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Rachel Notley wants Alberta to dump coal. May we review that, please?

May 14, 2015 | By | Reply More

Ontario’s experience with Green Energy Act should not be ignored by Rachel Notley

Rachel Notley says it’s time for Alberta to wean itself off King Coal, but before the new NDP government ploughs ahead, how about pausing to reflect upon the experience of other jurisdictions?

Rachel Notley

Premier Rachel Notley with NDP caucus. Photo: Rachel Notley/Facebook.

If the Notley government can review oil and gas royalties, why can’t it also appoint a panel of learned Albertans to report on best practice public policy for transitioning from coal to something else, most likely a combination of natural gas and solar/wind, but maybe geothermal or small hydro or an exotic technology like thorium-based nuclear power.

And if Alberta is starting from scratch, why not put all the options on the table?

If there is one thing we can say with certainty, is that government attempts to abandon coal – which has double the GHG-emissions of natural gas and plenty of that pesky NOX and SOX – have been challenging. Yes, Ontario, we’re looking at you.

A few months ago, I interviewed John Rilett, Enmax’s director of distributed generation, about the future of renewable energy in Alberta. The City of Calgary-owned utility is on the pointy end of this question and, as you can imagine, has been paying close attention to developments in wind and solar, in particular.

Rachel Notley

John Rilett, Enmax.

Rilett compared the coming Alberta power system to the old telephone networks prior to the introduction of cell phones. In just a couple of decades, Albertans transitioned from landlines to cell phones that are mini-computers, Voice Over Internet Protocols, and all sorts of other flexible and cheap telecommunications options.

“If you draw that same kind of parallel there’s lots of opportunity around electricity and the energy structure to innovate and come up with similar types of systems that are flexible, that are two-way, that allow consumers choice,” he said. “And give them more control over what they do, while at the same time maintaining safe, reliable energy for everybody.”

Rilett says ENMAX is very encouraged by the rapidly dropping cost curves for renewables, especially for solar. Recent contracts have been signed in the southern United States for roughly five cents per kilowatt hour, which is about three cents below what Alberta consumers currently pay. And Kent Brown of BluEarth Renewables, a Calgary-based solar and wind energy company with $650 million of assets in Canada, told me in an interview for a 2014 story that some Saskatchewan wind energy producers were generating power for similar rates.

Rachel Notley

Source: Pembina Institute.

What does it cost to generate electricity?

The figures below with an asterisk are from the U.S. Energy Information Administration’s Annual Energy Outlook 2014, which Enmax says is the best info they have at the moment. The other figures were provided by Rilett. Readers should also note that the Energy Outlook numbers can vary significantly by region, which is why utility-scale solar in Georgia or Texas might be significantly lower than the figure below.

  1. Existing Alberta coal-fired plants: As low was $40 to $50 per MWh.
  2. New coal-fired plants:$70 to $90 per MWh (required by regulation to achieve the same greenhouse gas particulate emissions as gas-fired plants, which significantly increases generation costs).
  3. New gas-fired plants: $70 to $90 per MWh depending on fuel price.
  4. Wind turbines: $80 per MWh*
  5. Solar micro-generation: $160 per MWh
  6. Solar PV: $130 per MWh*
  7. Solar thermal: $243 per MWh*

Where are power generation costs headed in the near future? Two things are likely to happen, says Rilett. One, a national carbon tax is likely coming and that will increase costs for Alberta’s existing coal plants. Two, renewable energy costs will likely continue to drop.

Rachel Notley

Coal is the low hanging fruit in the fight to lower carbon dioxide emissions.

Rilett notes that ancillary technology – such as smart power grids that gather information from producers and consumers and maximize efficiencies – is also developing rapidly.

In a time of rapid technological change, it behooves the Notley government to carefully consider its options so that public policy decisions don’t lock the provincial power industry into higher cost technology, when a bit of patience and forethought could avoid some pain and get Alberta the shiny new generation of technology.

Rilett likes renewables. Why? Because there are no fuel costs. No variable costs that can wreak havoc with utility budgets.

You erect a utility-scale solar facility or a wind farm like the ones in southern Alberta, and aside from a bit of maintenance and operating expense, the machines make electricity for 20-plus years with little fuss and bother.

Engineers love the simplicity and elegance. Accountants love the stable finances. What’s not to love?

Rachel Notley

Former Ontario Premier Dalton McGuinty.

Well, if you’re an Ontario consumer, plenty. Like Rachel Notley, the Dalton McGuinty Liberals also wanted to kick coal to the curb. Controversy has raged over the Green Energy Act – provided “feed-n tariffs” to renewable energy providers and 20-year power purchase agreements – since it was enacted in 2009. Ontario power rates have doubled in the past decade and are now some of the highest in North America, though there is debate over the GEA’s effect on higher prices.

Predictably, opponents and supporters Green Energy Act have very different views of the legislation’s consequences.

Conservative think tank The Fraser Institute argued in a 2013 report that the Green Energy Act is a disaster: “The focus on wind generation is especially inefficient because production peaks when it is least needed and falls off when it is most needed. Surplus power is regularly exported at a considerable financial loss,” writes study author Ross McKitrick. “The Auditor-General of Ontario estimates that the province has already lost close to $2-billion on such exports.”

Environmental Defence ignored costs and focused on emissions: “The coal phase out represented the largest greenhouse gas reduction effort in North America. As a result, air quality in southern Ontario has improved significantly, with only two smog days in 2013 – compared to 53 smog days in 2005.”

Ontario’s experience is the best argument for Alberta to do its own review and proceed cautiously. Getting it right could mean lower emissions and low energy prices for businesses and consumers.

Getting it wrong could get Rachel Notley the Ontario experience. No one wants that.

 

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Category: Markham

About the Author ()

Markham Hislop is the publisher of Beacon News and Beacon Energy News. He also reports and writes about Alberta and British Columbia energy issues.

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