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Ontario's Green Energy Act

Chris Adlam

Thursday, November 30, 2023

Dr. Chris Keefer  0:02  

Welcome back to decouple. Today I'm joined by Chris Adlam, veteran decoupler. Also one of the cofounders of Canadian Nuclear Energy and the massive brain behind a lot of the analysis that's gone into fighting that campaign and writing our reports, both on Pickering and CANDU. You did an episode with us the case for CANDU, which accompany that report. That was a big hit amongst the audience. So Chris, it's great to have you back today. Great beer. And today, we decided we really needed to take a look at something that's a little bit Ontario centric, the so called Green Energy Act. But I think we both feel that it has lessons well beyond the borders here. Bear with us, we will try and disentangle every acronym that we use. But yeah, I think it's got broad applicability. And given that Ontario's you know, such a focus in really a place of hope for nuclear within the Western world, this is the context into which we are heading now as commodity prices go up and the cost of borrowing goes up. Everyone else says the best time to build nuclear was 10 years ago. And it definitely was, but we were busy doing other things. So Chris, welcome back. And looking forward to this man. All right, let's dive in Green Energy Act. I think it was signed in 2009. What was it?


Chris Adlam  1:33  

Oh, it was essentially a Ontario, Ontario and eyes version of the German energy wind. Belt McGuinty Gerald Butz. That whole Liberal Party at the time was inspired by what was taking place in Germany. We were just coming out of a recession. They thought they could use that to kickstart the economy in Ontario. So they leveraged large contracts to subsidize wind and solar and biomass capacity, along with some gas to potentially or the idea was rather to, to bring those industries to Ontario, and make Ontario a manufacturing hub and create green jobs in the province, which did not materialize.


Dr. Chris Keefer  2:22  

Right. And I mean, Ontario, you know, has been I think it still is fair to say it's a it's a manufacturing, sort of center of the country, maybe alongside Quebec. But yeah, the 2008 Nine economic crisis, were a doozy. And we did bail out the auto industry, I think on both sides of the border here. But I think you're saying that was a big part of the rationale was a sort of economic recovery program. Yeah,


Chris Adlam  2:44  

whether we had companies like caterpillar that left the left the province after the GA was enacted. There, there were some some impacts of that. But yeah, essentially, there was a decline in demand, which corresponded with the decline of industry in the the economic issues that were taking place. And the idea was that, you know, we would recover that and that Ontario would be this this hub of green manufacture. Unfortunately, when those subsidies were removed, the companies immediately left Ontario. And it never developed into what it was claimed it was going to be, which was, you know, that we would be exporting wind turbine parts and solar panels all over the world that that never happened. Right.


Dr. Chris Keefer  3:30  

I think there's the promise of 50,000 green jobs. And I think some protectionist measures as well, right, I think, yes.


Chris Adlam  3:38  

So there were some of these really contracts had requirements for domestically sourced components, which is why these companies was to incentivize these companies to set up shop here in Ontario, so that, you know, the parent companies could be bidding on the contracts. Again, the contracts themselves recourse extremely lucrative. And once that requirement was removed, which was later on, those companies just packed up shop, because they could then build those projects and get those lucrative contracts without the domestic materials requirement.


Dr. Chris Keefer  4:12  

Right. I mean, I had a friend at the time, and this was before I had gone on this energy journey and deep dive. And he was working a lot of these contracts with Chinese investors and others. And, you know, the community I was a part of really held this guy up. He was a kind of a hero, part of the energy transition, helping get this stuff built. He was getting fabulously wealthy, which was was perfect, but it was mostly solar. Yeah. So tell tell us a bit more. I mean, what are feed in tariffs? I understand they originated in Germany. What are they as a mechanism and how did that play out and the


Chris Adlam  4:47  

concept is very simple. You get paid a premium rate for however many kilowatt hours that you export to the grid. So let's say you're buying electricity around the time the G. Bollinger At the time that this was enacted, and we hit the market and all that stuff was sort of foisted on the province, retail rates were around five cents. So if you were buying power from the grid, you would be buying it at five cents. And the feed in tariffs for solar, were 60 to 80 cents. And so small residential installs would receive up to 80 cents per kilowatt hour for which was, you know, a goldmine. And so this was actively pursued. The other part of this were the wind contracts, which weren't quite as lucrative. But it's like 90 some odd percent of them, I can't remember the exact figure is, but it's like 94% of the wind contracts went to the liberal party's donors, which didn't have very good optics. And they started calling them wind contracts like Kathleen Wynne. By the time she was in power after making tea, although didn't help things, but yeah, those those early feed in tariffs, were were a windfall for whoever could afford to invest in it at the time.


