Energy gobbler to become lean and green

Labrador Island Link Reliability faces scrutiny as Nalcor Energy and General Electric address software issues; Liberty Consulting warns of Holyrood risks, winter outages, grid stability concerns, and PUB oversight for Newfoundland and Labrador.

Key Points

It is the expected dependability of the link this winter, currently uncertain due to GE software and Holyrood risks.

✅ GE software delays may hinder reliable in-service by mid-November.

✅ Holyrood performance issues increase winter outage risk.

✅ PUB directs Hydro to plan contingencies and improve assets.

An independent consultant is questioning if the brand new Labrador Island link can be counted on to supply power to Newfoundland this coming winter.

In June, Nalcor Energy confirmed it had successfully sent power from Churchill Falls to the Avalon Peninsula through its more than 1500-kilometre link, but now the Liberty Consulting Group says it doesn't expect the link will be up and running consistently this winter.

"What we have learned supports a conclusion that the Labrador Island Link is unlikely to be reliably in commercial operation at the start of the winter," says the report dated Aug. 30, 2018.

The link relies on software provided by General Electric but Liberty says there are lingering questions about GE's ability to ensure the necessary software will be in place this fall.

"At an August meeting, company representatives did not express confidence in GE's ability to meet an in-service date for the Labrador Island Link of mid-November," says the report.

Liberty also says testing the link for a brief period this spring and fall doesn't demonstrate long-term reliability.

"The link will remain prone to the uncertainties any new major facility faces early in its operating life, especially one involving technology new to the operating company," according to the report.

Holyrood trouble

The report goes on to say island residents should also be worried about the reliability of the troubled Holyrood facility — a facility that's important when demand for energy is high during winter months.

Liberty says "poor performance at the Holyrood thermal generating station increases the risk of outages considerably."

The group's report concludes the deteriorating condition of Holyrood is a major threat to the island's power supply and Liberty says that threat "could produce very severe consequences when the Labrador Island Link is unavailable."

The consultant says questions about the Labrador Island Link's readiness combined with concerns about the reliability of Holyrood may mean power outages, and for vulnerable customers, debates over hydro disconnections policies often intensify during winter.

"This all suggests that, for at least part of this winter, the island interconnected system may be at the mercy of the weather, where severe events can test utilities' storm response efforts further."

The consultant's report also includes five recommendations to the PUB, reflecting the kind of focused nuclear alert investigation follow-up seen elsewhere.

In essence, Liberty is calling for the board to direct Newfoundland and Labrador Hydro to make plans for the possibility that the link won't be available this winter. It's also calling on hydro to do more to improve the reliability of its other assets, such as Holyrood, as some operators have even contemplated locking down key staff to maintain operations during crises.

Response to Liberty's report

Nalcor CEO Stan Marshall defended the Crown corporation's winter preparedness in an email statement to CBC.

"The right level of planning and investment has been made for our existing equipment so we can continue to meet all of our customer electricity needs for this coming winter season," he wrote.

Regarding the Labrador Island Link, Marshall called for patience.

"This is new technology for our province and integrating the new transmission assets into our current electricity system is complex work that takes time," he said.

There is also a more detailed response from Newfoundland and Labrador Hydro which was sent to the province's Public Utiltiies Board.

Hydro says it will keep testing the Labrador Island Link and increasing the megawatts that are wheeled through it. It also says in October it will begin to give the PUB regular reports on the link's anticipated in-service date.

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U.S. Residential Electricity Bills rose on stronger demand, inflation, and fuel costs, with higher retail prices, kWh consumption, and extreme weather driving 2022 spikes; forecasts point to stable summer usage and slight price increases.

Key Points

They are average household power costs shaped by prices, kWh use, weather, and upstream fuel costs.

✅ 2022 bills up 13% nominal, 5% real vs. 2021

✅ Retail price rose 11%; consumption up 2% to 907 kWh

✅ Fuel costs to plants up 34%, pressuring rates

In nominal terms, the average monthly electricity bill for residential customers in the United States increased 13% from 2021 to 2022, rising from $121 a month to $137 a month. After adjusting for inflation—which reached 8% in 2022, a 40-year high—electricity bills increased 5%. Last year had the largest annual increase in average residential electricity spending since we began calculating it in 1984. The increase was driven by a combination of more extreme temperatures, which increased U.S. consumption of electricity for both heating and cooling, and higher fuel costs for power plants, which drove up retail electricity prices nationwide.

