Every time I wander into the deep dark murky world of the electrical system, I am reminded of how complicated it is and how little I understand it. The physical movement of the electrons is complicated enough, but that’s “just engineering” – the part bound by certain laws of physics that are well enough understood.
The big complexity comes from the planning, the forecasting, the regulatory process, all amid changing regulatory regimes. Here in Alberta, as the AESO (Alberta Electrical System Operator) site puts it, the grid operator’s job is to ensure there is power there when we need it, both short and long term (from their site: “On behalf of Albertans, we work with industry partners and the government to make sure reliable power is there when you need it. Whatever changes happen in the world, you can rely on us to manage the electricity markets and meet your energy needs – now and in the future.”).
AESO has a process along with the AUC (Alberta Utilities Commission) whereby planning is the core of what they do (from the AUC site: “The Alberta Utilities Commission regulates the utilities sector, natural gas and electricity markets to protect social, economic and environmental interests of Alberta where competitive market forces do not.”).
It’s an amazing job, what they do – power outages of any material duration are remarkably rare, indicating that they are rather good at what they do. These operators are even doing a fairly remarkable job of integrating an increasing level of intermittent renewable energy.
An aspect that can cause widespread grief, however, seems to be rapidly changing regulations. We are seeing this in the US where four of the largest grid operators – covering 30 states and over 150 million people – banded together to state that plans, purely political plans, by state and federal politicians to accelerate the shut down of natural gas and coal power plants is going to lead to grid instability.
A grid that fails at the wrong time is catastrophic for societies, particularly our lavish western ones, that are build on a grid’s reliability. It is understandable that caution is paramount and, because the planning over longer time frames is so critical, that the fewer moving parts there are, regulatory-wise, the better.
It was particularly surprising then to see Alberta voluntarily introduce a destabilizing force that surprised apparently everyone. The provincial government initiated a six-month pause on renewable energy project approvals for any sizeable project.
The feedback I’ve been hearing is astonishingly similar: What is this? Why? Why such a surprise move for an industry that builds multi-decade projects, and requires planning along those timeframes as well?
The reasons given by the provincial government are, according to their statement as reported in the National Post, so that the AUC “will initiate an inquiry into issues of development on agricultural land, effect on scenery, reclamation security, the role of municipalities and system reliability.”
Those are all perfectly valid things to ponder, excellent things actually, and in my opinion such a report would be a great component to planning an “energy transition”.
But the shock six-month approval halt is the sort of destabilizing force that no one in the energy sector needs.
Word on the street is that this was a reasonable idea implemented poorly on political grounds, to cater to the rural support of the government. As far as rural concerns go, I’m in their camp in that regard; I find rural viewpoints to be poorly respected in an increasingly urban population that should show a hell of a lot more respect for where their food comes from.
But even those rural citizens in favour of slowing the pace of renewable development were surprised, as one put it in a CBC article: “It kind of came out of left field,” said a Vulcan County reeve, “But I think once we’d had a chance to speak with the minister’s office, I think I see the logic.”
Alex Epstein, American energy enthusiast, has a good point, applied to the US but applicable to Canada and everywhere – allowing every form of energy to achieve its potential is foundational to cheaper energy and ultimately to the best standard of living.
Alberta is one of a few jurisdictions to be naturally blessed with vast hydrocarbon resources and ample space for renewable development. The inevitable decarbonization drive has a place for material wind and solar components, so they are coming, and utilizing those sources to the extent it makes sense in terms of cost and reliability are part of the path forward in today’s societal expectations.
Those societal expectations take many forms, so it is not wise to too dismissive. For example, a subsidiary of General Electric has popped onto the radar, looking to build a massive natural gas fired power plant/carbon sequestration scheme west of Whitecourt. While this isn’t a solar/wind project, it is indicative of the potential to attract huge pools of capital. Many companies want to be seen as investors in wind, solar, carbon capture, etc., everyone from big tech to big banks.
Integrating these sources isn’t easy, but grid regulators ought to be the ones communicating if things are going too quickly; presumably as “managers of the electricity markets”, AESO should be outlining future expected problems, just as the 4 largest US grid operators did.
Things seem to have gone down differently up here though. Puzzled faces abound on anyone that comments on the six-month approval halt. Various reports from the media and hearsay from people who know these things indicate that some big players will possibly rank Alberta lower due to regulatory uncertainty demonstrated by this six-month move. That can’t be good, no matter the form of energy. The government seems to be realizing the capital flight risk they may have created. The media rustled up some scare stories about how $33 billion of investment was at stake, which is silly; that total was simply a compendium of all big projects in the queue, not ones directly impacted. But the fact remains that the competition for energy capital is not helped by regulatory surprises.
This is evident by the odd publications appearing in the media that attempt to put some context around the decision, such as a letter Danielle Smith sent to Gil McGowan, head of a labour union, that was posted to various social media platforms, and an AUC “Announcement” dated August 22 that appears to try to clarify the situation.
The reasons given for the review add to the murkiness. Renewables people can show quite easily that reclamation provisions are baked into many agreements up front (“All private contracts have provisions,” one leading solar developer told me), and the aesthetics aspect (effects on scenery) is I suppose an issue in some jurisdictions (but not with me – I like the site of a pumpjack and I like the sight of a wind turbine to be honest – both imply energy and prosperity and I love both). A grid reliability issue I could totally support, but that would have or should have come from AESO or the AUC, if it was of paramount importance.
I have no interest in seeing an ill-informed rush to renewables for multiple reasons but the primary reason against would be if it happens at the expense of grid stability; that would be a disaster in the making. Yet it is obvious that more renewables are coming, and that a lot of planning/consultation is required.
That’s the reason for bringing up this whole topic of energy policy enacted without understanding of first, second, third order consequences. It’s bad in any frame: The feds should be fully engaging the oil and gas sector to harness its full potential and make an energy transition as smooth and efficient as possible. By the same token, provincial leadership should do the same with the burgeoning renewable industry.
Federally, we should be asking why they think throttling the hydrocarbon sector is a good idea, rather than unleashing every aspect of its very considerable ability, and leveraging it.
Here in Alberta specifically, we should be asking: Where is the six-month moratorium advice coming from?