In pursuing a cleaner and sustainable energy future, the Canadian government has set forth ambitious goals under the Clean Electricity Regulation (CER), challenging all provinces, including Alberta, to transition to clean and carbon-neutral electricity by 2035. However, a recent announcement by the Alberta Electric System Operator (AESO) sparked controversy about the reliability and costs associated with this transition, estimating a staggering $118-billion increase in wholesale energy costs by 2035. While these concerns are valid, examining alternative pathways may offer more economically efficient solutions to achieve our clean energy goals.
The challenges on the path to clean electricity are multi-faceted. The most pressing issues are providing firm power in the face of a high proportion of intermittent renewable energy sources, and building system flexibility to accommodate fluctuating renewables and increasing demand from electric vehicles (EVs), space heating and industrial loads, without resorting to construction of expensive new electrical infrastructure.
Addressing these challenges requires a comprehensive approach. First is enabling and facilitating clean electricity technologies. One of the most promising avenues for ensuring year-round firm electricity supply is the development of clean electricity technologies that can provide sustained power.
Alberta’s unique geography, with its proximity to the Rockies and abundant natural lakes, positions it favourably for development of pumped hydro storage facilities. Unlike large hydro developments, pumped hydro storage has limited environmental effect and does not involve major dam construction. Recent studies, such as the one conducted by Stantec for WaterPower Canada, confirm pumped hydro storage is not only a reliable alternative to gas generation, but economically competitive as evidenced by two such projects currently under development.
Second is the need to facilitate interprovincial trade. Expanding the British Columbia-Alberta transmission line to its rated capacity can significantly enhance Alberta’s energy reliability and lower costs. This expansion can facilitate the import of relatively low-cost green (hydro-based) electricity, providing a valuable source of power that complements Alberta’s clean energy initiatives.
Third is the need for reform of the electricity market design — another vital aspect of our transition to clean electricity. Enhancing incentives for forward contracting by suppliers of firm power could encompass various clean energy sources (including decarbonized gas generation), mitigate investment risk and ensure a more stable energy supply. This approach, similar to measures adopted in Australia, can help alleviate concerns about reliability and costs.
Fourth is enabling development of energy storage solutions. Reliability is paramount, but so is flexibility and resilience. Pumped hydro storage is emerging as a cost-effective solution for large-scale, long-duration energy storage, offering high flexibility during emergencies. Compressed Air Energy Storage (CAES) is another competitive and flexible option for mid-sized applications, while lithium-ion batteries provide rapid response, though may be costlier per megawatt. To enable energy storage to provide firm service, in conjunction with intermittent renewables such as wind, the AESO’s transmission tariffs for energy storage need to be competitively priced to compete in the energy market.
Fifth is optimization of Demand Response (DR). To further optimize the efficiency of Alberta’s grid, we can draw inspiration from successful initiatives such as ERCOT in Texas, which effectively employs DR during system emergencies. DR empowers customers to reduce their energy consumption during peak periods and receive compensation for their efforts. DR can also be expanded to participate actively in the energy market, acting as a counterbalance against potential opportunistic price gouging by energy generation and storage facility owners during periods of supply scarcity. However, enabling broad-based DR necessitates grid modernization for seamless communication and integration between DR participants and the AESO.
In sum, Alberta’s deregulated generation market, combined with carbon pricing, is well and uniquely positioned to shift our energy generation resources toward cleaner and more sustainable options through market-driven incentives. Albertans are in an excellent position to seize this opportunity to navigate toward a reliable, cleaner and sustainable energy future that does not impose an undue financial burden on our citizens.
By embracing these economically efficient pathways, we can build a brighter and cleaner future for generations to come.
Raj Retnanandan is a Calgary consultant in the utility/energy business