Samsung Renewable Energy Deal: An Update

Aegent Energy Advisors – August, 2011 Newsletter

In early August, the Ontario Government announced further details of the January 2010 deal with Samsung to build 2,500 MW of wind and solar electricity generation.

  • If all the Samsung generation were to start at once, the gross amount paid for all output in the first year would be $996 million, resulting in an average unit price of $170/MWh (17 cents/kWh).
  • Currently, Ontario is a substantial net exporter of energy, so if the Samsung generation came online tomorrow, most or all of it would be exported. This would result in an additional annual cost to the province of about $786 million. For a typical residential consumer, the annual bill impact would be $65.
  • The annual economic adder of $14.7 million that is part of the Samsung deal is less than 2% of the cost to Ontarians.  Read the article

12 thoughts on “Samsung Renewable Energy Deal: An Update

  1. I appreciate the effort and trust the figures here, but …

    It is worth noting that yesterday was the second windiest day of the season.
    It was the lowest electricity market (HOEP) price on record.

    Wind output of 15597MWh was sold at a negative rate — we paid about $300,000 to give it away on top of paying about $2,100,000 to purchase it.
    But that 2.4 million is only the start.

    We also devalued the rest of the production in the system.
    We also reduced output at 4 nuclear reactors yesterday
    We also let water go over the falls.

    And we don’t have as much capacity now as Samsung is reportedly contracted to add.

    It’s tough to put a figure on how much wind supply devalues an electricity system.
    But it is clearly very expensive.

    http://morecoldair.blogspot.com/2011/08/sunday-sees-record-low-pricing-in.html

    • the other day it was producing 15 MW there abouts

    • New Yorkers should be happy with the Ontario Samsung deal as they want to have 30% “green”renewable energy by 2015 for a cheap price from anyplace they can get electricity from. Just get it from nearby Ontario as it will have to be dumped onto the market from Ontario. Michigan will probably have more economic decline so they won’t need excess power from anyone.

    • The analysis of relating wind output to price has a lot of moving parts. It’d be convenient to categorically say that the data clearly shows that higher wind output leads to low prices but that’s not necessarily what the data says. If one however cherry-picks, this CAN be said.

      I did an analysis of the correlation between absolute wind output and price, using hourly data and for 8,760 hour (1 year) windows, even exploring the possibility that wind output in a particular hour can affect prices one or two hours later.

      Over the last three years, the correlations ranged from about + 0.02 to – 0.23. Most of them, including recent ones, have been negative. Currently, we’re on an upward trend but the value is still less than – 0.10.

      • Thanks for the analysis Bruce – I’ve been citing the piece of emissions intensity from a couple of months frequently, and welcome another reference to cite.

        Relating to the impact of wind output on price, I agree there are a lot of moving parts in Ontario, so I wouldn’t try to quantify the external costs of the impact on markets, and increased wear on other generation equipment, but …
        Elsewhere things are less murky.
        In the US west, the BPA acknowledges wind’s impact on pricing (as high as 20% in the spring): http://www.bpa.gov/corporate/WindPower/docs/WIF_SC_Presentation_6-11.pdf
        That presentation, on page 7, notes the impact of this effect serves to discourage ‘long-term’ sellers.
        Texas: “Nicholson et al. (2010, p.19) find that a 100-MWH
        increase in wind generation in Texas may reduce the four-zone Electricity Reliability
        Council of Texas (ERCOT) 15-min balancing-energy market price by $0.71/MWH in the
        Houston zone,”
        http://warrington.ufl.edu/purc/purcdocs/papers/1114_Woo_The_Impact_of.pdf

        Europe: One recent study concluded it’s forecast of a future market with “There are a
        large number of low or zero priced periods when there is significant wind generation,
        and when the wind dies, prices jump to high levels.
        “http://www.poyry.com/media/media_2.html?Id=1301471113.html

      • Hey Scott,

        I acknowledge that, certainly theoretically, wind should/will affect price. After all, from the generators’ perspective it’s a “who cares ?” – priced resource (simultaneously dating and pigeon-holing myself, this makes me think of Alfred E. Neuman) , with its place in the gen stack at the bottom, offering in at minus MMCP, i.e. minus $ 2000/MWh. Perhaps in other markets the reason why the relationship is clearer is that the supply situation is tighter — so when the wind dies they into or close to an undesirable reserve requirement band. Perhaps the difference is that Ontario has so much excess supply that wind doesn’t make that much of a difference.

        Bruce

  2. Last Essex County meeting Gary McNamara had council endorse this agreement, the warden announced it was unanimous but it wasn’t, there were a couple that voted against it. Not much sense in complaining to our Mayors and deputy Mayors in Essex County, they all kiss up to Duncan. Not one Essex County municipality will call for a moratorium. Vote PC, it’s our only hope

  3. I’m with you Brenda. I have no faith with McDonot. Nice arena though. Lol

  4. And now Japan is having FITs
    http://social.windenergyupdate.com/uncategorised/japan%E2%80%99s-fit-out-nuclear-wind?utm_source=Communicator&utm_medium=E-Brief&utm_campaign=3008

    On Friday, Japan’s upper house of Parliament passed a renewable energy bill that sets a framework for a feed-in tariff worth 10 trillion Yen (€9bn, US$12.9bn), in a bid to increase Japan’s renewable energy share to 20% by 2020. While some analysts say the move could be the catalyst for driving renewable energy sources to grid parity, others question the efficacy of a policy that has been tempered to appease big industry.

    … the world is growing ever more insane…

  5. It’s getting like races to attract sport franchises … and we know who wins in those situations.

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