Integration of wind power into an electricity system using pumped-storage : economic challenges and stakeholder impacts

The Province of Ontario has had a very aggressive program of introducing wind electricity generation technologies into its generation supply mix. This program, combined with the rigid baseload production by nuclear and hydro plants, has created a surplus baseload electricity supply for 20 years. Pumped hydro storage (PHS) has been suggested as an economically viable technology for storing energy produced by non-dispatchable wind energy sources. In this vein, an analytical framework has been developed to explore the feasibility of the PHS facility to manage the surplus supply of electricity and compare its cost performance with the alternative gas power plants. The analysis is undertaken for a situation where the PHS plant uses surplus energy for the first 20 years of its operation, and additional wind energy would be provided for the second 20 years of the project's life. It is found that given the level of capital costs of building PHS in Ontario, the PHS expansion is not economically cost-effective to utilize 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 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 GHG emissions from a world perspective, this investment is not worthwhile. It would be better socially from the perspective of the world if the surplus baseload electricity from Ontario would be given away to the US free of charge. It could then be used to reduce generation by natural gas plants in the USA, hence reducing GHG emissions globally, without any incremental cost to Canada.