Imagine, if you will, a Boxing Day sale where everything was free for everyone across every store at the same time, for several hours.
And imagine if in early morning hours of Dec. 26, Best Buy, Staples, Walmart, and indeed every single store in the entire economy got paid precisely zero dollars for their wares for several hours that morning.
Preposterous, you say!
Indeed, it did happen, in Alberta’s free-wheeling unregulated electrical market. The pool price, as recorded by the Alberta Electric System Operator (AESO) was $0.00 per megawatt between 4-7 a.m., and from 11 a.m. until noon.
And as a pool price, that means unless there’s some other contract going, that’s the price all generators get paid.
I might not have an MBA, but I’m fairly certain no business model in the world can survive getting paid nothing at all for their product for terribly long. If McDonald’s, Burger King, and Tim Hortons all gave away their breakfasts on Dec. 26 to all comers, they couldn’t do it for long before someone would realize this is idiocy and shut the doors.
So what was happening during those wee hours in the morning, as the Boxing Day shoppers were in line for their flat-screen TVs? It was quite windy in Alberta.
At that point, wind was generating a full 33 percent of total generation, which again, sounds like great news.
It was during one of the deadest periods of economic activity in the whole year, the night after Christmas. Demand in Alberta was low, with an internal load of 9,632 megawatts. The lack of demand happened to coincide with lots of surplus power being dumped onto the grid.
(As it was still dark, solar wasn’t a factor.)
What to do? How about sell as much as you can?
And that’s what happened. Alberta was pumping out 995 megawatts of power exports to its neighbours, 967 megawatts to B.C., 26 to Saskatchewan, and two megawatts to Montana.
This situation is also the converse of what I’ve been reporting on over almost precisely 24 months: the frequent collapse of wind power generation in Alberta. Almost every time that has happened, the pool price shoots up, often hitting $700, $800, $900 or even the theoretical maximum of $999.99 per megawatt hour. If the maximum was $2,000, I’m willing to bet it would have hit those heights, too. And the integral under that graph—what consumers get on their bill—is horrendous.
So here we have renewable, “green” power in surplus, driving prices down for everyone, and so much so that it can benefit the neighbours, too.
But therein is the fundamental problem. No one, not Best Buy, McDonald’s, or Capital Power can produce product for nothing, and definitely not for extended periods. There is a cost to generating power, be it capital or fuel or operating costs. Nor can they sell their products, be it flat-screen TVs, hamburgers, or electricity, for next to nothing, either. The entire economic model will collapse, and then what? Who will provide the power then?
Sounds like a recipe for utter chaos. And blackouts.