Residential electricity customers’ monthly electricity bills are based on the amount of electricity consumed and the retail electricity price. Average U.S. monthly electricity consumption per residential customer increased from 886 kilowatthours (kWh) in 2021 to 907 kWh in 2022, even as U.S. electricity sales have declined over the past seven years. Both a colder winter and a hotter summer contributed to the 2% increase in average monthly electricity consumption per residential customer in 2022 because customers used more space heating during the winter and more air conditioning during the summer, with some states, such as Pennsylvania, facing sharp winter rate increases.

Although we don’t directly collect retail electricity prices, we do collect revenues from electricity providers that allow us to determine prices by dividing by consumption, and industry reports show major utilities spending more on electricity delivery than on power production. In 2022, the average U.S. residential retail electricity price was 15.12 cents/kWh, an 11% increase from 13.66 cents/kWh in 2021. After adjusting for inflation, U.S. residential electricity prices went up by 2.5%.

Higher fuel costs for power plants drove the increase in residential retail electricity prices. The cost of fossil fuels—including natural gas prices, coal, and petroleum—delivered to U.S. power plants increased 34%, from $3.82 per million British thermal units (MMBtu) in 2021 to $5.13/MMBtu in 2022. The higher fuel costs were passed along to residential customers and contributed to higher retail electricity prices, and Germany power prices nearly doubled over a year in a related trend.

In the first three months of 2023, the average U.S. residential monthly electricity bill was $133, or 5% higher than for the same time last year, according to data from our Electric Power Monthly. The increase was driven by a 13% increase in the average U.S. residential retail electricity price, which was partly offset by a 7% decrease in average monthly electricity consumption per residential customer, and industry outlooks also see U.S. power demand sliding 1% on milder weather. This summer, we expect that typical household electricity bills will be similar to last year’s, with customers paying about 2% more on average. The slight increase in electricity costs forecast for this summer stems from higher retail electricity prices but similar consumption levels as last summer.
 

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Ontario electricity pricing consultations will gather business input on OEB rate design, Industrial Conservation Initiative, dynamic pricing, global adjustment, and system costs through online feedback and sector-specific in-person sessions province-wide.

Key Points

Consultations gathering business input on rates, programs, and OEB policy to improve fairness and reduce system costs.

✅ Consults on ICI, GA, dynamic pricing structures

✅ Seeks views on OEB C&I rate design changes

✅ In-person sessions across key industrial sectors

The Ontario government has announced plans to hold consultations to seek input from businesses about industrial electricity pricing and programs. This will be done through Ontario's online consultations directory and though in-person sector-specific consultation sessions across the province. The in-person sessions will be held in all areas of Ontario, and will target "key industries," including automotive and the build-out of electric vehicle charging stations infrastructure, forestry, mining, agriculture, steel, manufacturing and chemicals.

On April 1, 2019, the Ontario government published a consultation notice for this process, confirming that it is looking for input on "electricity rate design, existing tax-based incentives, reducing system costs and regulatory and delivery costs," including related proposals such as the hydrogen rate reduction proposal under discussion. The consultation process includes a list of nine questions for respondents (and presumably participants in the in-person sessions) to address. These include questions about:

The benefits of the Industrial Conservation Initiative (described below), including how it could be changed to improve fairness and industrial competitiveness, and how it could complement programs like the Hydrogen Innovation Fund that support industrial innovation.

Dynamic pricing structures that allow for lower rates in return for responding to price signals versus a flat rate structure that potentially costs more, but is more stable and predictable, as Ontario's energy storage expansion accelerates.

Interest in an all-in commodity contract with an electricity retailer, even if it involves a risk premium.

Interested parties are invited to submit their comments before May 31, 2019.

The government's consultation announcement follows recent developments in the Ontario Energy Board's (OEB) review of electricity ratemaking for commercial and industrial customers, and intertie projects such as the Lake Erie Connector that could affect market dynamics.

In December 2018, the OEB published a paper from its Market Surveillance Panel (MSP) examining the Industrial Conservation Initiative (ICI), and potential alternative approaches. The ICI is a program that allows qualifying large industrial customers to base their global adjustment (GA) payments on their consumption during five peak demand hours in a year. Customers who find ways to reduce consumption at those times, perhaps through DERs and enabling energy storage options, will reduce their electricity costs. This shifts GA costs to other customers. The MSP found that the ICI does not fairly allocate costs to those who cause them and/or benefit from them, and recommends that a better approach should be developed.

