(Replay) Is Canada's Electrification Bet Still Current? | With Blake Shaffer

This is a replay of our conversation with Dr. Blake Shaffer, an energy economist at the University of Calgary, on Canada's electrification bet. We recorded this in spring 2023, right after the federal budget's big bet on clean electricity. With AI data centres now competing for the same grid capacity electrification needs, it might be even more relevant than it was in 2023.

Chapters:

0:00 – Replaying Canada's electrification bet
 4:52 – David's new gig: climate systems engineering at UChicago
 7:16 – Why electrify: Blake's primer on capacity vs. generation
 17:35 – Growth rates, NIMBYism, and selling the switch to consumers
 22:11 – Capacity factor, availability, and the "clean" vs. "zero-emission" fight
 26:31 – Transmission bottlenecks and interprovincial politics
 36:07 – Social license, orphan wells, and Danielle Smith's pushback
 44:41 – Grid instability, audience Q&A, and closing thoughts

About Our Guest:

Blake Shaffer is an Associate Professor of Economics at the University of Calgary where he teaches and researches on electricity markets, climate policy, and energy transitions. Shaffer uses empirical methods to evaluate policy effectiveness and better understand consumer and firm behaviour. Shaffer strives to bring rigorous evidence to help policy makers craft better policy.

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[00:00:00] Ed Whittingham: Hey everyone, it's Ed here. While EvC is on break pending the start of our new season later on in September, we're bringing you some of our most popular episodes from the past. This replay takes us back to the spring of 2023, right after the federal budget went all in on clean electricity. We brought in economist Blake Shaffer from the University of Calgary to help us unpack it all.

[00:00:23] Ed Whittingham: The questions we asked then, such as how far can electrification actually go? What happens to demand patterns? How do we integrate more wind and solar? Are still questions that Canada wrestles with today, a few budget cycles later. It's a good one to revisit if you want a gut check on how much progress we've actually made against that big bet.

[00:00:43] Ed Whittingham: So here's our conversation with Blake Shaffer on Canada's electrification push

[00:00:52] Ed Whittingham: Hello everyone, and welcome to season four, episode nine of Energy vs. Climate. My name is Ed Whittingham, and I'm joined by my co-hosts, Sara Hastings-Simon and David Keith. You will recall, dear listener, that our last show was on March 28th, and that was the day of Canada's federal budget. During that show on contract for difference policy that we did with Chris Bataille, if you haven't listened to it, I encourage you to go back and, uh, give it a listen.

[00:01:20] Ed Whittingham: We talked about the, the FOMO, the fear of missing out, that was driving the Canadian federal government following the Biden administration's big bet on clean energy in the Inflation Reduction Act. And during that show, we actually speculated on what the counterstrikes might be in the Canadian budget and counterstrikes designed to keep industrial decarbonization capital on this side of the border instead of going down to the side of the border where David currently sits.

[00:01:50] Ed Whittingham: We've got an update there that we'll, we'll get to in just a moment. Well, in last month's budget on March 28th, the Canadian federal government ended up betting big themselves, and especially on powering the Canadian economy with low carbon electricity. We saw a total of three billion dollars in additional support the next thirteen years for grid decarbonization, electrification, twenty billion, that's in the form of grants, twenty billion of support for clean electricity investments through the Canada Infrastructure Bank, that's typically financing.

[00:02:25] Ed Whittingham: We saw a clean manufacturing tax credit that could apply to manufacturing of renewable energy and energy storage equipment. And finally, we saw a clean electricity investment tax credit that looks like it's for big transmission projects and to support new inter-provincial trade of electricity. And all this on top of the tax incentives for wind and solar and low carbon hydrogen that were actually announced last fall in the fall economic statement.

[00:02:53] Ed Whittingham: So why this big bet on low carbon electricity, and why this emphasis in the first place? Why do we need to make this kind of investment when, as some would argue, already over eighty percent of our current electricity comes from non-emitting sources like hydro, nuclear, wind, and increasingly solar? And what parts of our economy can we reasonably expect to be electrified?

[00:03:18] Ed Whittingham: What parts can we not expect? And what does this mean for the fossil fuels we currently use to power parts of our daily lives and parts of our economy? So to help answer these and more electrifying questions, we are joined by Sara's University of Calgary colleague, Dr. Blake Shaffer. Blake is an assistant professor in the Department of Economics at the University of Calgary.

[00:03:42] Ed Whittingham: He works on electricity markets, climate policy, and energy transition, and he frequently provides advisor services to governments at various levels. Blake had, prior to returning to academia, a 15-year career in energy trading, and he specialized in electricity, natural gas, and emissions markets. And he is also the author of a recent report entitled Technical Pathways to Aligning Canadian Electricity Systems with Net-Zero Goals, which is entirely on point for today's discussion.

[00:04:12] Ed Whittingham: So welcome, Blake. 

[00:04:13]  Blake Shaffer: Thanks very much for having me. It's a longtime listener, first-time caller, so I'm excited to be here. 

