Lessons from an Alberta power market on the brink
Blake Shaffer
Contributed to The Globe and Mail
Published Yesterday
Blake Shaffer is a professor of economics and public policy at the University of Calgary
Faced with the prospect of rolling blackouts on a freezing Saturday night earlier this month, the Alberta Electric System Operator, in co-ordination with the provincial government, took the unprecedented action of issuing an emergency alert asking residents to conserve electricity.
The jarring sound heard on cell phones across the province on Jan. 13 was no doubt met with a mix of bewilderment and fear, but the response was immediate. Albertans turned off lights, dryers and whatever else they could for a total of 150 megawatts – a large drop in minutes and just enough to cover the predicted shortfall and stave off rolling blackouts.
The electric power system bent, but it did not break. In the aftermath, many are keen to dissect the event and assign blame.
The truth is that the system performed pretty much as expected. The sun didn’t shine at night (shocker, I know), so solar power was not an option; the high-pressure system that accompanies these frigid temperatures also meant very little wind; and a couple of gas plants struggled but overall the thermal fleet did exceptionally well given the extreme conditions.
To make matters more challenging, the Pacific Northwest was having its own power issues. A large reduction in capability at a major Montana coal plant and an outage at a gas storage facility in Washington state curtailing gas deliveries to power plants in the region meant Alberta had to compete with the Americans to get imports. This was made even harder because of Alberta’s $1,000 per megawatt-hour price cap, compared with prices that reached more than US$2,000 in the U.S.
In the end, some help from neighbouring provinces and a last-minute conservation effort by Albertans meant the lights stayed on. And now that the threats of blackouts are behind us for now, what lessons can be learned from this month’s events?
First, the role of renewables needs to be clarified. Critics may take the opportunity to denigrate wind and solar, pointing out their lack of production during the emergency alert and that they can’t be relied on during extreme peaks.
But wind and solar are not peaking, or “dispatchable,” resources. They are “as available” energy producing when nature provides. Those that claim otherwise – whether to pretend they’re more than that, or that they ought to be – are misguided. At a low enough cost, you accept them for what they are: cheap raw energy. When they run, they displace fuel from other sources and deliver low emissions electricity in the process.
Given their low cost, renewables are here to stay. And in Alberta they’ll be an increasing share of annual energy. The real challenge is maintaining and developing the portfolio of flexible resources to complement them. Here I’m talking about storage, expanded interties, demand response and, yes, gas peaking plants. This month’s emergency demonstrates just how important these on-demand resources are.
The second lesson is the need for more flexibility in proposed Clean Electricity Regulations. The near miss of a blackout will no doubt be weaponized as evidence the regulations aren’t workable in Alberta. And there’s some truth to that; as written, the CER are far too prescriptive.
As argued in a previous commentary ([url]https://www.theglobeandmail.com/opinion/article-danielle-smith-may-be-grandstanding-but-canadas-clean-electricity/[/url]), the CER need far more flexibility to accommodate a range of potential outcomes and ensure reliability can be maintained across the country’s diverse electricity systems. For Alberta, that means more ability to run gas, albeit infrequently, while other clean “dispatchable” technologies develop. Rather than the firm hand of the CER, let the carbon price do the bulk of the work to encourage clean generation.
And the third lesson is that the emergency alert highlighted an often-overlooked tool: demand response, which refers to customers shifting their electric consumption to better match supply. The swift action by Albertans showcased the potential to use demand response as a resource to lessen strain on the grid.
But it doesn’t need to – and shouldn’t – occur simply because citizens are frightened into it. Instead, it’s time to deploy the full functionality of smart metres and reward consumers with savings if they are willing to be flexible. Not “black-me-out” flexibility, but certain appliances in the home. This is where the future of electricity ([url]https://www.theglobeandmail.com/topics/electricity/[/url]) is going, and it’s cheaper than more supply solutions.
In the days and weeks ahead, Alberta’s electricity system remains in a tight spot. But by the end of 2024, there will be over 2,000 megawatts of additional gas capacity and several hundred megawatts of storage projects in the province: Alberta will be in surplus for several years to come.
Nevertheless, the coming reprieve shouldn’t put an end to the important conversations on the future of the province’s rapidly evolving power grid and the policies needed to get us there.
