Assessing the potential for a wind power incentive for remote villages in Canada

This paper discusses the uptake potential for a wind–diesel production incentive designed specifically for Canadian northern and remote communities. In spite of having over 300 remote communities with extremely high electricity costs, Canada has had little success in developing remote wind energy projects. Most of Canada’s large-scale wind power has been developed as a direct result of a Federal production incentive implemented in 2002. Using this incentive structure as a successful model, this paper explores how an incentive tailored to remote wind power could be deployed. Micro-power simulations were done to demonstrate that the production incentive designed by the Canadian Wind Energy Association would cost on average $4.7 $Cdn million and could be expected to result in 14.5 MW of wind energy projects in remote villages in Canada over a 10 year period, saving 11.5 $Cdn million dollars in diesel costs annually, displacing 7600 tonnes of CO_2eq emissions and 9.6 million litres of diesel fuel every year.     

Hydrogen as a long-term,large-scale energy storage solution when coupled with renewable energy sources or grids with dynamic electricity pricing schemes

One of the key challenges that still facing the adoption of renewable energy systems is having a powerful energy storage system (ESS) that can store energy at peak production periods and return it back when the demand exceeds the supply. In this paper, we discuss the costs associated with storing excess energy from power grids in the form of hydrogen using proton exchange membrane (PEM) reversible fuel cells (RFC). The PEM-RFC system is designed to have dual functions: (1) to use electricity from the wholesale electricity market when the wholesale price reaches low competitive values, use it to produce hydrogen and then convert it back to electricity when the prices are competitive, and (2) to produce hydrogen at low costs to be used in other applications such as a fuel for fuel cell electric vehicles. The main goal of the model is to minimize the levelized cost of energy storage (LCOS), thus the LCOS is used as the key measure for evaluating this economic point. LCOS in many regions in United States can reach competitive costs, for example lowest LCOS can reach 16.4¢/kWh in Illinois (MISO trading hub) when the threshold wholesale electricity price is set at $25/MWh, and 19.9¢/kWh in Texas (ERCOT trading hub) at threshold price of $20/MWh. Similarly, the levelized cost of hydrogen production shows that hydrogen can be produced at very competitive costs, for example the levelized cost of hydrogen production can reach $2.54/kg-H₂ when using electricity from MISO hub. This value is close to the target set by the U.S. Department of Energy.     

Customer-economics of residential photovoltaic systems (Part 1): The impact of high renewable energy penetrations on electricity bill savings with net metering

Residential photovoltaic (PV) systems in the US are often compensated at the customer's underlying retail electricity rate through net metering. Given the uncertainty in future retail rates and the inherent links between rates and the customer–economics of behind-the-meter PV, there is growing interest in understanding how potential changes in rates may impact the value of bill savings from PV. In this article, we first use a production cost and capacity expansion model to project California hourly wholesale electricity market prices under two potential electricity market scenarios, including a reference and a 33% renewables scenario. Second, based on the wholesale electricity market prices generated by the model, we develop retail rates (i.e., flat, time-of-use, and real-time pricing) for each future scenario based on standard retail rate design principles. Finally, based on these retail rates, the bill savings from PV is estimated for 226 California residential customers under two types of net metering, for each scenario. We find that high renewable penetrations can drive substantial changes in residential retail rates and that these changes, together with variations in retail rate structures and PV compensation mechanisms, interact to place substantial uncertainty on the future value of bill savings from residential PV.     

Power trade,welfare, and air quality

We use detailed microdata from all generators in the Ontario wholesale electricity market to investigate cross-border electricity trade and its impact on air emissions and welfare (consumer and producer surpluses) in Ontario. Using the technical characteristics of the generators and financial data we run a competition model every hour. We examine how trade expansion across different parts of the interconnected power grid affects the efficiency in the Ontario market. We show that there is a significant welfare gain from power trade. The air emissions savings are also considerable. For instance, when hourly imports double from current levels CO₂ emissions decrease around 13%, and market prices reduce 5.4%. In autarky, CO₂, SO₂, NOx emissions increase 12%, 22%, 16%, resp., the prices go up 5.8%, and the price volatility rises 12%. However, the impact of negative wholesale prices on market outcomes is small.     

