Alberta Power Plan for Demand and Supply

Given the large amount of discussion regarding electricity in Alberta, I thought it would be useful to look at the public policy regarding this very political issue.  As the saying goes, all politics is local, and there is nothing more local than the price and reliability of electricity.

The Alberta government has stated that it wants to close all coal-fired plants by 2030, and replace them with gas and renewables electrical plants.  It has also set a target that 30% of electricity generated must come from renewables.  It has stated that 2/3 of the lost coal capacity should come from renewables and 1/3 from natural gas (source http://www.alberta.ca/climate-coal-electricity.cfm.:

Again, an examination of facts and numbers is in order.

I  Electrical Generation Supply

The current average demand for electricity in Alberta is about 9,200 megawatts (MW), with a peak demand of 11,200 MW (source http://www.energy.alberta.ca and http://www.aeso.ca).  There are daily and seasonal cycles of demand, with higher demand at night and in cold weather.  Total demand in 2015 was only slightly higher than demand in 2014 (source: http://www.aeso.ca/downloads/2015_Annual_Market_Stats_WEB.pdf ).  Maximum generating capacity is about 16,000 MW – the higher maximum capacity is needed to deal with possible unavailability of generating units due to maintenance, unexpected outages, backup in case of no wind etc.  The numbers are as follows (source: http://energy.alberta.ca/Electricity/682.asp)

Generating                                       Electricity

Capacity in                                       Generated in                                      Reliability

July 2015, MW          %                   2014, GWh                        %              Factor

Coal                   6,258                       38.5%             44,442                              55.3%            81.1%

Gas                    7,080                       43.6%             28,136                              35.0%           45.4%

Wind                 1,459                        9.0%               3,471                               4.3%            27.2%

Hydro                  900                        5.5%                1,861                              2.3%             23.6%

Biomass and       545                       3.4%                2,433                              3.1%             51.0%

Other

Solar                         0                         0.0 %                  0                                 0.0%            0.0%

Total               16,242                         100.0%             80,343                       100.0%       56.5%

The generating capacity is the maximum electricity generating capacity in MW.  Electricity generated is the actual electricity generated in gigawatt-hours (GWh).   The reliability factor is the ratio of actual electricity generated divided by the electricity that would have been generated if the unit ran at maximum generating capacity for the entire year.  The higher the reliability factor, the greater the percentage of time that the source of electricity is in use – a number of 100% would mean that the source is producing at its maximum generating capacity for 100% of the time.  The higher the reliability factor, the better, and an indication that such source provides the base load for electricity.

Coal fired generation coal is currently the base load in Alberta.  It operates 81% of the time and supplies 55% of the electricity.  Gas is more variable and is turned off during low demand periods or when wind power is available, so it only operates 45% of the time and supplies 35% of the electricity.  Wind only operates when it is windy for 27% of the time, and supplies 4% of the electricity.  Hydro and biomass make up the rest.  There is no on grid solar in Alberta – the small amount of solar in Alberta is off the grid.

Some will contend that the coal-fired plants can all be replaced by renewable energy such as wind and solar.  A look at Ontario that has gone all in on these sources of power shows otherwise.  The equivalent numbers for Ontario are as follows (source  http://www.ieso.ca/Documents/LTEP/2014-Actual-vs-2014-Forecast-in-LTEP.pdf)

Generating                           Electricity

Capacity in                          Generated in                           Reliability

Sept 2015, MW        %         2014, GWh         %                 Factor

Coal               0                           0.0%              0                    0.0%               0.0%

Gas                10,065               26.9%           19,900                12.1%            22.6%

Nuclear           12,947                34.6%           94,900               57..7%         83.7%

Wind              3,498                 9.4%            7,800                 4.7%              25.5%

Hydro             8,712                 23.3%          37,900               23.1%             49.7%

Biomass and        606                  1.6%            2,100              1.3%             39.6%

Other

Solar                1,549                 4.1 %            1,800                     1.1%          13.3%

Total               37,377            100.0%         164,400           100.0%       50.0%

The above numbers include off grid capacity in Ontario for solar on roof tops and wind.

