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Interruptible Electricity is non-fossil electricity that is only intermittently available and hence has a relatively low price. In many jurisdictions interruptible electricity is presently either frequently constrained (discarded) or is exported at an extremely low price. Subject to appropriate electricity pricing interruptible non-fossil electricity can be used to displace fossil fuels in hybrid heating systems, to charge battery electric vehicles and to produce electrolytic hydrogen. This web page addresses practical aspects of implementation of an Interruptible Electricity Service (IES) on top of an existing Dependable Electricity Service (DES).
IESO CONTROL METHODOLOGY:
At any instant in time the amount of power available for IES customers is the difference between the total available non-fossil generation capacity and the total Dependable Electricity Service (DES) load. In Ontario the time integral of this difference is about 20 TWh / year and has a potential market value of as much as $2 billion / year. The continuing existence of this huge amount of discarded non-fossil electrical energy can only be reasonably explained by ongoing corruption of the Ontario provincial government by the fossil fuel industry. Otherwise this surplus electricity would be sold to consumers at a discount for liquid fossil fuel displacement.
To provide an IES the Independent Electricity System Operator (IESO) must be able to modulate the total IES electricity load in accordance with the instantaneous interruptible electricity supply. This modulation can be achieved by dividing the IES load within each Local Distribution Company (LDC) service area into approximately uniform block sizes and then using a computer to automatically turn individual load blocks on and off in a cyclic fashion with a software controlled on/off timing ratio such that total IES load in the LDC service area is nearly constant at an IESO controlled set point while the available IES electricity is fairly distributed over all the IES load blocks with minimum load switching. Note that due to relatively frequent (10 minute cycle typical) load switching IES electricity is poorly suited to powering motors with large inertial loads. IES electricity is much more suitable for charging energy storage, for powering hybrid heating systems and for electrolytic hydrogen production.
As the Dependable Electricity Service (DES) load decreases below the instantaneous total non-fossil generation capacity the IESO should gradually enable an increasing fraction of the available IES load until 100% of the available IES load is enabled. Similarly, as the DES load increases or the non-fossil generation capacity decreases the total IES load fraction enabled should gradually decrease.
There must be a provision for rapidly dumping the entire IES load in the event of a sudden loss of generation capacity, so that in effect the IES load provides the same benefits as spinning reserve generation.
System reset software limits the rate of IES load turn-on after an IES load dump.
This IES load control concept is not a new idea. This control methodology was originally developed by this author and others at ADMIC during the period 1977 - 1978 and was used for peak demand control in numerous electrically heated high rise apartment buildings in the Greater Toronto Area (GTA) up to 1999. Thereafter the equipment was taken out of service due to changes in the electricity rate structure that gave building owners more financial incentive for electrical energy conservation than for peak demand control.
The present Dependable Electricity Service (DES) rate regime in Ontario does not have sufficient dynamic price variation to financially enable behind-the-meter customer energy storage and use of surplus non-fossil electricity for fossil fuel displacement and for electro-chemical processing. A major source of this lack of dynamic price variation is the present allocation of the Global Adjustment to kWh instead of to peak kW or peak kVA. Another source of this lack of dynamic range is the December 2015 OEB approval of a fixed delivery charge for small loads rather than a charge proportional to peak kW or peak kVA.
In order to achieve effective utilization of all of the available non-fossil electrical kWh the Global Adjustment and the delivery charge must both be allocated in proportion to peak kW or peak kVA. In an efficient non-fossil electricity system the object is to minimize kVA, not kWh. Hence a new electricity rate structure is required to financially enable behind-the-meter customer energy storage and use of surplus non-fossil electricity for fossil fuel displacement and for economic electro-chemical processing.
In practice IES customers are also DES customers, so the metering and billing system must measure the customer load profile and must separate DES billing from IES billing.