Alternative technologies for US residential water heating : Energy savings and economic benefits

This article evaluates the energy savings and direct economic benefits of introducing heat pump and solar water heaters to the US residential market and the effects of a tax credit for solar installations. Energy savings are estimated for ten regions of the USA, as well as for the country as a whole, over the period 1977–2000. Changes in annual fuel bills and capital costs for water heaters are also computed. The results suggest that heat pump water heaters are likely to offer much larger benefits than solar heaters, even with tax credits. This is because heat pumps provide the same electricity savings (about 50%), but at a much lower capital cost.     

The economic costs of reducing greenhouse gas emissions under a U.S. national renewable electricity mandate

The electricity sector is the largest source of greenhouse gas emissions (GHGs) in the U.S. Many states have passed and Congress has considered Renewable Portfolio Standards (RPS), mandates that specific percentages of electricity be generated from renewable resources. We perform a technical and economic assessment and estimate the economic costs and net GHG reductions from a national 25 percent RPS by 2025 relative to coal-based electricity. This policy would reduce GHG emissions by about 670 million metric tons per year, 11 percent of 2008 U.S. emissions. The first 100 million metric tons could be abated for less than $36/metric ton. However, marginal costs climb to $50 for 300 million metric tons and to as much as $70/metric ton to fulfill the RPS. The total economic costs of such a policy are about $35 billion annually. We also examine the cost sensitivity to favorable and unfavorable technology development assumptions. We find that a 25 percent RPS would likely be an economically efficient method for utilities to substantially reduce GHG emissions only under the favorable scenario. These estimates can be compared with other approaches, including increased R&D funding for renewables or deployment of efficiency and/or other low-carbon generation technologies.     

Geologic feasibility of underground hydrogen storage in Canada

Electricity production in the majority of Canada's regions is characterized by high proportions of nuclear and renewable sources such as hydroelectricity. Future plans to phase out coal-fired power plants by 2030 and decrease fossil fuel use in favor of increased integration of renewables highlight the need to develop strategies which can match intermittent and base-load electricity output with market demand. The use of hydrogen gas generated through off-peak electrolysis has been highlighted by the Canadian government as a potential avenue forward in managing electrical grids with surplus and intermittent electricity generation. This technology can be supported in a safe and cost-effective manner by underground hydrogen storage in geological formations. In this article, an overview of Canadian geology, as well as an assessment of the potential application of underground storage methods and associated safety concerns in Canada is presented. Favorable locations for pilot projects are found in the sedimentary basins of western and Atlantic Canada as well as southern Ontario, or the crystalline rocks of the Canadian Shield.     

Analysis of the Cost per Kilowatt Hour to Store Electricity

This paper presents a cost analysis of grid-connected electric energy storage. Various energy storage technologies are considered in the analysis. Life-cycle cost analysis is used. The results are presented in terms of the cost added to electricity stored and discharged, in US dollar per kilowatt hour. Results are compared with wholesale and retail electricity costs and with the cost of conventional pumped hydro storage.     

Electricity market price volatility: The case of Ontario

Price volatility analysis has been reported in the literature for most competitive electricity markets around the world. However, no studies have been published yet that quantify price volatility in the Ontario electricity market, which is the focus of the present paper. In this paper, a comparative volatility analysis is conducted for the Ontario market and its neighboring electricity markets. Volatility indices are developed based on historical volatility and price velocity concepts, previously applied to other electricity market prices, and employed in the present work. The analysis is carried out in two scenarios: in the first scenario, the volatility indices are determined for the entire price time series. In the second scenario, the price time series are broken up into 24 time series for each of the 24 h and volatility indices are calculated for each specific hour separately. The volatility indices are also applied to the locational marginal prices of several pricing points in the New England, New York, and PJM electricity markets. The outcomes reveal that price volatility is significantly higher in Ontario than the three studied neighboring electricity markets. Furthermore, comparison of the results of this study with similar findings previously published for 15 other electricity markets demonstrates that the Ontario electricity market is one of the most volatile electricity markets world-wide. This high volatility is argued to be associated with the fact that Ontario is a single-settlement, real-time market.     