Dr. Chris Keefer  6:13  

I remember you showing me I think it was the spreadsheets of some of the beneficiaries, a lot of kind of fossil fuel subsidiaries were involved. Tell me a bit more about Well, one


Chris Adlam  6:23  

of the earliest wind developers in the province was Enbridge a name we should all recognize


Dr. Chris Keefer  6:33  

international listeners, that's a gas company. Yeah.


Chris Adlam  6:35  

And so that was the case with the vast majority of the wind contracts either went directly to fossil fuel companies, or to companies that were fossil fuel adjacent or affiliated. And there might be a couple corporate levels there, where it's like, oh, there's no direct affiliation. But then you like, oh, look, it's the parent company that has, in fact, invested in fossil fuels. And that's a common theme for every one of the almost every one of the wind contracts, especially the large ones.


Dr. Chris Keefer  7:07  

You know, it's interesting, politically, the world seems really topsy turvy and upside down. We currently have a Conservative government that is investing more in publicly owned power generation than any government going back, I'm not sure four or five terms, and under this liberal government earlier, and I'm not trying to be partisan here, but it's just interesting, you know, typically, the left would be associated with investing in public ownership, etc. This seems like it was a pretty large scale, privatize a privatization if


Chris Adlam  7:39  

it was a huge privatization effort. And they were pulling away. And so there's a relation to this to the whole market philosophy. Brief backstory, but of course, Ontario Hydro was broken up and created these separate entities, Ontario Power Generation being the one that inherited all the generating assets. And part of the whole growing in the market was to grow private generating sources and to reduce the share that that OPG occupied. So there was this reluctance to invest in anything public, which seemed bizarre by a government that we traditionally view as left. But if you go back further, Darlington, Pickering, Bruce, those were all built by conservative governments. So there is this history of conservative support for public power in Ontario. It's just not necessarily something that we would view as synonymous with, with the more modern view of conservatism. But there is that that legacy, so it's not as unusual as you would get that at first Earth and get their first glance, right. But yeah, so, you know, we signed 10s of 1000s of private contracts. For generation we have more than five gigawatts of wind, which is massive, the Darlington Beam project was cancelled, which would have been an investment in public power, of course, the cancellation of the Pickering a refurbishment after units one and four were done. The cancellation of the Pickering B, refurbishment also happened. So again, canceling investment in public infrastructure and moving that money over into private investment. The other thing was it allowed the government to avoid spending public monies and instead, it was pushed directly onto the ratepayer via these contractual obligations, right. We as ratepayers had to cover those contract costs. So it wasn't still wasn't it? Well, that's just it. It's not past one year contracts, which were then extended, or re amortized over 30 to reduce their impact. And now 85% of those contract costs have been shifted to the tax base to keep them off our hydro bills, because the impact was so dramatic. And I remember getting an argument with somebody who's like, oh, it's only 478 megawatts of solar in the province. There's no way that had an impact on hydro bills. No, there's not there's there's 2.2 gigawatts of rooftop solar, or small scale solar in the province. On top of the 471 megawatt 470 megawatts of grid tied solar. So there's more than two and a half gigawatts of solar. And the average rate for solar is almost 50 cents a kilowatt hour. That's considerable. The thing is, you don't see that in the grid mix. Because it's embedded. Right, so it doesn't show up in the ISO supply mix. It's there, it depresses demand during the day. So it manifests as a as a reduction in demand that we're not seeing. But there's a considerable cost to it. So you know, even though it's invisible, looking at the IES a website, it is not invisible, in terms of the cost. And the other thing is with is with wind power, producing out of phase with demand, right, it's most productive in the spring, and in the fall when Ontario demands in the toilet, which is exactly when we scheduled or nucular outages, right, because we have surplus hydro in the spring. So we've got lots of generating capacity. So we shut down a couple of nuclear units, do some maintenance breaks, make sure everything's ready for that summer peak, which is our peak period, we then we do the same thing in the fall, right? Make sure like Pickering aid is off right now we're getting maintenance done to it, Bruce for is off right now getting maintenance done to it, those units will be reloaded, before the cold really sets in so that we have reliable power over the winter. I mean, that's really that's really about when, you know, at 40% capacity 40 50% capacity, when we don't need the power. So we did or gets curtailed, which we then pay full price for it's part of those lovely lucrative contracts. Or we dump it on the US. You know what, half a cent per kilowatt hour while we pay the full contract cost is ratepayers. So it was it was a delicious scheme. cooked down, it's no wonder that it was so popular at the time, right? People were scrambling to get these contracts, because they were so lucrative. Get Rich, quick, exactly, but it completely screwed the repair. So So in terms