The proposed methodology is to base DES billing primarily on peak kVA, to base IES charges on extra kWh consumed during IES availability periods and to bypass the DES peak demand recording mechanism at times when IES electricity is available to the customer.
In a non-fossil electricity system the cost of servicing a particular DES customer is approximately proportional to that customer's peak kW or peak kVA during the billing period. In the contemplated DES billing arrangement a customer pays a higher blended charge per kWh when his instantaneous rate of energy usage rises above his average rate of energy usage. The logic behind this DES billing arrangement is that peaking energy costs a lot more per kWh to generate and transmit than does base load energy.
The logic behind the IES billing arrangement is that there is only a finite amount of non-fossil IES energy available. Those who are willing to pay for it get it. The IES rate is entirely market driven and must compete against export alternatives available to the IESO and fossil fuel energy alternatives available to load customers.
A major advantage of this new rate structure is that the DES billing formula accurately reflects the actual costs of generation and transmission.
The Ontario Society of Professional Engineers (OSPE) is publicly advocating for the development of an IES for the retail electricity market in Ontario.
The administrative and legal costs related to obtaining governmental and Ontario Energy Board (OEB) approval for sale of electricity under an IES rate are extremely onerous. There must be legislative changes with respect to allocation of the Global Adjustment. The regulatory obstacles are so high that today electricity distributors simply refuse to offer an Interruptible Electricity Service (IES), in spite of its inherent economic and environmental merits. Sometimes generators and load customers who deal in Interruptible Electricity avoid OEB regulation by directly exchanging energy without use of the public electricity grid.
From an IESO perspective implementation of an IES rate would raise the Ontario electricity system load factor, which would result in more kWh sales and more electricity revenue without corresponding capital costs, which would financially benefit all electricity consumers. This benefit would be in addition to the benefits available from existing demand response measures.
One method of reducing the amount of energy storage required to support wind and run-of-river generators is to sell much of their electricity output as interruptable power. Interruptible power is electricity that can displace a fossil fuel such as oil, gasoline, diesel fuel, propane, natural gas, etc. For example, the interruptible electricity might be used for hybrid heating, for charging the batteries of a plug-in hybrid vehicle or for production of electrolytic hydrogen. Provided that the customer has a fully functional alternative fossil fueled energy system, then the electricity is interruptible. The IES is not reliable like the DES but the IES provides electrical energy at a much lower price per kWh.
In an electricity system with a DES but no IES the system power is regulated by constraining the total electricity generator output power to match the uncontrolled load power.
In a DES the required amounts of reserve generation and reserve transmission/distribution capacity are not apparent to the load customer. The actual amounts of these reserves vary depending on time of year, time of day, outside air temperature, wind conditions, equipment maintenance issues, etc. However, provision of redundant generation and transmission capacity for load following and for electricity supply reliability represents about half of the cost of non-fossil electricity delivered to a DES load customer.
In economic theory the DES rate should contain sufficient dynamic price variation that every non-fossil kWh that can be generated can be sold at a positive price. However, the practical experience in Ontario has been that most DES load customers prefer stable electricity rates rather than highly variable electricity rates. However, stable electricity rates per kWh lead to electricity generation surpluses at certain times of the day, during certain seasons of the year, at moderate outside air temperatures and during high wind or high sunlight conditions. A practical approach to DES rate minimization is to provide an Interruptible Electricity Service (IES) that can realize revenue by sale of surplus non-fossil electricity, when it is available, at a low marginal price. Since provision of the IES has little marginal cost to the electricity system, almost the entire IES revenue stream can be applied to DES rate reduction. The IES has the additional advantage that it enables major CO2 emission reductions.
The line voltage is further regulated by IESO control of the IES portion of the total grid load power so that both provincially and locally the load matches the available non-fossil generation, transmission and distribution capacities. Since both DES and IES co-exist on the same distribution circuits, the IES power capacity is the difference between the currently available non-fossil generation capacity and the sum of the uncontrolled DES loads plus transmission/distribution losses.
