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A few weeks ago, I attended an online presentation by the Alberta Electric System Operator where it revealed its long-term outlook (LTO) for 2023. The LTO is essentially a 20-year forecast for electricity demand and generation for the Alberta electrical grid and it’s used to inform transmission system planning. The presentation was followed by an opportunity for stakeholders to provide feedback before the final release of the LTO next fall.
The province's system operator (AESO) releases a new LTO every two years to update its forecasting models based on changing market conditions and societal trends. For example, the adoption of electric vehicles in the province could come at a much slower pace than expected and this change in demand growth would be incorporated into the LTO in two years time. The process provides an invaluable look into how AESO engages industry partners and plans for a rapidly evolving electricity market.
The presentation indicated that growing demand for electric vehicles and an accelerating rollout of charging systems is expected in Alberta. This gave me some hope because there is no sign of rapid EV adoption among gas-loving Calgarians.
Another promising trend was the predicted increase in electricity demand due to widespread adoption of residential heat pumps. However, there were a few disappointing moments, such as an expected tapering of wind and solar development within the next 10 years.
Alberta has ideal conditions for wind and solar generation and this is driving a renewable energy boom in the province. AESO expects the rapid buildout of renewables to continue, but forecasts a flatline in renewable energy growth once it exceeds 30 per cent of total generating capacity. This was indeed surprising when other jurisdictions around the world are successfully incorporating much higher renewable capacity.
In Texas, wind and solar is already 35 per cent of the total energy mix, with incentives in the Inflation Reduction Act already pushing that number higher. Last year, Denmark generated over 55 per cent of its electricity from wind and another five to six per cent from solar. Denmark continues to add wind and solar capacity with the ultimate goal of reaching 100 per cent renewable electricity generation — something many people want you to believe is impossible.
Will Noel of the Pembina Institute commented: “Unfortunately, this means that the effect of underestimating the growth of renewables now has the potential to instigate a vicious cycle of renewables investment suppression.”
Forecasting a tapering of wind and solar capacity prevents AESO from adequately investing in the transmission infrastructure required to avoid congestion. This in turn impacts investment decisions by companies seeking renewable energy opportunities in Alberta because the grid isn’t capable of adequately supporting new production.
Another source of disappointment was AESO’s forecast of a paltry 500 MW of grid storage over the next 20 years. Energy arbitrage is a technique where energy is purchased during off-peak hours and then sold to the grid during peak hours.
AESO’s analysis indicates that grid storage isn’t economically viable for energy arbitrage and, therefore, companies are unlikely to invest in this technology. But this overlooks the ability of long-duration storage systems like pumped hydro, compressed air and CO2 storage to enable wind and solar generation to supply the grid on a 24-hour basis, thereby eliminating the need for natural gas generating capacity.
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Short-duration storage systems are already proving to be economical for applications in Alberta. Focusing on the economic viability of energy arbitrage ignores the cost advantages of renewable energy and the rising demand for Alberta’s clean energy.
It’s concerning that AESO is overlooking the value of energy storage in its forecasts when the technology is decreasing in cost and enables the production of more renewable energy.
Rob Tremblay of Energy Storage Canada (ESC) noted that AESO’s forecast of 500 MW of energy storage capacity is lower than what is currently in the development queue.
“ESC notes that there is just over 5 GW of ‘solar+storage’ projects on the AESO Connection Project List and thinks it is reasonable to model these … ESC would also appreciate the modelling of long-duration storage assets in a scenario.”
Pembina Institute also expressed similar concerns regarding AESO’s low forecast for energy storage and recently published a report describing how Alberta could achieve a clean electrical grid at a cost up to $28 billion cheaper than predicted by AESO. Pembina’s models rely on energy storage to help balance the grid as more renewable energy is added.
However, the biggest disappointment in the LTO presentation was the fact that natural gas generation is not predicted to decline over the next 20 years and, in fact, new natural gas generating stations will be built. This is based on the expectation that federal tax credits on carbon capture and storage (CCS) will drive the implementation of CCS on all new and existing natural gas generating assets. In the meeting, a representative from Capital Power bluntly asked if AESO had done a reality check on the CCS forecasts.
In stakeholder feedback it states, “Capital Power believes that the AESO should explore further the risks around technology and timing of investments throughout the LTO. This is particularly important when considering the AESO’s base scenario includes a succession of CCS retrofits in the late 2020s that appear to ignore the challenges that progressing projects of this scale face (uncertain policy and funding frameworks, labour-force challenges, etc.).”
In response to my question regarding the track record of effectiveness for existing CCS projects, AESO acknowledged that it considers this a major risk factor in achieving net-zero electricity generation in the province. It’s understandable that Alberta would take a risk on an expensive and unproven technology to protect the fossil fuel industry. But when renewable energy and grid storage solutions are “off the shelf,” easier to construct and considerably less expensive, betting on CCS will undoubtedly prove to be very costly for consumers.
Rather than investing in CCS, a technology that will take decades to roll out, Alberta could be seizing an opportunity to upgrade transmission infrastructure and rapidly build out cost-effective renewable energy, augmented by co-located energy storage capacity. Clean electricity is in demand by the world’s largest technology companies Amazon, Meta and Alphabet. It will also be needed by our provincial and American neighbours looking to decarbonize their electrical grids.
Albertans are likely overcommitting to an industry that has historically brought them wealth and a comfortable lifestyle. The promise that we won’t piss away the next oil boom is always forgotten in the midst of the boom.
Now is the time to plan for a rapidly transforming global energy system and invest for the most likely outcomes. Albertans need practical foresight that isn’t influenced by the misguided belief that the good times in the oilpatch will roll well beyond 2050.
Rob Miller is a retired systems engineer, formerly with General Dynamics Canada, who now volunteers with the Calgary Climate Hub and writes on behalf of Eco-Elders for Climate Action.