Dr. Chris Keefer  12:43  

of in terms of getting a sense of that overall cost, I think you probably need $3 billion.


Chris Adlam  12:49  

Because that's just the rate cost. That doesn't that doesn't include AMORT re amortization doesn't include it doesn't include interest, it doesn't include an inflation adjustment, which there is. So there's an inflation, escalator baked baked into every single one of those contracts. So if you go back and you look at the average cost of wind and solar, five years ago, and I'm in the province, right, even though we haven't signed any new contracts, all those costs have gone up, because they're ratcheted with inflation. So those contract costs will continue to escalate. So I took the average cost, the average 2023 costs, and just applied it to the amount of kilowatt hours generated over the anticipated life of those assets. And we get $63 billion. In reality, the cost will be considerably higher because of that inflation adjustment, which is more than we paid for our entire nuclear fleet, which produces 60% of our electricity. And this produces Yeah, well.


Dr. Chris Keefer  13:49  

And that's only to the midlife refurbishment point. And we have Yeah, we


Chris Adlam  13:52  

have another 50 plus years out of those assets.


Dr. Chris Keefer  13:56  

Okay, so let's just let's just get those numbers side by side, I think the, you know, 20 $21 value of our entire nuclear fleet was about 58,000,000,063, as you said, for


Chris Adlam  14:07  

the contract or the fleet, just the contract is what we pay for the generation.


Dr. Chris Keefer  14:14  

We don't only have what the ratio is between power produced by the nuclear versus the GA contract. So


Chris Adlam  14:23  

current years probably not the best example because we haven't units offline for refurbishment at both sites. But even using the current year. You can learn hydro provides 76% of our supply at 58% of our cost. In comparison, wind, solar and biomass are 12% of our supply and 31% of our supply costs which is unreal


Dr. Chris Keefer  14:51  

it's interesting that shift to the tax base because you know what the rate payer pays is actually pretty regressive tax because poor household Kids have inefficient appliances. And as a percentage of their their income, they spend more on electricity, whereas rich folks have nicer appliances and bigger income. So they spend proportionately less shifting it to, you know, a progressive tax base, I guess it does shift the load a little bit more on to people who earn a bit more income. But I remember talking to Edgardo Sepulveda, who's been a frequent guest on the podcast, not for a while. And you know, in Ontario, we've got health care number one budget item, but I think down number six line item is long term care. And these the subsidy costs are just below that. I think it's what 3.1 million


Chris Adlam  15:38  

was the previous period. I think it's up from that now. And yeah, that's just subsidizing 85% of the wind and solar contract costs. Which is unreal, considering how little of our power they actually produced. And the other thing is, is if you look at that 12%, right. Solar, it's, I mean, besides the fact that some seen, at least solar tends to produce in phase with demand, you know, it's most productive in the summer, which is when our demand is the highest, but wind is most productive when we don't need it. So most of those kilowatt hours which are reflected in the supply next are unneeded, you know, we are spilling hydro. So Ontario. So you know, you have OPG bypassing the dams, and then we pay for the spilled waters. So, so we're paying to not produce power at back and the other hydro stations so that we allow wind on the grid, which we didn't need, which we then pay a premium for. And then we're also paying for standby gas capacity. It's just a gong show.