The IES loads must be able to tolerate frequent and prolonged electricity service interruptions with no notice. Typically the IES capacity factor is small during extremely cold winter weather and extremely hot summer weather but rises to almost 100% in moderate temperature weather when neither heating nor air conditioning systems are operating. The IES capacity factor also varies due to time of day and variability of wind, solar and run-of-river hydroelectric generation. For most of the year some IES capacity is available every night.
In order to have an IES Rate it is necessary to use a metering system that distinguishes IES electricity from DES electicity because IES electricity is provided at a different rate than DES electricity.
For practical reasons, both equipment and administrative, the IES should be implemented as an add-on rate to an existing DES account at the same address. Thus in reality there is no separate IES rate. Instead there is one combined rate that effectively provides the load customer the IES rate for the portion of his load that he actually operates in synchronization with the IESO control signals. If a customer tampers with the IES control system then that customer is subject to the DES rate on his entire electricity consumption.
An issue with the IESO having direct control of customer loads is that such control can potentially lead to higher demand peaks in a local distribution systems than would otherwise occur. Hence, when the IESO exercises such control it must must do so in concert with the Local Distribution Company (LDC) so that the LDC is not subject to an increased monthly peak demand charge.
It is contemplated that IES accounts will initially be billed using data gathered by existing smart electricity meters. The disadvantage of existing smart electricity meters is that the customer can only determine his billed peak demand after the fact. Large electricity customers usually also want a local indication of current demand that is more convenient than timing meter pulses with a stop watch.
In the future the required smarter electricity meter should have standard smart meter interval kWh features plus interval kVA features plus an additional input channel which is used to flag metering intervals during which the customer's IES load is enabled by the IESO. To implement this future feature there must be either a wireless or a hard wired communication link between the electricity meter and the Internet connected IES load controller. Any fault in this communication link should disable the IES electricity load.
An important element of the IES rate is that the IES metering system inherently prevents IES electricity being used to displace existing DES load. If a load runs when commanded off by the IESO the electricity associated with that load is billed at the DES rate.
INTERRUPTIBLE ELECTRICITY RATE:
The cost of IES electrical energy should be about $0.02 / kWh to compete with natural gas and about $0.04 / kWh to compete with liquid fossil fuels. These prices give the purchaser of the interruptible electricity various viable application options. These prices are usually more than the IESO is able to realize via the spot export market. At the time of writing the Hydro One rural residential DES blended end user rate is about $.25 / metered kWh. Most of the revenue from the IES rate could be returned to DES electricity rate payers via a reduction in the Global Adjustment.
CONDITIONS FOR SUPPLY OF INTERRUPTIBLE ELECTRICITY:
In order for an Interruptible Electricity Service to make financial sense for the participating parties, the marginal cost of providing IES energy must be close to zero. Hence:
1. Fossil fueled electricity generation should not be operating when use of interruptible electricity is enabled by the IESO;
2. Provision of IES energy should not require any upgrade to the transmission/distribution system beyond normal upgrades required for providing reliable DES electricity. Customers will likely want to use local peak demand control systems to limit their total electricity demand at times when there is no IESO control signal;
3. The IESO must have dependable Internet based dispatch control of the interruptible load, which will be geographically distributed throughout Ontario. This dispatch control should progressively enable IES loads when there is no dispatchable fossil fuel generation running at the margin. Assuming that the load customer already has an Internet connection and a local router the cost of equipment for providing the required IES load control signal is quite small;
4. The main issue will be obtaining Ontario Legislature and Ontario Energy Board approval for the new electricity rate. There must also be an implementation agreement between the IESO and the relevant LDC;
5. There are also smarter meter, software, data access and billing issues related to collection and use of the required electricity meter data.
6. The smarter electricity meter records the cumulative total kWh, the cumulative total kVAh and the IESO control flag status every 15 minutes. The kVA, sliding average peak kVA and the kW are locally displayed and are recalculated after the end of each metering interval.