Did residential electricity rates fall after retail competition? A dynamic panel analysis

A key selling point for the restructuring of electricity markets was the promise of lower prices. There is not much consensus in earlier studies on the effects of electricity deregulation in the U.S., particularly for residential customers. Part of the reason for not finding a consistent link with deregulation and lower prices was that the removal of transitional price caps led to higher prices. In addition, the timing of the removal of price caps coincided with rising fuel prices, which were passed on to consumers in a competitive market. Using a dynamic panel model, we analyze the effect of participation rates, fuel costs, market size, a rate cap and switch to competition for 16 states and the District of Columbia. We find that an increase in participation rates, price controls, a larger market, and high shares of hydro in electricity generation lower retail prices, while increases in natural gas and coal prices increase rates. We also find that retail competition makes the market more efficient by lowering the markup of retail prices over wholesale costs. The effects of a competitive retail electricity market are mixed across states, but generally appear to lower prices in states with high participation rates.     

The economic and institutional rationale of PV subsidies

In terms of cost and performance, infant technologies, such as solar photovoltaics (PV), are normally inferior to entrenched technologies. It is a Catch-22 situation since the diffusion on larger markets that would be needed to reduce cost is hindered by the high cost. Therefore it would make sense to subsidise PV to increase sales, which would increase experience and induce investments in larger factories, which in turn would drive down costs and the subsidies needed. The total costs of such a scheme does not have to be prohibitive if cost reductions with increased volumes are large enough. Over the last 20 years the cost of PV modules was reduced by 18–23% per doubling of cumulative production (a progress ratio of 0.77–0.82). For a progress ratio of 0.80 and an annual growth rate of 30%, the modelled annual subsidy peaks at $14 US billion, which corresponds to an additional electricity tax of no more than 0.1 US cents/kW h in OECD countries. A market support programme also creates institutional learning and increases the political power of the proponents of PV. The current federal German support programme is a product of learning and network formation in earlier market stimulation and research, development and demonstration (RDD) programmes of smaller scale. Hence, the current support programme is now likely to create not only economic virtuous circles that reduce costs, but also institutional virtuous circles that work for the survival and expansion of the programme itself. As the PV industry grows, care should be taken to maintain variety to reduce the risk of a premature lock-in of an inferior design. To maintain variety in the market place may prove costly when the market grows but variety creation at the level of RDD investments is fairly cheap. To increase the world expenditure on RDD of renewable energy technology by a factor of 10 would not cost more than $1 US/ton C or 0.02 US cent/kW h of electricity.     

Measuring the competitiveness benefits of a transmission investment policy: The case of the Alberta electricity market

Transmission expansions can increase the extent of competition faced by wholesale electricity suppliers with the ability to exercise unilateral market power. This can cause them to submit offer curves closer to their marginal cost curves, which sets market-clearing prices closer to competitive benchmark price levels. These lower wholesale market-clearing prices are the competitiveness benefit consumers realize from the transmission expansion. This paper quantifies empirically the competitiveness benefits of a transmission expansion policy that causes strategic suppliers to expect no transmission congestion. Using hourly generation-unit level offer, output, market-clearing price and congestion data from the Alberta wholesale electricity market from January 1, 2009 to July 31, 2013, an upper and lower bound on the hourly consumer competitiveness benefits of this transmission policy is computed. Both of these competitiveness benefits measures are economically significant, which argues for including them in transmission planning processes for wholesale electricity markets to ensure that all transmission expansions with positive net benefits to electricity consumers are undertaken.     