Dr. Chris Keefer  16:47  

So when you used to have first right on the grid, yes, it did. So so what did that do to our nuclear fleet. So


Chris Adlam  16:52  

that was so Bruce Power is the only one that undertook this flexible operation profile. So Pickering and Darlington both run 100% baseload, so they just reactors just run at a constant level, all the time. They're capable of doing maneuvers. But OPG does not do maneuvers with that. So it's not that the units aren't capable of load following, they are specifically Darlington that was actually baked into the requirement for the plant, but they don't, because the they the OPEX for the plants are the lowest when they're running in 100%. Baseload versus a contract facility. It's owned by OPG. But it's operated by Bruce Power, who also assumes all the operating costs and upgrades and all that stuff. So they figured that they would offer in this flexible operation so they can curtail up to 2400 megawatts of capacity. Across all the units, yes, considerable. So because wind had first grid rights at Bruce, they'd start steaming off power, dumping potential electricity, right into the lake, as he to allow wind on the grid at more than double the cost of the power coming out of the Bruce, Bruce plant, which is, you know, insane. What. And I have actually seen and interacted with a few people in the UK that believe that first a grid rights for when makes sense. How you have generating source that shows up completely randomly, why would it have priority? Why should it have priority over a source that's already there that has lower life cycle emissions? There's there's no real argument there other than somebody who just prefers wind? Like why would you turn off a 4.9 gram per kilowatt hour or co2 per kilowatt hour source to allow a 12 Gram co2 per kilowatt hour source on the grid? That just shows up out of nowhere? There's no rhyme or reason to that.


Dr. Chris Keefer  18:58  

Were there actually, because I'd heard that the Russian nuclear units going offline, they, you know, take two or three days to come back online. Well, they


Chris Adlam  19:04  

never took units offline. I mean, there's the potential for that to happen. Like if they had to curtail more than 2400 megawatts. They could take any unit offline, but not a Bruce, they wouldn't. They would try to avoid that if at all possible. They just curtail more more capacity across more units. I mean, 2400 megawatts is a lot.


Dr. Chris Keefer  19:28  

So in terms of this is another kind of interesting point, like observing the Ontario nuclear fleet. And as you said, the outage is happening in the low demand seasons, people say nuclear isn't flexible. It's not going to play well on the grid, because it's just this constant baseload. But when you have a fleet, you do the maintenance when demand is low, and you go gangbusters when it's high. So it's kind of it's interesting when it's averaged over 18 units. There is a lot of flexibility. Oh,


Chris Adlam  19:52  

absolutely. It's possible, right? And especially with the CANDU units, right, you don't have refueling outages. So you just you know, Run the units till you, you know, you're not going to need capacity or as much capacity and you just take the units that are going to need maintenance offline and you you because you have such a large fleet, you can really manage that schedule quite quite well. And so you don't end up with surplus baseload and you make sure you do have sufficient capacity for your peak periods, which are both summer and the winter.


Dr. Chris Keefer  20:25  

I don't want to get too much into sort of name calling but and bringing up names that, you know, won't be of relevance to the international audience. But one name that comes up is Amory Levin's. He came over and did some consulting. So just walk us through a little bit of the kind of intellectual authorship of this. I mean, this the sounds calamitous, policymakers make ridiculously stupid decisions. And


Chris Adlam  20:46  

this actually dates the GTA considerably. We have to go back into the 90s. To look at Levin's influence, which is actually I would say more far reaching than what we saw with the GA you know, the soft path, right, which is all about distributed generation and reducing demand. And that's incompatible with building large infrastructure. Right? Those are two completely different things. So Murray strong, who was the chairman of Ontario Hydro, pointed under Bob Ray, during the rainy days of the NDP, one time NDP had power in Ontario. He decimated the fight for


Dr. Chris Keefer  21:37  

the international audience. This is their sort of left social democratic kind of Labour Party. And that was the only government they ever formed that usually an opposition and occasionally have influence in kind of minority government setups. But anyway, just just for context there.


Chris Adlam  21:49  

So Maurice Strong was heavily influenced by Levin's. And so his stewardship of Ontario Hydro reflected that. So it did not receive adequate investment. nucular performance tanked. The only plant that was really able to weather it properly was Darlington, because it was brand spankin. New at the time. Bruce B kinda did. Okay, because it was the second most recent plant. Bruce, he was just completely laid up because it was a gong show. And Pickering a was laid up as well. So we were down eight units.


Dr. Chris Keefer  22:26  

And that any burning some more coal back then Right?


