Integration Of Wind Power into An Electricity System Using Pumped Storage: Economic Challenges and Stakeholder Impacts

Pejman Bahramian, Glenn Jenkins () and Frank Milne

No 2023-07, Development Discussion Papers from JDI Executive Programs

Abstract: The Province of Ontario has had an aggressive program of introducing wind electricity generation technologies into its generation supply mix. This, combined with the rigid baseload production by nuclear and hydro plants, has created a situation where a surplus baseload electricity supply is projected for the next 20 years. Pumped hydro storage (PHS) is suggested as an economically viable technology for storing energy from non-dispatchable wind energy sources in the baseload period to be used the generate electricity in peak periods. An analytical framework has been developed to explore the feasibility of the PHS facility and to compare its cost with that of alternative gas power plants. Two situations are analyzed. First, the PHS plant uses only surplus energy for the first 20 years of operation and then is retired from the system. Second, an additional 20 years of PHS usefulness is added by making investments in wind electricity generation to provide energy for pumping. Given the capital costs of building PHS in Ontario, the conclusions of this study suggest that a PHS facility is not economically cost-effective for utilizing the projected off-peak surpluses. The economic analysis also illustrates that in the context of Ontario, the integration of PHS with wind power generation will have a further negative impact on the Canadian economy in all circumstances. This loss is borne mainly by the electricity consumers of Ontario. Even considering the cost of CO2 emissions from a world perspective, this investment is not cost-effective. It would be much better socially from a world perspective and economically from Canada's perspective if the surplus baseload electricity from Ontario were given away free to the USA. It could then be used to reduce generation by natural gas plants in the USA, hence reducing CO2 emissions globally, without any incremental economic cost to Canada.

Keywords: Economic analysis; Electricity; Ontario; Pumped hydro storage; Wind power (search for similar items in EconPapers)
JEL-codes: D61 O55 Q42 (search for similar items in EconPapers)
Pages: 34 Pages
Date: 2023-04-14
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Related works:
Working Paper: Integration of wind power into an electricity system using pumped-storage: Economic challenges and stakeholder impacts (2021)
Working Paper: Integration of wind power into an electricity system using pumped-storage: Economic challenges and stakeholder impacts (2021)
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