?
Blake Shaffer
Contributed to The Globe and Mail
Published Yesterday
Blake Shaffer is a professor of economics and public policy at the University of Calgary
Faced with the prospect of rolling blackouts on a freezing Saturday night earlier this month, the Alberta Electric System Operator, in co-ordination with the provincial government, took the unprecedented action of issuing an emergency alert asking residents to conserve electricity.
The jarring sound heard on cell phones across the province on Jan. 13 was no doubt met with a mix of bewilderment and fear, but the response was immediate. Albertans turned off lights, dryers and whatever else they could for a total of 150 megawatts – a large drop in minutes and just enough to cover the predicted shortfall and stave off rolling blackouts.
The electric power system bent, but it did not break. In the aftermath, many are keen to dissect the event and assign blame.
The truth is that the system performed pretty much as expected. The sun didn’t shine at night (shocker, I know), so solar power was not an option; the high-pressure system that accompanies these frigid temperatures also meant very little wind; and a couple of gas plants struggled but overall the thermal fleet did exceptionally well given the extreme conditions.
To make matters more challenging, the Pacific Northwest was having its own power issues. A large reduction in capability at a major Montana coal plant and an outage at a gas storage facility in Washington state curtailing gas deliveries to power plants in the region meant Alberta had to compete with the Americans to get imports. This was made even harder because of Alberta’s $1,000 per megawatt-hour price cap, compared with prices that reached more than US$2,000 in the U.S.
In the end, some help from neighbouring provinces and a last-minute conservation effort by Albertans meant the lights stayed on. And now that the threats of blackouts are behind us for now, what lessons can be learned from this month’s events?
First, the role of renewables needs to be clarified. Critics may take the opportunity to denigrate wind and solar, pointing out their lack of production during the emergency alert and that they can’t be relied on during extreme peaks.
But wind and solar are not peaking, or “dispatchable,” resources. They are “as available” energy producing when nature provides. Those that claim otherwise – whether to pretend they’re more than that, or that they ought to be – are misguided. At a low enough cost, you accept them for what they are: cheap raw energy. When they run, they displace fuel from other sources and deliver low emissions electricity in the process.
Given their low cost, renewables are here to stay. And in Alberta they’ll be an increasing share of annual energy. The real challenge is maintaining and developing the portfolio of flexible resources to complement them. Here I’m talking about storage, expanded interties, demand response and, yes, gas peaking plants. This month’s emergency demonstrates just how important these on-demand resources are.
The second lesson is the need for more flexibility in proposed Clean Electricity Regulations. The near miss of a blackout will no doubt be weaponized as evidence the regulations aren’t workable in Alberta. And there’s some truth to that; as written, the CER are far too prescriptive.
As argued in a previous commentary ([url]https://www.theglobeandmail.com/opinion/article-danielle-smith-may-be-grandstanding-but-canadas-clean-electricity/[/url]), the CER need far more flexibility to accommodate a range of potential outcomes and ensure reliability can be maintained across the country’s diverse electricity systems. For Alberta, that means more ability to run gas, albeit infrequently, while other clean “dispatchable” technologies develop. Rather than the firm hand of the CER, let the carbon price do the bulk of the work to encourage clean generation.
And the third lesson is that the emergency alert highlighted an often-overlooked tool: demand response, which refers to customers shifting their electric consumption to better match supply. The swift action by Albertans showcased the potential to use demand response as a resource to lessen strain on the grid.
But it doesn’t need to – and shouldn’t – occur simply because citizens are frightened into it. Instead, it’s time to deploy the full functionality of smart metres and reward consumers with savings if they are willing to be flexible. Not “black-me-out” flexibility, but certain appliances in the home. This is where the future of electricity ([url]https://www.theglobeandmail.com/topics/electricity/[/url]) is going, and it’s cheaper than more supply solutions.
In the days and weeks ahead, Alberta’s electricity system remains in a tight spot. But by the end of 2024, there will be over 2,000 megawatts of additional gas capacity and several hundred megawatts of storage projects in the province: Alberta will be in surplus for several years to come.
Nevertheless, the coming reprieve shouldn’t put an end to the important conversations on the future of the province’s rapidly evolving power grid and the policies needed to get us there.
?
Comment