IES LOAD ENABLING:
At a customer's premises two binary control signals come from the IESO via the Internet. There should be no IES consumption when fossil fueled generation is running at the margin. The IESO can divide the IES load into a number of smaller load blocks so that the IESO can easily modulate the IES load. This load division can be accomplished by using digital signal decoding at the Internet receivers.
The effect of the IESO control signal which enables IES loads is to raise the setpoint of the customers load control system and in the case of future "smarter" electricity meters to set a flag which bypasses the local peak demand calculation. The other IESO signal resets the local display peak demand calculation. Both signals are recorded as to time received in the "smarter meter" memory.
The customer's peak demand control system must be engineered to allow the desired load cycling and to limit load during recovery from an AC power failure and when the line voltage is below its specified minimum.
If communication via the Internet fails for more than one minute the IES load enable control output should automatically go to zero until after Internet communication is restored.
For at least one random 8 hour interval per billing month, on a day and time when the total Ontario grid load is believed by the IESO to be close to maximum for that month, the IESO does not enable any IES load at a particular customer. During the period when no IES load is enabled the customer's electricity meter will measure and record the customer's uncontrolled electricity peak kW or peak kVA demand, which is the primary basis for customer billing.
POTENTIAL INTERRUPTIBLE ELECTRICITY SERVICE CUSTOMERS:
Potential IES customers include:
1. Parties with hybrid electric/ fossil fuel heating systems;
2. Parties with thermal energy storage systems;
3. Parties with battery type energy storage systems;
4. Parties with compressed gas type energy storage systems;
5. Bio-methanol producers;
6. Wood pellet producers;
7. Electrolytic hydrogen producers (methanol producers):
8. Ammonia producers;
9. Nitrogen fertilizer producers;
10. Aluminum, lithium, sodium, chlorine amd fluorine producers.
The most easily accessible IES load is displacement of furnace oil and propane by electricity for rural space and domestic hot water heating. The largest and most important potential IES load is distributed electrolytic hydrogen generation for synthesis of methanol from water and farm/forest waste biomass. It is contemplated that in the future many rural IES customers will have equipment for electrolysis of water, for temporary storage of the resulting hydrogen and for nearly immediate on-site consumption of that hydrogen for production of methanol.
Other potential IES customers are bulk metered high rise residential and commercial buildings. As long as the building's DES demand is less than the building's monthly peak demand and as long as the IES electricity energy rate is below the marginal cost of natural gas such high rise buildings can absorb a lot of IES energy for displacement of natural gas. The economies of scale in high rise buildings are such that new storage tanks can often be added to enhance interim energy storage. Often in high rise residential there are three isolated heating zones (space heating, high zone domestic hot water and low zone domestic hot water). Subject to adequate main electrical switch gear and service capacity it is often physically simple to add an in-line electric immersion heater to each heating zone.
POLITICS AND HYBRID HEATING SYSTEMS:
One of the economic realities in Ontario during the past decade has been a substantial increase in the prices of both electricity and furnace oil, while the price of natural gas has fallen. This issue has more than doubled the cost of space and domestic hot water heating in rural areas that are not serviced by natural gas while the cost of space and domestic hot water heating in urban areas with natural gas service has decreased. This issue has contributed to a severe urban/rural split in elected members in the Ontario provincial legislature. If the provincial politicians want to remain in power it is essential that they offer electricity cost rate relief to rural property owners who presently have no economically viable automatic heating fuel options other than the liquid fossil fuels.
Offering rural property owners interruptible electricity at $.04 / kWh for space and domestic hot water heating, when that energy is otherwise going to waste via non-fossil generation constraint, would provide cost relief for rural property owners, would increase electricity system revenue and would decrease liquid fossil fuel consumption and related CO2 emissions, all at no cost to anyone except the rural property owner who would have to fund the purchase and installation of an electric hot water heater in series his existing oil fired hot water heater and a furnace plenum electric duct heater. With this equipment a typical home owner would likely experience a furnace oil cost saving of about $2500 per year, an increase in electricity cost of about $1000 per year resulting in a net utility cost saving of about $1500 per year and would likely realize a two year simple payback on his investment.
