate, expected in 2012, the OPA is facing additional payments of C$450 million a year. Adding the new renewable projects would add about C$9-15 million a year in potential constraint payments.

"The benefits of bringing more renewable energy on have to be weighed against the economics of adding constraint payments risks. Yes, there is a potential financial risk to ratepayers, but if you look at the risk they already have in terms of the contracts that are already in place, it is marginal and needs to be weighed against other system benefits and government priorities," says Timm.

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