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At present Ontario has large amounts of intermittently available clean (non-fossil) electricity generation. One method of both decreasing the average cost of electricity and reducing provincial CO2 emissions is to sell this surplus clean electricity as interruptable power instead of curtailing (discarding) it or exporting it at a very low price as at present. Subject to appropriate pricing this interruptible power could be used for displacement of liquid fossil fuels in rural hybrid heating systems, for charging battery electric vehicles, for charging thermal energy storage systems or for production of green hydrogen.
This web page addresses practical implementation of both a simple interim method for exploiting part of the available Interruptible Electricity and implementation of a full Interruptible Electricity Service (IES) integrated with the existing Dependable Electricity Service (DES).
In order for a full IES service to operate together with an existing DES service the wiring at the consumer premises must be modified such that the electricity utility can enable/disable the consumer's IES load at any time without notice and without affecting the consumer's DES load. Usually this modification is realized by adding a contactor controlled pony panel at the premises main electrical panel and/or by use of low voltage or wireless appliance control signals.
In order for a consumer to use IES supplied electricity for an essential function such as winter space heating the consumer must have a fully functional automatic backup heating system, usually based on a liquid fossil fuel such as oil or propane. Most backup heating systems also need DES supplied electricity for proper control.
At any instant in time the amount of power available for IES consumers is the amount by which the total available clean generation capacity exceeds the total Dependable Electricity Service (DES) load. In Ontario in 2020 the time integral of this difference was about 20 TWh / year and had a potential value to consumers of liquid fossil heating fuels of about $2 billion / year at current retail rates and prices. As interruptible electricity at its wholesale market price it would have a value of about $400 million per year. The existence of this large amount of discarded non-fossil electrical energy can only be reasonably explained by past lobbying of the Ontario provincial government by the liquid fossil fuel industry. Otherwise most of this surplus electricity would have been sold to Ontario rural consumers at a discount for liquid fossil fuel displacement.
SIMPLE INTERIM SOLUTION:
At present (2022) in Ontario there is almost always interruptible electricity available daily between midnight and 6:00 AM. Thus, at least until the projected closure of the Pickering NGS, IES loads which will only operate during that time period can be enabled just by a timer. The consumer must have an interval electricty meter so that the Local Distribution Company (LDC) can apply a deep discount time-of-use rate to the interruptible load. A typical residential load is charging of a battery electric vehicle or displacing a liquid fossil fuel.
However, this simple time control methodology can only access part of the total available interruptible electricity and may only be valid for liquid fossil fuel displacement as long as the 3000 MWe clean electricity generation capacity of the Pickering NGS is available. Thereafter it may be important for LDCs to have the capability to selectively remotely disable interruptible electricity loads that are used for liquid fossil fuel displacement.
From a CO2 emissions perspective we should avoid use of electricity generated by combustion of natural gas for displacement of oil and propane in rural hybrid heating systems.
The situation is a bit different for Battery Electric Vehicle (BEV) charging because of the large difference in energy efficiency between a BEV and an Internal Combustion Engine (ICE) powered vehicle. Electricity generated by combustion of natural gas, when fed to a BEV, still results in less net CO2 emissions than an equivalent ICE powered vehicle.
FULL INTERRUPTIBLE ELECTRICITY SERVICE (IES):
A party that wishes to access all the available interruptible electricity needs a sophisticated metering and control system that maintains electronic commumnication with either the LDC or the IESO so as to know exactly when interruptible electricity is available for that party and to what extent.
In order to support a full IES the Independent Electricity System Operator (IESO) must be able to modulate enabling of IES electricity loads in accordance with the amount of instantaneously available interruptible electricity. This modulation can be achieved by dividing the IES load served by each Local Distribution Company (LDC) into approximately uniform block sizes and then using a computer to automatically enable/disable individual load blocks in a cyclic fashion with a software controlled on/off timing ratio such that total IES load within the LDC's service area remains nearly constant at the IESO controlled set point while the available IES electricity is fairly distributed over all the IES load blocks served by the LDC with minimum load enable/disable switching.