Chris Adlam  22:28  

Well, so, you know, Ontario Hydro had this huge fleet, their public generator, so they have massive amount of capacity that was either under or completely not not really utilized. So we were peaking previously with coal. We had the North America's largest coal plant, and Nanticoke. And so when the nuclear assets were, you know, had their performance decimated, coal stepped in, because you can pass the operating cost of the coal units directly on to the ratepayer, you don't have this the same staffing levels and the same maintenance levels that you do at a nuclear facility due to regulation, you know, the requirements, right. So we saw this resurgence of coal use in the province, which was, you know, the, the parties later agreed that all like it was a pan party agreement that we would need to phase out coal, but that had been Ontario's Hydros goal with the new killer phase out or the nuclear rollout from the get go. I mean, Pickering was built instead of a gold plant. So the big coal plant, yeah, like we had a Yeah, for gigawatt coal plant, right, a plant comparable in size Nanticoke. And the reason being is we had control over the fuel supply, it produced cheaper electricity. And even then they knew that there were environmental shocks. Right. So that was why there was going to be Darlington B, that was why there was going to be Bruce C and D. You know, Ontario Hydro had very ambitious plans, there was going to be Leslieville they were going to be, you know, all of these other nuclear plants to completely replace coal. And then that was all completely undone. And so then we, you know, there's the the breakup of Ontario Hydro under Harris. Because we decided that for whatever reason, we were going to brace this market ideology. But then after the breakup, of course, we ended be elected the liberals. And they were the ones who actually privatized either one. So Harris didn't actually privatize anything. He set the stage for the privatization and buggered up Ontario Hydro. But nothing was actually privatized, other than the operation of Bruce Power. And it's still a publicly owned asset. It's just privately operated. But yeah, it was it was actually the more left leaning party that did the privatization which is a bit odd, but Um, but things have never been the same since the breakup of Ontario Hydro. Right.


Dr. Chris Keefer  25:04  

Right. It's interesting because, you know, people make a lot of hay about, you know, having a nuclear station that's relatively urban. I mean, you can see suburbs, maybe 500 meters from the fence or even closer at Pickering. You know, but that was supposed to be a four gigawatt coal plant. Yep. Like and, you know, the day to day plants and


Chris Adlam  25:23  

right in Toronto. Right, wow. Right down on the harbor, no.


Dr. Chris Keefer  25:28  

Big Smoke. That's what it was called.


Chris Adlam  25:30  

So, I mean, why would you be okay. And coal plants emit tons of radioactive emissions by virtue of the ash that comes out of them, right. So they're more dangerous, considerably more dangerous, they don't have the same safety regulations. They're not as very safe. They're not as strictly regulated. And, you know, you think of the amount of emissions that, you know, Pickering and Darlington and Bruce have avoided you know, it's unreal. So yes, this choice to build this non emitting plant directly adjacent to our largest load center was, was beneficial. There was really no real detractors. I mean, the reason the plants in Ontario have this vacuum building, which is this additional layer of safety and protection of the plants are not allowed to operate without the vacuum building being in service. It was so that they could be built so close to the population and the load centers. That was intentional.


Dr. Chris Keefer  26:32  

So my sense is that, you know, the capacity that was built out in the Green Energy Act, it wasn't, you know, demand was down, we just had the global economic crisis. This wasn't because we needed a bunch of power generation on the grid. This was more a plan for economic stimulus kind of unrest, to have kind of a frill. So now we're in a situation, you know, 10 years later, that we're seeing demand forecasts, skyrocketing. Immigration, reindustrialization reshoring of industry, the battery plants, electric arc furnaces, and man, the 2010s. What a great decade, interest rates, you know, going negative at a point, coal gas, uranium, dropping peak to trough 90% in cost. I mean, this was what a decade it was. And you know, what a shame that we weren't doing any nuclear at that


Chris Adlam  27:21  

point. Yeah, that's Darlington be.


Dr. Chris Keefer  27:25  

We're stinging and referring Pickering back then. It would have been a bit cheaper. But yeah, now we're stinging from this, this financial stress of $62 billion for some pretty low value. And you


Chris Adlam  27:37  

brought up this point, you're saying now that now demand has increased or is increasing, right. But all of this generation that we build, doesn't satisfy that demand? Because it produces out of phase with demand, the largest thing we built was the wind capacity, which doesn't produce when we need it. So it has like zero value for this massive costs.