Assessing the economic value of renewable distributed generation in the Northeastern American market

Incentive programs and tax rebates are commonly offered to offset the high initial costs of small-scale renewable energy systems (RES) and foster their implementation. However, the economic costs of RES grid integration must be fully known in order to determine whether such subsidies are justified. The objective of this paper is to assess the economic value of RES, including their environmental benefits, using hourly generation information in conjunction with hourly wholesale price data. Reaching the paper′s objective will provide a better estimate of the bias that could result from neglecting 1) the time pattern of the hourly wholesale price, 2) the impacts of carbon taxes on the hourly wholesale price and 3) the value of the marginal hourly GHG emissions. Selected RES include two types of grid-connected photovoltaic panels (3 kWp mono- and poly-crystalline) and three types of micro-wind turbines (1, 10 and 30 kW) modeled for different climatic conditions in the province of Quebec (Canada). The cost of electricity is based on the technical performance of these RES using a life cycle costing methodology. The economic value of RES electricity is estimated using the hourly wholesale electricity price in Northeastern American markets in 2006–2008. Results show that distributed generation (DG) has no economic benefits using the selected RES, even with a US$100/tonne of CO₂-equivalent carbon tax. This finding remains the same when the value of the avoided GHG emissions is fully internalized, except for one scenario (micro-wind 30 kW). Our results are key to understanding the extent to which subsidies for distributed RES can be economically sustainable when the latter are integrated into regional networks driven by centralized electricity production.     

The marginal cost of solar backup

The long-run marginal cost of providing electricity for solar heating and hot water systems is estimated for three utilities and compared with the cost of providing electricity to electric-only systems. All investment, fuel, and operating costs are accounted for. Hot water systems and combined heating and hot water systems are analyzed separately. It is found that the marginal cost for solar backup is no more than the marginal cost of electricity used for purely electric heating and hot water devices and also no more than the incremental cost of normal load growth. For the three utilities studied, there appears to be little basis for rate distinctions between solar devices using electric backup and electric-only heating and hot water devices. “Off-peak storage” heating and hot water devices have a much lower marginal cost than the standard systems; again, there appears to be no basis for distinguishing between solar and electric off-peak devices. Compared with average cost pricing, marginal cost pricing offers benefits to customers using solar and electric heat and hot water, especially if a separate lower rate is adopted for off-peak storage devices; these benefits can amount to several hundred dollars a year. Substantial savings in the use of oil and gas fuels can be achieved if residences using these fuels convert to solar systems, savings not necessarily achievable by a shift, instead, to electric systems.     

Efficiency and deregulation of the electricity market in Singapore

This study examines production efficiency of electricity generation in the New Electricity Market of Singapore (NEMS), where deregulation is currently proceeding. Singapore is reliant on foreign direct investments and exports so competition from countries with lower costs such as China and India is exerting pressure on the government to reduce the costs of doing business here. Electricity cost is one of these. Deregulation is believed to be able to bring about lower electricity costs due to the various efficiency gains possible. This study concerns itself mainly with production efficiency and attempts to calculate possible production efficiency gains by using linear programming model. Production-efficiency gains are quantified by the base case scenario of continued regulation versus four counterfactual deregulation scenarios. The results indicate that cost gains could be about eight per cent of current production cost, and this is possibly a lower-bound estimate. However, whether the purported efficiency gains are realized is to be seen as the deregulation proceeds.     

Accounting for variation in wind deployment between Canadian provinces

Wind energy deployment varies widely across regions and this variation cannot be explained by differences in natural wind resources alone. Evidence suggests that institutional factors beyond physical wind resources can influence the deployment of wind energy systems. Building on the work of Toke et al. (2008), this study takes a historical institutionalist approach to examine the main factors influencing wind energy deployment across four Canadian provinces Canada: Alberta, Manitoba, Ontario and Nova Scotia. Our case studies suggest that wind energy deployment depends upon a combination of indirect causal factors—landscape values, political and social movements, government electricity policy, provincial electricity market structure and incumbent generation technologies and direct causal factors—grid architecture, ownership patterns, renewable incentive programs, planning and approvals processes and stakeholder support and opposition.     