In February 2019, the OEB released its Staff Report to the Board on Rate Design for Commercial and Industrial Electricity Customers, setting out recommendations for new rate designs for electricity commercial and industrial (C&I) rate classes as Ontario increasingly turns to battery storage to meet rising demand. As described in an earlier post, the Staff Report includes recommendations to: (i) establish a fixed distribution charge for commercial customers with demands under 10 kW; (ii) implement a demand charge (rather than the current volumetric charge) for C&I customers with demands between 10kW and 50kW; and (iii) introduce a "capacity reserve charge" for customers with load displacement generation to replace stand-by charges and provide for recognition of the benefits of this generation on the system. The OEB held a stakeholder information session in mid-March on this initiative, and interested parties are now filing submissions in response to the Staff Report.

Whether and how the OEB's processes will fit together with the government's consultation process remains to be seen.

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European Solar Inverter Demand surges as photovoltaics and residential solar expand during the clean energy transition, driven by high natural gas prices; Germany leads, boosting Enphase and SolarEdge sales for rooftop systems and grid-tied installations.

Key Points

Rising European need for solar inverters, fueled by residential PV growth, high energy costs, and clean energy policies.

✅ Germany leads EU rooftop PV installations

✅ Enphase and SolarEdge see revenue growth

✅ High gas prices and policies spur adoption

Solar equipment makers are expected to post higher quarterly profit, benefiting from strong demand in Europe for critical components that convert energy from the sun into electricity, amid record renewable momentum worldwide.

The continent is emerging as a major market for solar firms as it looks to reduce its dependence on the Russian energy supply and accelerate its clean energy transition, with solar already reshaping power prices in Northern Europe across the region, brightening up businesses of companies such as Enphase Energy (ENPH.O) and SolarEdge Technologies (SEDG.O), which make solar inverters.

Wall Street expects Enphase and SolarEdge to post a combined adjusted net income of $323.8 million for the April-June quarter, a 56.7% jump from a year earlier, even as demand growth slows in the United States.

The energy crisis in Europe is not as acute as last year when Western sanctions on Russia severely crimped supplies, but prices of natural gas and electricity continue to be much higher than in the United States, Raymond James analyst Pavel Molchanov said.

As a result, demand for residential solar keeps growing at a strong pace in the region, with Germany being one of the top markets and solar adoption in Poland also accelerating in recent years across the region.

About 159,000 residential solar systems became operational in the first quarter in Germany amid a solar power boost that reflects policy and demand, a 146% rise from a year earlier, according to BSW solar power association.

Adoption of solar is also helping European homeowners have greater control over their energy costs as fossil fuel prices tend to be more volatile, Morningstar analyst Brett Castelli said.

SolarEdge, which has a bigger exposure to Europe than Enphase, said its first-quarter revenue from the continent more than doubled compared with last year.

In comparison, growth in the United States has been tepid due to lukewarm demand in states like Texas and Arizona where cheaper electricity prices make the economics of residential solar less attractive, even though solar is now cheaper than gas in parts of the U.S. market.

Higher interest rates following the U.S. Federal Reserve's recent actions to tame inflation are also weighing on demand, even as power outage risks rise across the United States.

Analysts also expect weakness in California where a new metering reform reduces the money credited to rooftop solar owners for sending excess power into the grid, underscoring how policy shifts can reshape the sector. The sunshine state accounts for nearly a third of the U.S. residential solar market.

Enphase will report its results on Thursday after the bell, while SolarEdge will release its second-quarter numbers on Aug. 1.

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Ontario Electricity Rebate clarifies hydro rates as OEB aligns bills with inflation, shows true cost per kilowatt hour, and replaces Fair Hydro Plan; transparent on-bill credit offsets increases tied to nuclear refurbishment and supply costs.

Key Points

A line-item credit on Ontario hydro bills that offsets higher electricity costs and reflects OEB-set rates.

✅ Starts Nov. 1 with rates in line with inflation

✅ Shows true per-kWh cost plus separate rebate line

✅ Driven by nuclear refurbishment and supply costs

The Ontario Energy Board says electricity rate changes for households and small businesses will be going up starting next week.

The agency says rates are scheduled to increased by about $1.99 or nearly 2% for a typical residential customer who uses 700 kilowatt hours per month.

The provincial government said in March it would continue to subsidize hydro rates, through legislation to lower rates, and hold any increases to the rate of inflation.

The OEB says the new rates, which the board says are “in line” with inflation, will take effect Nov. 1 as changes for electricity consumers roll out and could be noticed on bills within a few weeks of that date.

Prices are increasing partly due to government legislation aimed at reflecting the actual cost of supply on bills, and partly due to the refurbishment of nuclear facilities, contributing to higher hydro bills for some consumers.