It is projected that over 100,000 single family homes and small businesses in Ontario would ultimately participate, leading to an increase in electricity revenue from this market sector of over $100 million per year and a reduction in liquid fossil fuel purchases of over $500 million per year.
It is contemplated that the above described heating retrofits would be installed and maintained by the liquid fuel appliance field service technicians who are currently dispatched by rural oil and propane delivery firms such as Shell and Ultramar.
OTHER IES MARKETS
Several times as much additional revenue revenue should be available from parties involved in wood pellet and methanol production provided that the IES energy pricing makes business sense for these parties. Wood pellet producers require energy for feedstock drying. Distributed methanol producers require electrical energy for biomass drying and production of electrolytic hydrogen.
We need a IES rate that can be applied to any size building. Due to lack of customer knowledge this rate is not something that at present can be easily sold by an electricity utility. It needs to be sold by contractors who are already in the oil and propane heating system service business. These contractors already have a long standing business relationship with the target customers and would be responsible for the design, installation and maintenance of the hybrid heating system conversions. These contractors already provide periodic reports to the fire insurance companies relating to the system safety and good maintenance. These contractors are also responsible to TSSA with respect to fuel safety matters. They are responsible to ESA with respect to electrical safety matters.
Explaining the complexities of a IES electricity rate to average consumers who may not have any knowledge of calculus is not simple. Thus the heating contractors have an important role to play in explaining the relevant electricity rate issues to end users. Typically these contractors already have an earned trust relationship with their clients.
The heating contractors need to be adequately paid for their important role in this process. My suggestion to the parties is that for a limited period of time the IES rate be $0.04 / kWh of which the utility (typically Hydro One) would pay the contractor about $0.02 / kWh for maintaining successful hybrid heating system installations. In return the contractor, not Hydro One, would deal with the customer regarding billing issues. Hence the only training required of Hydro One personnel is to look for a flag on the bill which indicates a IES rate structure. If there is a customer query on an account with that flag that customer should be referred to his/her designated heating contractor. As a condition of obtaining the IES rate each customer must designate an approved heating contractor.
The net benefit to the customer would be about $0.08 / kWh. For a customer with an annual electricity consumption of 20,000 kWh that benefit would typically be:
$0.08 / kWhe X 20,000 kWhe / year = $1600.00 / year
which would provide a two to three year simple payback on most conversions of oil/propane heating systems to hybrid heating systems.
At some future date the implementation process can be simplified but until such time as all the appropriate codes are suitably modified and personnel are suitably trained this is the simple way to proceed. Contractors that want to do this hybrid heating system work must demonstrate to the local distribution company that they have the required heating, electrical and rate structure expertise. As a minimum they need to possess the required electrical and heating licences, liability insurance and pass an exam which demonstrates their understanding of the relevant electricity and liquid fossil fuel rate structures.
GLOSSARY OF TERMS RELATING TO THE INTERRUPTIBLE ELECTRICITY SERVICE:
The following terms are applicable to the Interruptible Electricity Service (IES) market in Ontario.
LDC - Local Distribution Company
DES - Dependable Electricity Service
IES - Interruptible Electricity Service
Dispatchable generation - generation that can follow a load change command from the IESO to power up or down usually in response to the plant's bid being below or above the market clearing price respectively.
Dispatchable load - load that participates in the wholesale market and that can follow a load change command from the IESO to power up or down usually in response to the load's bid being above or below the market clearing price respectively.
Non-dispatchable (or self-dispatching) generation - generation that does not respond to IESO energy market load change demands.
Non-dispatchable (or self-dispatching) load - load that comes on-line or off-line without permission from the ISO. It either takes the market price or it pays a pre-established regulated price for the energy.