Dr. Chris Keefer  28:02  

Can't run a factory without baseload? I think that's baseload, maybe maybe a myth if you want to live in mud huts? And I don't know, enjoy the solar economy. But that seemed like a real challenge. You know, so yeah, I guess I guess looking forward, I mean, is there anything else that you wanted to kind of add or reflective on in terms of this GA experience? I mean, we should fit we should finish the story in terms of the electoral outcomes. Oh, yeah. Well, yeah. I mean, what happened? What people got upset? What was going on? So


Chris Adlam  28:35  

yeah, I mean, there were there were a couple of things that happened during the the Winnipeg McGuinty days. One of them was the coining of the term hallway health care, which, you know, given your occupation, I'm sure you're well aware of it patients lining hallways, because there weren't beds. And the other was, of course, heater eat. And that was the dramatic impact that the wind and solar contracts had on electricity rates, which then people you know, heating with electric baseboard, which didn't make up a large portion of the population, but it was enough. made, you know, running their electric heaters on affordable. And so which is where that came from. And it's, you know, that ultimately led to the decimation of the Ontario Liberal Party, which became known as the minivan party because they had seven seats. So the repercussions came fast and hard. They know the ratepayer hit their breaking point, and just wiped out the party. And you know, that's, that's a warning for other parties. And I think we see that playing out with the with the current Conservative government, who's very treading very carefully on the electricity file and that's why They're, you know, trying, they've stabilized rates. And yesterday, they're being subsidized, but people don't see their bills going up. And so it's it's ironic that Ontario has gone from one of the most expensive jurisdictions in North America to now being one of the lowest price jurisdictions in North America. Yes, there's subsidy but our, our rates when the GA was cancelled, that stopped the bleeding. Our rates stopped increasing at that point. And so we're just


Dr. Chris Keefer  30:29  

going to talk about that. Talk about that. You mentioned the election, again, a majority party in parliament, you know, real natural party of government, as we call them, usually, it'll go liberal, conservative, liberal, conservative, just decimated. I think that's, you know, the last official party status minivan party, as you said. And I think one of the first things that the incoming Ford government did was was cancelled the green energy law was that,


Chris Adlam  30:49  

that they would, they would cancel the Green Energy Act, which had outraged everybody and return to sensible policy. And that's what we're seeing now is, you know, the announcement of the refurbishment of Pickering. That's a sensible announcement, investing in a generator that enabled us to get off of coal, right through see again, generated the return to service of Bruce a provided 70% of the electricity, we needed to replace coal in the province. That's massive. So if it's if it's doing that, and then we want to phase out gas, you would do the exact same thing, right, we had the investment in the SMR is at Darlington, hence Brucey. Now, these are big projects that we know, can deliver deep decarbonisation, and you look after look no further than Europe, look at France, even in the grips of their reactor outage binge due to those leaking pipes, they were still massively greener than Germany, and that, you know, hundreds of billions of dollars that Germany spent on wind and solar. And you know, that that success. And we were able to emulate that success here in Ontario with our nuclear fleet. So we'd be absolutely stupid not to do the same thing over again, and just continue on that path, which we know works. And there has been no major economy that is decarbonized with wind and solar. It's either hydro hydro plus nucular. Or nickel brands, little


Dr. Chris Keefer  32:19  

geothermal and Iceland. Yeah, well, yes.


Chris Adlam  32:21  

The one volcanoes random Off, off example there. But yes, yeah.


Dr. Chris Keefer  32:27  

So So I mean, there's definitely the the radon, the impact on the rates. You know, I understand also that the wind turbines, you know, engendered some resistance, just maybe on an aesthetic basis, or certainly in farming communities. I mean, I've driven from the Bruce, which is surrounded by wind turbines at night. And you know, there are wind turbines everywhere. And those little red lights are flashing all night long. I mean, I used to drive past and on my way to do you know, family medicine, elective, and I was in my residency, and I would drive past and say these things are kind of ugly, but you know, this is the future. This is how we save the planet. Obviously, my position has changed somewhat, but you know, that that flashing I don't know, if people dismiss that the Jesse Jenkins, or I'm blanking on some of the names where they say people who resist wind or just old, Cranky white men?