Note that due to relatively frequent (10 minute cycle typical) for load switching IES electricity is poorly suited to powering motors with large inertial loads.
As the available Interruptible Power increases the IESO should gradually enable an increasing fraction of the IES load until 100% of the IES load is enabled. Similarly, as the available interruptible electricity decreases the total IES load fraction enabled should gradually decrease.
There should also 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. Note that this benefit is not available from simple timer controlled loads. Hence a IES service should provide the consumer interruptible power at a lower cost per kWhe than is the rate applicable for timer controlled loads.
System reset software should limit the rate of IES load enabling after an IES load dump.
This IES load control concept is not a new idea. This control methodology was originally developed by Charles Rhodes and Joseph Urbaniak at ADMIC during the period 1977 - 1978 and was used for peak demand control and energy management in numerous electrically heated high rise apartment buildings in the Greater Toronto Area (GTA) during the 1980s and early 1990s. Thereafter this equipment was taken out of service due to adverse electricity rate changes.
GLOBAL ADJUSTMENT ALLOCATION:
The present Dependable Electricity Service (DES) rate regime in Ontario does not have sufficient dynamic price variation to financially enable full exploitation of interruptible electricity as contemplated herein. The source of this lack of dynamic price variation is the present allocation of the Global Adjustment to kWh instead of to monthly peak kW or peak kVA.
In order to achieve effective utilization of all of the available interruptible electrical kWh the Global Adjustment must be allocated in proportion to a consumer's peak kW or peak kVA measured at times when interruptible electricty is not available to that consumer.
In a clean electricity system the costs are dominated by the cost of capital financing, not by fuel. In a clean energy system costs are minimized by minimizing the load's peak kW or peak kVA, not the load's kWh consumption. Hence a new electricity rate structure is needed to financially enable behind-the-meter customer energy storage and use of surplus clean electricity for liquid fuel displacement.
In a clean electricity system the cost of servicing a particular DES customer increases in proportion to that customer's peak kW or peak kVA during the billing period.
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 IES implementation methodology is to have a constant distribution charge, to have a low per kWhe energy charge applicable at all times and to realize the remaining required DES revenue based on monthly peak kVA or peak kW measured at times when IES electricity is not available to the consumer.
The logic behind the proposed combined IES and DES billing arrangement is that there is only a finite amount of clean IES energy available. Those who are willing to pay most for it get it. The IES rate per kWhe is entirely market driven and must compete against export alternatives available to the IESO and fossil fuel energy alternatives available to load customers. The electricity system relies primarily on distribution and peak demand charges to meet its revenue requirement.
A major advantage of this proposed new rate is that the billing formula accurately reflects the actual costs of electricity system generation, transmission and distribution. Wide adoption of this billing methodology would enable efficient use of interruptible electricity and would simplify financing of future clean electricity generation, transmission and distribution in Ontario. However, adoption of the proposed new rate would likely require a minor legislative change to reallocate the global adjustment from kWhe to peak monthly kWe.
The administrative and legal costs related to obtaining governmental and Ontario Energy Board (OEB) approval for sale of electricity under the proposed new rate are onerous. There must be a legislative change with respect to allocation of the Global Adjustment. This legislative obstacle is so high that today LDCs simply refuse to offer an Interruptible Electricity Service (IES), in spite of its inherent economic and environmental merits. Sometimes parties who deal in Interruptible Electricity avoid both governmental legislation and 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.
From the perspective of Ontario rural residents, who cannot access pipeline suppled natural gas, the cost of tanker truck delivered liquid heating fuels has recently skyrocketed due to a combination of increases in the cost of liquid petroleum, increases in the fossil carbon tax and projected increases in the cost of oil pipeline maintenance/replacement. These consumers urgently want availability of low cost IES supplied electrical energy. However, they need certainty regarding future availability of this IES supplied energy in order to make the necessary investments in capital equipment.
