Canadian Perspectives: Energy Policies and Progress - t ti Presentation to the Western System Power Pool S
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Canadian Perspectives:
Energy Policies and Progress
P
Presentation
t ti to
t the
th Western
W t S
System
t Power
P Pool
P l
March 2011
1Overview
In business school…
Good
Cheap Fast
The theory goes, you can pick only two out of three.Overview
In electricity…
Reliable
Affordable Clean
Canadian provinces are grappling with this challenge differently:
• Most provinces remain regulated and are contracting with IPPs
• Most are grappling with the need for transmission
• Few – if any – have an articulated roadmapTable of Contents 1.0 IPPSA’s Role 2.0 Canadian Market Regulation 3.0 Affordable 4.0 Reliable 5.0 Clean 6.0 Achieving the Trinity 70 7.0 Conclusion
1.0 IPPSA’s Role
1.0 IPPSA’s
IPPSA s Role
• IPPSA was founded in 1993 as a forum for generator dialogue and as an
advocate for competition in Alberta
Alberta’s
s electricity market
market.
• Since the market opened, competition has brought new suppliers, new
innovation new choices and a downward pressure on wholesale prices
innovation, prices.
• IPPSA has 100 members. Our Board includes Canada’s leading IPPs and
power suppliers: AltaGas
AltaGas, ATCO Power
Power, Capital Power Corp
Corp., ENMAX
ENMAX,
EnCana, Maxim Power Corp., Nexen Marketing, Shell Energy Trading,
TransAlta and TransCanada.2.0 Canadian Market Regulation
2.0 Canadian Market Regulation
g
• Electricity is a matter of provincial jurisdiction
• Federal
F d l regulation
l ti iis li
limited
it d tto iinterprovincial
t i i l ttransmission
i i d
development
l t
and export permitting
• Federal policy on climate change is contentious. Environment is a shared
provincial/federal responsibility, but natural resources are provincial.
• Most Canadian jurisdictions – with the notable exception of Alberta –
remain vertically integrated, crown corporations
• IPPs are a popular means to ‘green the grid’ across Canada
• Alberta’s market is commoditized, where IPPs take investment risk and are
compensated by spot market prices, or any contract they can sell.
• Ontario attempted commoditization, but is now contracting with both
generators and subsidizing
g g some consumers2.0 Canadian Market Regulation
g
Canadian Electricity Market Regulation
Source: London Economics International LLC3.0 Affordable
3.0 Affordable
Expectations
p are that electricity
y will remain cheap
p
2009 delivered electricity costs (average = ¢10.1/kWh)
Source: London Economics International LLC3.0 Affordable
• Reality is that costs will rise as demand rises, along with new supply and
needed transmission
Estimated 2015 delivered electricity costs 2015 (average = ¢12/kWh)
Source: London Economics International LLC4.0 Reliable
4.0 Reliable
• Non-negotiable
• Mandatory Reliability Standards
• Quite tricky in Alberta
• Transmission a key vehicle for
f reliability
• Grid under particular strain in Alberta with 3% annual load growth over
the past decade and little in transmission
• Transmission has been source of particular drama in Alberta:
• 300KM 500KV AC line filed in 2005, approved in 2006, and voided in 2008
• New bill to introduce 2, 500 KV DC lines, for ~ 300KM from Edmonton to
Calgary
• 500KV line to industrial development near Edmonton has attracted 500
intervenors, and its in a utility corridor5.0 Clean
5.0 Clean
• Impending Federal Regulation phases out coal generation
• Requires all future plants to emit to the level of a CC plant, no offsets
• Patchwork of provincial policies, many striving for green economy (Quebec,
Ontario, British Columbia, Manitoba)
• Ontario’s FIT = ¢13.5/kWh for onshore wind, ¢63.5 for > 250KV PV solar rooftop
• Alberta generators respond to market price signals and offset price signals
• ~6000 MW built since 1996, ~1000MW has been coal, 675 wind and the rest gas
• Fuel switching has a profound impact on a slow moving industry
• Decades long investments in thermal generation and transmission (AB, Sask, ON)
• Remote intermittent facilities require transmission and interties
• Slow progress on demand response, micro-gen and smart grids
• Gas generation can be located close to loads, with its own issues5.0 Clean
• “Clean” is where the challenge begins:
• Intermittent generation requires balancing in order to maintain reliability
• Intermittent generation
g is not often found near load,, thus the need to build
transmission
• Intermittent generation – wind, solar - comes at a cost premium
• Other “clean” generation - large hydro, nuclear - are complex or prohibitive
• Gas
Gas-fired
fired generation appears to be the “go
go to
to” fuel…again.
fuel again
Levelized Cost (Hatch Energy, 2009) Cost/ $MWH
Pulverized coal 100-140 (with carbon capture)
Natural Gas Combined Cycle (@ 5/GJ) 80
Natural Gas Cogen (@ 5/GJ) 70
Wind 85-115
Large Hydro 70-120
Nuclear 100-1406.0 Achieving the Trinity
6.0 Achieving the Trinity
Reliable
• Understanding the trade-offs
• M
Managing
i public
bli expectations
t ti
Affordable Clean
• Seeking policy stability
• climate change is a challenge for Alberta’s
Alberta s open market in particular
• Ensuring regulatory framework supports the strategy
• universal concerns with citing generation and transmission
• dealing
d li with
ith costs
t associated
i t d with
ith fuel
f l switching
it hi (thermal,
(th l gas, smartt grid)
id)
• Implementation of policy is its own challenge
• Ontario FIT cancelled offshore wind, transmission an issue
• BC Energy Plan reaction
• Alberta Transmission Policy7.0 Conclusion
7.0 Conclusion
• A number of challenges are common
to Canadian power markets
Reliable
• greening the grid
• citing new supply and new transmission
• cost p
pushback
• Expect a patchwork approach to Affordable Clean
resolving them among various provinces
• These aren’t simple objectives
• We take them for granted
• Provinces will strive to achieve all three with differing successesYou can also read
