Hydro One Consultation

I attended a consultation on distribution connection at Hydro One on Friday.  They have some big challenges in dealing with the impact of the Standard Offer.

Hydro One has connected about 20 MW of capacity to their distribution system since 2001.  That is 4 or 5 projects, or less than one per year.  The reason they have connected so little is electricity policy.  All of our electricity system rules encourage the development of large, centralized transmission connected projects, and discriminate against small, distributed projects.

The discrimination is in the Distribution System Code, which does not allow system upgrades that benefit other customers to be paid for by the system.  It is in the tariffs, which requires the Distributor like Hydro One to charge handsomely for connection, while passing all costs on to the Generator.  It is in the standards for equipment, such as protection and control, which are set to accomodate large projects, which have a very high cost of downtime, and therefore are willing to pay to ensure 99.999% reliability, but result in small projects paying far more than that level of reliability is worth.  It is in the Request for Proposal (RFP) process, which all but eliminated the opportunity for small companies or small projects to participate.  But the discrimination is starting to reverse.

The key thing that has changed is the Standard Offer.  Suddenly, there is a rush of interest in small projects.  Of course, the reason this is the case is that it is the only game in town.  There is no RFP announced for large projects, so companies that would have bid a large project are now forced to reduce the scale of the project to meet the Standard Offer 10 MW limit.

Hydro One has received over 500 connection applications in the past 11 months, from 150 organizations.  Most of the applications are for wind.  The average size of the application is 9 MW.  That makes a total of 4500 MW of applications!  Of course, many of these projects will not be built.  Just because an application is made doesn’t mean the proponent will receive permission to connect.  Nor will they necessarily receive zoning approval, pass the Environmental Screening, have suitable wind resource, obtain financing etc.  In fact, I would say we would be lucky if 10% of the applications proceed to projects.  The Non Utility Generator contracts in the late 1980’s had about 25% of them proceed to construction.  250 assessments have been completed since Jan 1.
Hydro One is grappling with the intake of so many applications.  Streamlining of the process is a key corporate objective. They have hired SNC Lavalin to assist them in designing systems to assist in handling the application workload.

There was considerable discussion around the table.  They need more generators there to provide advice – but there aren’t any!  With only 20 MW of connection, my little 5 MW project makes me a veteran.  There was discussion on intake discussions.  How much can/should Hydro One provide to new prospective developers, who may not even know what a single line diagram is?  (don’t worry – I didn’t know when I got into the business either).  It is a tough balancing act.

There was discussion about transmission congestion (Flow Away From Bruce).  There was discussion about multiple applications on the same feeder.  An individual feeder may be able to accomodate one or two projects, but not 6.  How do you allocate among projects?  How do you get someone out of the queue if their project will never be built?  These are problems that Hydro One would prefer to be told how to deal with, by the OPA, or by the OEB.

There was discussion about the lack of distribution class transfer trip equipment.  Today, only transmission class equipment is approved, and that makes cost much higher than needed.

It was useful discussions, but satisfactory resolutions to these issues will take time.  I hope Hydro One succeeds in streamlining their processes, and provides fairness and transparency for generators.  The success of the Standard Offer is in their hands.

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