By now it is hardly news that a review of Alberta’s climate change policies is underway. In this context, the issue of energy efficiency has been gaining some traction.
Energy efficiency as a policy goal is a broad term that refers to measures 1) that alter the ratio of energy outputs to inputs by getting the same with less or getting more with the same on the supply side, 2) that alter how energy is transported or stored on the transmission side, or 3) that alter the way end-users consume energy on the demand side.
Premier Notley has made energy efficiency a linchpin of her policies. Naturally, energy efficiency is a facet of addressing climate change, and all appearances indicate that the Premier and her party view it as such.
“I have long since identified and been quite concerned about the fact that Alberta lacked an energy efficiency strategy — and indeed we’re the only province that doesn’t have one,” she said.
This claim’s veracity is a question of perspective. On the supply side, many oil sands producers utilize co-generation. Similarly, demand side energy efficiency rebate programs pre-date Premier Notley’s administration. Thus, whether voluntarily adopted by industry or enacted by government, Alberta has already made some strides towards greater energy efficiency. But since energy efficiency can encompass many constituent policies, the Premier’s statement can be fairly read to mean that there is no broad encompassing strategy coordinating separate policies.
Examples of energy efficiency measures
Energy efficiency on the supply side includes co-generation, where byproducts incidental to power generation are utilized to fulfill functions that require that byproduct, such as byproduct steam used in oil sands SAGD operations. Practically speaking, this is more efficient than utilizing a separate energy source solely to produce steam . There are also hybrid power generation facilities, where renewables like solar or wind are combined with natural gas, whereby the former picks up some slack and reduces plant emissions while the latter serves as a buffer to the intermittency issues that affect weather-sensitive renewables.
On the transmission side, there is increasing talk of so-called “smart grids.” A 2008 Department of Energy report notes that since electricity has to be used or transmitted the moment it is produced, numerous technical hurdles must be overcome to keep an electrical grid running smoothly. Since the modern-day grid design pre-dates cheap, instantaneous communication and digital automation technology, intra-system visibility issues reigned and as a result centrally-planned expansion was key. But because of skyrocketing demand, less supply side market concentration, and greater market competition in power generation, today’s overly rigid electrical grid – while immense – is subject to bottleneck risks. When the grid is one giant system of interdependencies, a failure in one segment can have a cascade effect and cause outages elsewhere. To simplify a complex subject, smart grids in part refer to the application of modern digital communication and automation technologies towards building a less centralized, more flexible, and more information intensive grid able to quickly adapt to demand cycles and efficiently and reliably route power to where it is needed most.
On the demand side, the options are particularly diverse.
In a broad sense, demand side energy efficiency refers to measures to shift consumer demand, ideally from peak periods to off-peak periods. Since the electricity grid must be reliable above all else, many generation facilities serve only to fulfill demand at peak periods, and remain idle otherwise. Successful demand shifting would theoretically negate the need for these spare plants.
Such demand shifting could be accomplished by dynamic pricing structures that accurately track demand cycles, whereby peak rates are set at a premium and off-peak rates are discounted, thus incentivizing cycle-appropriate consumer behavior. Such a dynamic pricing system could be used in conjunction with smart appliances, which measure power use and react according to set price parameters, perhaps shutting down or idling during peak power periods.
Incidentally, the Climate Change Advisory Panel’s discussion paper places especially heavy emphasis on demand side energy efficiency, and considers a broad array of means to achieve this end, including the use of more energy efficient appliances and lighting fixtures as well as new building codes that promote less energy intensive residential, commercial, and public structures.
While these are just a few examples, the fact is that the options on the demand side – while too numerous to mention in full here – are abundant.
Despite the conceptual distinction between energy efficiency and climate change policy, there is noticeable overlap. For now, however, the scope and content of the province’s prospective energy efficiency strategy is difficult to gauge. For this reason, it is hard to tell how much upstream oil & gas producers will be affected.