These numbers may surprise a number of people who might believe that a large portion of Ontario’s electricity grid supply comes from wind and solar.  As can be seen, most of Ontario’s base load supply comes from nuclear (58%) and hydro (23%), due to (a) a decision made in the 1960’s by then Ontario Hydro to invest in heavy water nuclear plants (known as CANDU, for Canada Deuterium Uranium) in a big way, and (b) Mother Nature’s gift of a large number of attractive hydroelectric sites.

The numbers for Ontario also show that it gets about 5% of its electrical energy from wind (a high of 15% on really windy days, and a low of 1% on really calm days).  Solar contributed to the grid is only 1% (most of Ontario’s solar is small rooftop facilities that are off the grid).  The remainder of Ontario’s electricity comes from natural gas (12%) as a back up generator when the wind does not blow and the sun does not shine.

The important thing to note is that wind and solar are not that reliable.  The numbers shown above for Ontario demonstrate that wind has a reliability factor of between 25% to 30%, whereas solar has a reliability factor of about 10% to 13%.  The low reliability factor for solar is caused by

• no sunlight for half the day on average,
• the sun’s rays at higher latitudes are at an angle rather than straight down
• cloudy days reduce the amount of sunlight

This low reliability factor is often glossed over by advocates of wind and solar power.  But it is a crucial fact.  Albertans may grumble about future higher prices, but they would accept them (just like the people of Ontario).  But Albertans would never accept ongoing systemic power outages.  As a result, wind and solar have to be backed up by gas generation on cold, windless nights.  For example, Ontario has almost 10,000 MW of gas (27% of Ontario’s capacity) to back up wind and solar.

Given these constraints, Alberta will have to replace its coal-fired plants (currently 55% of supply) with a mixture of gas, wind and solar generation.  Sadly, there has been no discussion of nuclear plants, even though there has been some industry proposals regarding small modular reactors in the 300 MW size range.  These reactors would be manufactured and assembled at a central factory location and the sent to their new location where they can be installed with very little difficulty.  The regulatory process for any nuclear plants would likely be long and expensive, thereby making the economics difficult for any investor.

The 2014 Long Term Forecast of the AESO showed a demand of 120,000 GWh in 2030 (source: http://www.aeso.ca/downloads/AESO_2014_Long-term_Outlook.pdf). In order to meet this demand, the following table shows a supply mix that would meet the requirement for 30% electricity from renewables as well as sufficient backup capacity from natural gas.

Generating                                    Electricity

Capacity in                                   Generated in                                Reliability

2030, MW                  %               2030, GWh          0%                  Factor

Coal                    0                        0.0%                     0                    0.0%              0.0%

Gas                    16,000               47.6%             84,096                69.9%            60.0%

Wind                 11,000                 32.7%             26,169                21.8%            27.2%

Hydro                 1,000                  3.0%             2,068                  1.7%             23.6%

Biomass and          600                  1.8%                2,685             2.2%             51.0%

Other

Solar                    5,000                14.9%                5,256           4.4%             12.0%

Total               33,600                    100.0%           120,274              100.0%       40.9%

It should be noted that investment in wind capacity increases over 7 times (1,459 MW to 11,000 MW), and would be about 3 times the current wind capacity in Ontario. With an average of 35 hectares per MW of wind capacity (source: http://www.saskwind.ca/land-area), the 11,000 MW of wind turbines would occupy about 385,000 hectares, or 3,850 square kilometres, or about 0.6% of Alberta.

There is currently very little solar in Alberta, so the 5,000 MW is a huge increase. With an average of 2.5 hectares per MW of solar capacity (source: http://www.renewableenergyworld.com/articles/2013/08/calculating-solar-energys-land-use-footprint.html), the solar panels would occupy 12,500 hectares, or 125 square kilometres.

The obvious question to ask is, where will the investment for new capacity come from, and what pricing is required to give the incentive needed for such investment?  The answer lies in the pricing regime and other supply terms that will be proposed by the Alberta government and the AESO.  This discussion will be continued in a future blog.