Ontario's Green Future: How Ontario Can Move To A 100% Renewable Electrity Grid

Ontario’s Green Future: How Ontario Can Move To A 100% Renewable Electrity Grid

Speaking Notes for Jack Gibbons, Ontario Clean Air Alliance
To Kingston Rotary Club
October 22, 2009

 Thirty years ago I had the very good fortune to be an economics student at Queen’s University. So it is great to be back in Kingston today to talk with you about how we can move to a green future for Ontario where 100% of our grid-supplied electricity will come from renewable sources.

Ontario’s electricity system is at a crossroads for two reasons. First, thanks to the strong leadership of Premier Dalton McGuinty all of Ontario’s dirty coal-fired power plants will be phased-out by 2014 at the latest. This will be a tremendous accomplishment. It is the largest single greenhouse gas reduction action in North America. It is equivalent to taking 7 million cars off the road.

In addition, our electricity system is at a crossroads because most of our aging nuclear power power plants will come to the end of their lives during the next 10 to 15 years.

As a result, we have a once if a lifetime opportunity to re-build our power system from the ground up.

There are two different paths we can take. First, we can invest in energy efficiency and renewable energy and move Ontario towards a 100% renewable electricity grid by 2027.

Alternatively, we can re-invest in nuclear power and remain dependent on high-cost and unreliable nuclear power for at least another 60 years.

In 2007 the Government of Ontario released their 20 year plan to meet Ontario’s electricity needs. At that time the Government of Ontario chose the nuclear path. According to their plan, by 2027 our nuclear generation capacity would increase from 11,400 MW to 14,000 MW. As a result, in 2027 approximately 60% of our electricity needs would be met by nuclear power and less than 40% from renewable energy.

The Government’s decision to go nuclear was based on their assumption that new nuclear reactors were the lowest cost option to meet our future electricity supply needs.

In June 2008, as a first step in its plan to increase our dependence on nuclear power, the Government announced that it was establishing a competitive procurement process to buy two new nuclear reactors for the Darlington Nuclear Generating Station.

Three companies submitted bids to build the new nuclear reactors: Atomic Energy of Canada, Areva and Westinghouse.

When Energy Minister Smitherman opened the price bids in May 2009 he had severe sticker shock. Only one company, Atomic Energy of Canada, submitted a bid that was in compliance with the Government’s proposed terms and conditions. But its price was way too high. Specifically, Atomic Energy of Canada’s price for building new nuclear reactors was 3.7 times higher than the Government expected.

As a result, Minister Smitherman has suspended the nuclear procurement process and said that Ontario will only build new nuclear reactors if the Government of Canada will raise taxes in Vancouver, Calgary, Montreal and Halifax to subsidize the construction of two new nuclear reactors at the Darlington Nuclear Station.

I am pleased to note that Prime Minister Harper has not responded positively to this request for higher taxes.

The good news is that there are much lower cost and more reliable options to meet our electricity needs than new nuclear power plants. In particular, I would like to discuss three lower cost options that can help us move to a 100% renewable electricity grid by 2027. They are: energy efficiency; stop wasting natural gas; and water power imports from Quebec.

The lowest cost option to meet our electricity needs is energy efficiency. Energy efficiency costs about 3 cents per kWh; whereas the cost of electricity from a new nuclear reactor is approximately 21 cents per kWh. That is, the cost of energy efficiency is 1/7th the cost of new nuclear supply. Second, by reducing the demand for electricity, energy efficiency investments make it easier for us to meet 100% of our grid-supplied electricity needs from renewable sources.

Since the summer of 2006 Ontario’s peak day demand for electricity has fallen by 10%. Nevertheless, we still have a huge untapped energy efficiency potential since Ontario’s electricity consumption per person is 50% higher than that of New York State.

On the supply-side, the lowest cost option to meet our electricity needs is to simply stop wasting natural gas. Virtually every home, building and factory in Ontario uses natural gas to provide only one service, namely, heat. It is much more efficient to use these same molecules of natural gas to simultaneously produce two services, i.e., heat and electricity. That is what combined heat and power plants do.

Natural gas-fired combined heat and power (CHP) plants can have an overall energy efficiency of 80 to 90% versus the 33% efficiency of a nuclear reactor. As a result, of their very high energy efficiencies, CHP can meet our electricity needs at a cost of approximately 6 cents per kWh. That is, the cost of CHP is a less than 1/3rd the cost of a new nuclear reactor.

Also, by reducing the demand for grid-supplied electricity, investing in CHP will make it easier for us to obtain 100% of our grid-supplied electricity from renewable sources.

I am very pleased to note that that Queen’s University and the Kingston General Hospital are the joint owners of a 15 MW natural gas-fired CHP plant. As a result, in the event of a provincial or North American blackout, the Kingston General Hospital will be able to continue to operate at full capacity. This is a very significant accomplishment. Most of Ontario’s hospitals, including the major hospitals in downtown Toronto, do not have sufficient emergency diesel generation capacity to operate at full capacity during a blackout. This is simply not acceptable. And that is why Kingston General Hospital’s leadership in terms of electricity security of supply is such an important model for the rest of Ontario.

We need to create a 1,000 points of light across Ontario by converting our hospitals, seniors homes, recreation centres, shopping malls, airports, apartment buildings and factories into small-scale CHP plants.

In terms of renewable energy, Ontario’s lowest cost source of renewable energy is water power imports from Quebec.

In 2008, Hydro Quebec’s electricity exports to the United States exceeded the total output of our Pickering Nuclear Generating Station. However, Hydro Quebec’s electricity exports to Ontario were miniscule.

There are at two important facts to note with respect to Hydro Quebec’s electricity exports.

First, in 2008 the average price that Quebec received for its exports was 9 cents per kWh. That is, less than half the cost of building a new nuclear reactor.
Second, according to the National Energy Board Act, Ontario has the right to import power from Quebec for the same price as the Americans are paying.

Therefore, it makes no sense for Ontario to build new nuclear reactors when we can import water power from Quebec at less than half the cost.

However, I want to emphasize that the Ontario Clean Air Alliance is not advocating that Hydro Quebec should build new dams to meet our electricity needs.

On the contrary, Hydro Quebec has much lower cost options to meet Ontario’s electricity needs. First, it could divert some of its electricity exports from the U.S. to Ontario. In 2008, 88% of its electricity exports were pursuant to short term contracts. Therefore these exports could be easily re-directed to Ontario.

Second, Hydro Quebec can free up more of its existing water power generation for export to Ontario by investing in energy efficiency to reduce the electricity needs of its customers in Quebec. In this context, it is important to note that Quebec’s electricity consumption per person is double that of Ontario’s. So Hydro Quebec has the potential to make huge profits by investing in energy efficiency to free up more of its heritage water power generation for export.

In conclusion, I would like to remind you that at the beginning of the last century Sir Adam Beck and Ontario Hydro phased-out coal-fired electricity in Ontario for the first time and created a virtually 100% electricity grid for our province that lasted for almost 50 years.

Working together, we now have the opportunity to phase-out coal for a second time and create a 100% renewable electricity grid that will last forever.

Please join us on this exciting journey.

Thank you for your attention.