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 ideal 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, pure stable DES rates 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 blended electricity 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, the blended electricity rate falls as the fraction of energy supplied by IES increases. The IES has the additional advantage that it enables major CO2 emission reductions.
The grid load is 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 clean 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 clean 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 other variability of wind, solar and run-of-river hydroelectric generation. However, for almost the entire year some IES capacity is available every night from midnight to 6:00 AM.
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 consumer the IES rate for the portion of his/her load that actually operates in synchronization with the IESO control signals. If a consumer tampers with the IES control system then that consumer may be subject to the DES rate on his entire electricity consumption.
An issue with the IESO having direct control of enabling of consumer 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 be billed using data gathered by existing interval electricity meters. The disadvantage of existing interval electricity meters is that the customer can only determine his billed peak demand after the fact. Large electricity customers usually also want a more convient local indication of present power demand.
In the future the 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 an electronic communication link between the consumer and the IESO or LDC. Any fault in this communication link should disable the interruptible electricity load.
An important element of the proposed IES rate is that the IES metering system inherently prevents IES electricity being used to displace existing DES load. If a load actually runs when it is supposed to be disabled by the IESO the electricity associated with that load is billed at the DES rate.
INTERRUPTIBLE ELECTRICITY RATE:
The cost of IES electrical energy rate 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 cost of operating an oil fied furnace is about ____ / kWht. 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 load enable control signal;
3. The IESO must have dependable Internet based dispatch control of the enabling of 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 additional 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 agreements between the IESO and the relevant LDCs;
5. There are also long term 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, likely 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 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 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 loads are charging of battery electric vehicles and displacement of fossil fuels 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 synthetic liquid fuels such as biomethanol and ammonia. It is contemplated that in the future many rural IES customers will have equipment for temporary storage of heat.
Other potential IES customers are bulk metered high rise residential buildings. Those buildings can effectively use heat rejected during electrolysis of water to produce green hydrogen.
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. Rising energy costs have 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 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 $3000 per year, an increase in electricity cost of about $1000 per year resulting in a net utility cost saving of about $2000 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 allied with rural oil and propane delivery firms such as Shell and Ultramar.
OTHER IES MARKETS
Several times as much additional IES 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 energy equipment service business. These contractors already have long standing business relationships 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 MCCR/TSSA with respect to fuel safety and pressure vessel matters. They are responsible to ESA with respect to electrical safety matters.
Explaining the complexities of a IES electricity rate to unsophisticated consumers may not be simple. Thus the service 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.
As a condition of obtaining the IES rate each customer must designate a technically qualified service contractor. Contractors that want to do this work must demonstrate to the local distribution company that they have the required expertise. One simple way of ensuring suitable competence is to have the work supervised by a licenced professional engineer with relevant experience.
GLOSSARY OF TERMS RELATING TO IESO ELECTRICITY DISPATCH:
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 obeys load change commands from the IESO to increase or decrease power output.
Dispatchable load - load that participates in the wholesale market and that obeys load change commands from the IESO.
Non-dispatchable (or self-dispatching) generation - generation that does not respond to IESO commands.
Non-dispatchable (or self-dispatching) load - load that does not respond to IESO commands.
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 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 prevent 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 shortage of capacity forecast. 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.
Implementation of an IES service implies development of an interruptible power market (for domestic loads) in which consumers can voluntarily accept power 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 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 IESO is determined by a local control system.
The interruptible feature is important because the fossil fuel displacement loads should be disabled when clean generation capacity is scarce. It is also necessary to prevent the consumer and the Local Distributrion Company (LDC) being billed for peak demands that occur when interruptible electricity is being supplied. It is also necessary to step on and step 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 approximately double if the interruptible electricity originated from fossil fueled generation.
This web page last updated February 12, 2022.
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