Chris Adlam  33:11  

Well, you brought up a good point there too, right? Because there were groups like wind concerns Ontario, that were spawned from this opposition, and wanted the communities to be informed of the potential impact of having these near them. And you know, there are impacts they, you build them on shale, and they cause problems with water table. So like, these are real, real issues. And yeah, people don't like the aesthetic either. You don't do you want an industrial power plant in your backyard? When you live in in the country? You know, if you buy a house directly adjacent to Pickering, you've made a decision to buy a house adjacent to a plant that's been there for 50 years. You know, if you have a farm, and all of a sudden neighbor behind you puts up five giant wind turbines. That wasn't a decision that you've made, right? You weren't part of that decision making process. So I can understand that opposition. And full disclosure, my mom was a member of a group that opposed wind development on the Tantramar Marsh when they lived out east for the same reason. She didn't want wind turbines behind their hips. She thought they were ungodly. So I mean, yeah, there's their legitimate opposition. But your mention of saving the saving the planet there. I got into a discussion with somebody a couple of years ago. And it was really interesting. And it was it was spurred by my comment that Ontario's wind turbines were at the time and that load on the grid because I think we were producing 20 megawatts, which is less than required to run their cooling systems and, and keep them operating. And this girl replied to me, she's like, well, that's impossible. The ones behind my house are spinning right now. And I asked her what what the Name of the Wind Farm was. Oh, it's probably producing zero. And she's like, well, that's no, no, that's not possible. Like, when they're spinning their produce, they're avoiding gas and they're producing valuable electricity. No, they're not. I sent her the link to this aggregation site. And she could view that the turbines behind her I was were in fact producing absolutely nothing. And she, you know, that was a revelation for her that, you know, just because it's spinning, doesn't mean it's producing valuable electricity. She didn't realize that work, though. I


Dr. Chris Keefer  35:29  

mean, that's counterintuitive to me. So what's what's going on?


Chris Adlam  35:32  

There's freewill. Okay, yeah, they don't cut in they they're they're not, they're not coupled to the turbine when there's not enough wind to produce electricity. So they just draw the grid Sheezus. So they have a cut in speed, and they have a cut out speed too, right? If the wind gets too fast, then they have to put on the brakes.


Dr. Chris Keefer  35:52  

You do these analyses, you know, where you compare pickerings up, but to the wind fleets out. But yeah, it started with garland. Actually, just to drive home though this incredible mismatch? I mean, again, we're a summer peaking grid, what's the kind of peak and trough of our grid and just paint a, like a more granular picture of what the hell's going on in summer? Because, you know, in terms of this reindustrialization, you know, we're not going to face blackouts all year round, because we're not generation, but my understanding is we'd have to load shed some factories during the summer if if we have insufficient generation. So paint that picture for us a little more and a little more clearly. I mean,


Chris Adlam  36:27  

I can just simply say that, during the peak summer period, Pickering at 3.1 gigawatts, produces five times the electricity of our five gigawatt wind fleet. That's the reality, five times more productive, despite having a lower nameplate capacity, and wind has gotten as low as 6.8% capacity over a two week period. That's not like, oh, one day it wasn't productive. Now, we're talking two weeks at two weeks span where it produced less than 7%.


Dr. Chris Keefer  37:03  

So summer Duncan floated for frontier. Yeah, exactly. It's first


Chris Adlam  37:07  

thing less electricity than one unit at Pickering.


Dr. Chris Keefer  37:12  

Okay, so the contracts are canceled. There's a penalty to that. And that's often brought up as, as being kind of scandalous, or, you know, you'll hear a lot in the media about, you know, the fact that we're in a power law, which had to do with those contracts being cancelled. How do you respond to those two


Chris Adlam  37:28  

points on that, first off, people are pegging this capacity that was cancelled as is if it would prevent us from burning gas because we're burning more gas right now. Due to the refurbishment outages. That's nonsense. We're talking in 10s of megawatts, like the variation that we see in seasonal output on a Darlington unit is more than what that capacity would have delivered to the grid. It's wholly inconsequential. There wasn't enough capacity that was cancelled to be a value. Secondly, canceling the contracts was cheaper than allowing them hurrah to run to term. Right, I think it was one 300 million or something like that, to cancel the contracts. And to let those that contracted capacity run would have been like 680 million. So it was in that savings. For capacity we didn't need because a lot of it was wind, which again, produces out of phase with demand, so no value.