Trade-linked Canada–United States household environmental impact analysis of energy use and greenhouse gas emissions

We compare energy use and greenhouse gas (GHG) emissions associated with total household expenditures and activities in Canada and US in 1997, the first detailed estimate of environmental burdens for Canadian households. We estimate direct burdens from published government data and indirect burdens using an industry-by-commodity, bi-national economic input–output life cycle assessment model developed in this study. Comparing 30 expenditure and two activity categories, per capita US household expenditures were 70% higher, while per capita household energy use and GHG emissions were only 10% and 44% higher, respectively. Energy use/dollar of expenditure was higher in most Canadian categories, while the average ratio of GHG emissions/energy use was higher in the US (65 vs 50 kg Eq. CO₂/GJ) due largely to a higher proportion of electricity from nonrenewable sources. Indirect environmental burdens represented 63–69% of total burdens and 62–70% of total burdens were associated with household operation and transportation. Key drivers of differences between energy profiles were: higher per capita electricity use by Canadian households, and higher US household private health care expenditures and motor fuel use. Energy-intensive production for export represented a higher proportion of Canadian production, resulting in less agreement between consumption and production-based analyses for Canada than US.     

Projected regional impacts of appliance efficiency standards for the US residential sector

Minimum efficiency standards for residential appliances have been implemented in the US for a large number of residential end-uses. This analysis assesses the potential energy, dollar, and carbon impacts of those standards at the state and national levels. We explicitly account for improvements in efficiency likely to occur in the absence of standards, but because our method for characterizing these exogenous improvements probably overestimates them, both the energy and cost savings presented in this article represent lower bounds to the true benefits. Cumulative present-valued dollar savings after subtracting out the additional cost of the more efficient equipment are about $30 billion from 1990 to 2010. Each dollar of federal expenditure on implementing the standards will contribute $165 of net present-valued savings to the US economy over the 1990 to 2010 period. Average benefit/cost ratios for these standards are about 3.5 for the US as a whole. Projected carbon reductions are approximately 9 million metric tons of carbon per year in the years from 2000 to 2010. Because these standards save energy at a cost less than the price of that energy, the resulting carbon emission reductions are achieved at negative net cost to society.     

Optimization of hydrogen-producing sustainable island microgrids

Hydrogen-based microgrids are receiving attention as critical pathways are being charted for the decarbonization of our thermal, transport, and power grids. In this article, clean, cost-effective, and reliable hybrid microgrid designs are developed to satisfy hydrogen and electricity loads in three energy-stressed islands of Eastern Canada, namely Pelee, Wolfe, and Saint Pierre. The design iterations incorporate elements of solar, wind, fuel cells, Hydrogen, and electricity storage. Real-time field irradiation, wind speed, ambient temperature, and load data over 8760 h have been used to drive the designs. Although the anticipated inflation rate in Newfoundland is higher than in Ontario, the lowest net present cost (NPC) of the hybrid solution is found in Saint Pierre Island. The hydrogen cost, in this case, is $7.5/kgH₂ and $15.8/kgH₂ lower than that of Pelee and Wolfe islands, respectively. The maximum H₂ tank capacity (≥680 kgH₂) on Pelee Island is 3000 h/yr and 1000 h/yr lower than optimal cases in Saint Pierre and Wolf Islands, respectively. LCOE is more sensitive to market changes in fuel cell costs than other components. The highest LCOE reduction (～63%) is observed when the optimal case in Pelee Island increases its lifetime. Analyzing the volatility in resource assessment indicates that predicting the energy cost over a short-term project is challenging. The salvage share in the long-term project is more than that of the short-term, indicating that the long-term project can be more cost-effective taken overall.