Exports and imports - Most normal exports or imports into or out of Ontario are not firm. They are scheduled on the wholesale market for energy and are not backed by capacity guarantees.
Firm exports or Firm imports - these exports or imports have capacity guarantees. The north-eastern US has firm contracts with Hydro Quebec that are backed by capacity guarantees. That energy is paid for at a higher price than the wholesale market energy price because of the capacity guarantee.
Interruptible load - load that does not pay the full price for the electricity because there is no firm capacity to guarantee the energy flow. The IESO can order that load off-line when there is a shortage of generation capacity to ensure the reliability or emission minimization of the Dependable Electricity Service (DES). Each IESO command should specify the fraction of the interruptible load served by a particular LDC that is to be automatically enabled. The load increments are typically 1.2 kW in a single family home and 60 kW in a major building such as a 575 suite apartment tower.
The term interruptible with respect to generation is not used during normal system conditions. However, during system emergencies that threaten grid reliability, the IESO can interrupt both load and generation.
Uninterruptible domestic loads and generation located behind an electricity meter of a customer with a DES account cannot be interrupted by the IESO during normal operating conditions.
The IESO cannot interrupt domestic load unless there is an emergency affecting electricity system reliability.
Curtail is a term used to describe IESO action to deliberately reduce generation below what is physically available to eliminate excess energy production. In Ontario generation curtailment is achieved through the market price and dispatching process. Natural gas generation, bio-energy generation and hydroelectric generation are curtailed via normal market bidding processes because their marginal cost of production is positive. When the market clearing price falls below the plant bids that generation is dispatched down (curtailed).
Normal exports do not have a capacity guarantee and can be curtailed (or interrupted) if there is a forecasted shortage of capacity. The IESO does not have to wait for an emergency to curtail exports.
In the case of wind, solar and nuclear curtailment the order of curtailment is achieved by setting a floor or minimum bid price for each of those facilities. When the market clearing price reaches those floor prices the facilities are dispatched down (curtailed).
Non-dispatchable generation facilities bid -2,000 $CND/MWh into the energy market and that effectively means they continue to run at whatever capacity they want to run at. If the market price falls to that lower limit the IESO decides which plants to shut down. Typically that would be one or more nuclear units.
Dispatchable loads bid into the market at their marginal cost of production loss. Many have costs exceeding +2,000 $CND/MWh. That is the market ceiling price so they would bid that value into the energy market. If the market price rises to that upper limit the loads will be dispatched down by the ISO dispatching algorithm. If any dispatchable load fails to curtail itself, financial penalties are imposed.
OSPE wants to develop an interruptible retail market (for domestic loads) so that for interruptible loads consumers can voluntarily accept interruptions in exchange for paying the wholesale market price (or some fixed semi-annual proxy) without any capacity charges. Because there is no capacity guarantee the electricity price would be the same as the electricity price received for exports, namely the market clearing price (or some proxy to achieve some level of price stability for small consumers).
The term “interruptible” is used instead of "dispatchable" because the IESO signal actually indirectly automatically enables or disables the interruptible power flow at the consumers premises. Whether or not an interruptible load is energized when the interruptible load is enabled by the ISO is determined by a local control system.
The interruptible feature is important because the fossil fuel displacement loads should be disabled when non-fossil generation capacity is scarce. It is also necessary to prevent the customer and the Local Distributrion Company (LDC) being billed for peak demands that occur when interruptible electricity is being supplied. It is also necessary to stage on and stage off the interruptible load to prevent the interruptible load causing fossil fuel generation to start up. Fossil fuelled electricity generation plants are only 1/2 as efficient as high efficiency gas, propane or heating oil furnaces. The customers' heating systems must only run on clean electricity as the alternate fuel. Emissions would double if the interruptible electricity originated from fossil fueled generation.
This web page last updated August 23, 2020.
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