Dr. Chris Keefer  38:25  

We're going to be doing, like a follow up Pickering episode. We are all sort of what's the word? Not white knuckling? Because I think we're pretty confident of good news on the Pickering refurbishment file. But we're a little impatient. Oh, yes, absolutely. So in a year. That's been a year, it's been a year. I think we're wrapping up on the GA unless there's something else you wanted to mention. But


Chris Adlam  38:47  

there's one thing I'd like to mention, people often trot out LCMV to argue that wind and solar projects are cheaper. Right? So they're not considering the production profile in that. And they're not considering oftentimes, those numbers are American. Like the most recent wind farm that was built in Ontario, it was nation rise. And somebody with Oh wins a million dollars a megawatt they didn't rise was $2.33 million megawatt. That's considerably more. Right. And then the same thing you can do that for Nanticoke. Solar, which we have the actual cost for because it's a public project. OPG did it. So, you know, there's this massive chasm between these LCP figures and what projects actually cost in Ontario. And people are being misled by these LCD figures that say, oh, you know, nothing's cheaper than solar. Nothing's cheaper than when solar produced 1.1% capacity yesterday. It peaked at 26 megawatts. Oh, batteries. Okay, what are four hours of batteries which are what most of these large installs that get trotted out What are your four hours of battery going to do when you peaked? At 26 megawatts?


Dr. Chris Keefer  40:07  

What are you going to charge him with,


Chris Adlam  40:08  

but you're not right. And same with the two weeks of no wind in the summer, right, the two firm all of this. And to bring it up to the level of a reliable generator, we're talking 10s of billions of dollars, you know, multiples of the price of building a nuclear plant. So that needs to be considered. And I have roughly model that in the past, using real numbers. And that's how I the price


Dr. Chris Keefer  40:39  

comparison of this was the price comparison of of a picker and refurbed versus building wind and solar track two, and


Chris Adlam  40:46  

I had somebody just get subserved. So I had somebody come at me going well, that doesn't that's not LCMV. I'm like, I don't care about LCMV. I care about what real project called well, you should be using LCP, no, I'm going to use real project costs. I'm not going to use fictional numbers, I'm going to use real numbers. If you don't like the real numbers, find me a project that has real numbers that are more to your liking. And of course, they can do the same thing with the battery projects, right? You look at all of these battery installs in Australia, and I use a blended cost based off war instead of oh, well, they're the new ones are cheaper. Now they're not. You look at the completed battery projects, and they are in line or even more expensive than where instead. So that, you know, you aren't seeing this cost decline that's claimed to be happening. Just like we're not seeing projects, you know, that are aligned with LC OE being, you know, being installed in Ontario.


Dr. Chris Keefer  41:45  

I mean, I think this is going to be a bit of a decade of disappointment, given the expectations really across the board for clean tech, whether that's wind, solar batteries, nuclear, it's all getting more expensive. Absolutely.


Chris Adlam  41:56  

And that with states, right, the these cancellations of these offshore wind contracts, because, you know, the the, the agreement was not generous enough to cover the CapEx for the for the project, because all the materials got more expensive.


Dr. Chris Keefer  42:18  

Yeah, no, I mean, I do really worry for we're again, we're the furthest ahead. I think in the Western world, certainly an SMR. Front,


Chris Adlam  42:25  

well, we have an advantage here in Ontario, just because we have OPG. And we have this this public champion, who if we go back to the Ontario Hydro days, you know, Darlington was built during a time of absolutely insane interest rates. So as soon as Bruce B. So, you know, we've been in that environment before. And we had this champion of public power that was able to pull through and produce something that we're still using today. You know, if you're relying on the market, and you're relying on private investors, Hmm, what's gonna get built? Right? It has to make sense. Whereas, you know, you can public, these public utilities will do the long game.


Dr. Chris Keefer  43:11  

Interesting. And on the finance front, we just won the federal green bond. Absolutely. And we've got nuclear in the federal green bond, which I thought would be a lot harder than getting nuclear in the provincial green bond, but still still waiting on that. I think that dominoes is going to fall very shortly. Anyway, Chris, that was a great summary. We don't need to beat a dead horse or belabor the point. I think we got a good sense of the Green Energy Act. You know, again, just what a good time it was to build some energy projects and sounds like we built the wrong ones.


Chris Adlam  43:44  

Yeah, it should have been Darlington B, and it should have been those bigger and refurbishments. I mean, the only reason we're not running Pickering a past 2024 is because it's down two units. And those two units aren't able to be resurrected. In a financially reasonable way at this juncture.


Dr. Chris Keefer  44:04  

Okay, Chris, great having you back. I'm sure we'll have you back again fairly soon. Wonderful. Thank you.



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