So, effective November 1, Ontario electricity bills will show the true cost of power, after a period of a fixed COVID-19 hydro rate, and will include the new Ontario Electricity Rebate.

Previously the electricity rebate was concealed within the price-per-kilowatt-hour line item on electricity statements, prompting Hydro One bill redesign discussions to improve clarity. This meant customers could not see how much the government rebate was reducing their monthly costs, and bills did not display the true cost of electricity used.

"People deserve facts and accountability, especially when it comes to hydro costs," said Energy Minister Rickford.

The new Ontario Electricity Rebate will appear as a transparent on-bill line item and will replace the former government's Fair Hydro Plan says a government news release. This change comes in response to the Auditor General's special report on the former government's Fair Hydro Plan which revealed that "the government created a needlessly complex accounting/financing structure for the electricity rate reduction in order to avoid showing a deficit or an increase in net debt."

"The Electricity Distributors Association commends the government's commitment to making Ontario's electricity bills more transparent," said Teresa Sarkesian, President of the Electricity Distributors Association. "As the part of our electricity system that is closest to customers, local hydro utilities appreciated the opportunity to work with the government on implementing this important initiative. We worked to ensure that customers who receive their electricity bill will have a clear understanding of the true cost of power and the amount of their on-bill rebate. Local hydro utilities are focused on making electricity more affordable, reducing red tape, and providing customers with a modern and reliable electricity system that works for them."

The average customer will see the electricity line on their bill rise, showing the real cost per kilowatt hour. The new Ontario Electricity Rebate will compensate for that rise, and will be displayed as a separate line item on hydro bills. The average residential bill will rise in line with the rate of inflation.

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France Electricity Crisis drives record power prices as nuclear outages squeeze supply, forcing energy imports, fuel oil and coal generation, amid gas market shocks, weak wind output, and freezing weather straining the grid.

Key Points

A French power shortfall from nuclear outages, record prices, heavy imports, and oil-fired backup amid cold weather.

✅ EDF halted reactors; 10% capacity offline, 30% by January

✅ Imports surge; fuel oil and coal units dispatched

✅ Prices spike as gas reverses flow and wind output drops

Electricity prices surged to a fresh record as France scrambled to keep its lights on, sucking up supplies from the rest of Europe.

France, usually an exporter of power, is boosting electricity imports and even burning fuel oil, and has at times limited nuclear output due to high river temperatures during heatwaves. The crunch comes after Electricite de France SA said it would halt four reactors accounting for 10% of the nation’s nuclear capacity, straining power grids already facing cold weather. Six oil-fired units were turned on in France on Tuesday morning, according to a filing with Entsoe.

“It’s illustrating how severe it is when they’re actually starting to burn fuel oil and importing from all these countries,” said Fabian Ronningen, an analyst at Rystad Energy. The unexpected plant maintenance “is reflected in the market prices,” he said

Europe is facing an energy crisis, with utilities relying on coal and oil. Almost 30% of France’s nuclear capacity will be offline at the beginning of January, leaving the energy market at the mercy of the weather. To make matters worse, Germany is closing almost half of its nuclear capacity before the end of the year, as Europe loses nuclear power just when it really needs energy.

German power for delivery next year surged 10% to 278.50 euros a megawatt-hour, while the French contract for January added 9.5% to a record 700.60 euros. Prices also gained, under Europe’s marginal pricing system, as gas jumped after shipments from Russia via a key pipeline reversed direction, flowing eastward toward Poland instead.

Neighboring countries are boosting their exports to France this week to cover for lost nuclear output, with imports from Germany rising to highest level in at least four years. In the U.K., four coal power units were operating on Tuesday with as much as 1.5 gigawatts of hourly output being sent across the channel. 

The power crisis is so severe that the French government has asked EDF to restart some nuclear reactors earlier than planned amid outage risks for nuclear-powered France. Ecology Minister Barbara Pompili said last weekend that, in addition to the early reactor restarts and past river-temperature limits, the country had contracts with some companies in which they agreed to cut production during peak demand hours in exchange for payments from the government.

Higher energy prices threaten to derail Europe’s economic recovery just as the coronavirus omicron variety is spreading. Trafigura Group’s Nyrstar will pause production at its zinc smelter in France in the first week of January because of rising electricity prices. Norwegian fertilizer producer Yara International, which curbed output earlier this year, said it would continue to monitor the situation closely and curtail production where necessary.

Freezing weather this week is also sending short-term power prices surging as renewables can’t keep up, even though wind and solar overtook gas in the EU last year. German wind output plunged to a five-week low on Tuesday.

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