[00:04:18] Ed Whittingham: Great. Well, we're excited to have you on as a guest. Uh, so what we're gonna do today is Blake and I will run through a, a quick and dirty primer session on electrification, and then after that I'll guide all of us through, uh, some Q&A, uh, amongst ourselves until 45 minutes past the hour.

[00:04:36] Ed Whittingham: Then we'll get to the 15-minute Q&A with all of you tuning in. But before we get there, David, it looks like you have a new office backdrop, which suggests that you might actually have a new job, and we'd love for you to tell us about it 

[00:04:52] David Keith: How did you possibly guess? Yes, I'm at University of Chicago in my new pretty much empty office here, with piles of boxes all around that you can't see.

[00:05:01] David Keith: So yeah, I've taken a job at UChicago as the founding faculty director of something called the Climate Systems Engineering Initiative. And this is, at least in my little word, a pretty big deal. It's the first time that a, a really top research university has committed in a kind of formal, formal consultative way to really push seriously on research on these topics of, of solar geoengineering and carbon removal, this intersection we're ca- calling climate systems engineering.

[00:05:27] David Keith: And it, it, we expect it to really be a big effort. There'll be quite a lot of faculty hires and a series of different pieces connected with this. And so that's really quite unprecedented. There've been other small efforts in these topics, like the one I started at Harvard and elsewhere, but they've all been kind of bottom-up, driven by a single enthusiast, often against kind of opposition because there's been concern about whether there should be any research on these topics.

[00:05:48] David Keith: And this feels really different to have a university do this in a kind of a large scale way. So I'm, I'm really excited and intimidated. I'll be here a lot of the time the next while, but I'll still be in Canmore. That's still long-term home, about a third of the time. And I guess on a note connected with this topic, I on Friday got here, moved into my apartment, met the moving truck, got a new bicycle, and a new electric car.

[00:06:08] David Keith: My first electric. That's kind of exciting. 

[00:06:10] Ed Whittingham: Awesome. Well, and, and it begs the conversation, an actual longer EvC conversation on climate systems engineering, which we've been promising for a while, but we will get to it. And yes, go ahead. 

[00:06:22] David Keith: And actually, I should just go on one... And, and on that note, I've had that electric car now for quite a few days, and I've been to the airport and back and various places, and I still haven't figured out how to charge it because charging is not as convenient as it should be even in my fancy apartment.

[00:06:34] David Keith: I mean, I'm not worried that I will fail, but this illustrates the fact that on the ground, even in urban Chicago, it's just not quite as easy as it should be. 

[00:06:42] Ed Whittingham: Well, I hope you do figure out how to charge it. Uh, otherwise 

[00:06:44] Sara Hastings-Simon: it's gonna be a large paperweight. You, you plug the thing into the connector, you know, and then 

[00:06:48] David Keith: Well, I was trying to do it on the cheap in this fancy apartment 'cause there's a lot of just regular plugs which would, you know, give me some charge overnight, but they seem to have disabled all those.

[00:06:56] David Keith: It does come with a free two years of Electrify America fast DC charging. Uh, we certainly will figure out how to charge it, but it just isn't quite as easy as it ought to be. 

[00:07:06] Ed Whittingham: Well, we look forward to hearing more about, about your research. So let's, yeah, let's, let's turn to Blake. Let's get back to the topic du jour, or build upon the topic du jour of, of electrification.

[00:07:16] Ed Whittingham: So Blake, feds have bet big on electrifying the Canadian economy, and they bet big on increasing the role of electricity for end use purposes in Canada. Why, why do we need to do that? 

[00:07:28]  Blake Shaffer: Yeah. You know, I, I like a quote from Jesse Jenkins, the modeler out of Princeton. He's got a great quote about the role of electricity, and he calls it the linchpin, sometimes the cornerstone of Net Zero ambitions for two reasons.

[00:07:41]  Blake Shaffer: So one is we can clean up the production of electricity, so make it a cleaner on the supply side. I think you noted at the outset, Ed, that that's an advantage Canada is starting with. So we've got this huge head start in terms of a decarbonized system. Over 80%, uh, of generation is, is zero emission, largely due to the historically large hy- hydro systems we have across the country.

[00:08:04]  Blake Shaffer: And so that lends itself into why don't we take advantage of this fact that we've already got this clean system? The US is sitting around 40 or 50% clean. They've got to, you know, what's the word I'm looking for? Like, walk and chew gum at the same time. They've got to clean up their system while they electrify to get the benefits out of it.

[00:08:21]  Blake Shaffer: In most of Canada, I'm sitting here in Alberta, so we're the, kind of one of the big exceptions, in most of Canada you can jump right into electrifying other processes or other parts of the economy and get the full environmental benefit of, of leveraging clean electricity. But I think, I think they're looking at that and saying, "Hey, we can look at transportation across Canada."

[00:08:42]  Blake Shaffer: You know, that swaps between one and two in terms of the biggest sector for emissions. We can electrify that, and we don't have the issue in most of the country, uh, of, of charging those cars off of coal. We can charge it off clean power. We'll look at, um, buildings, so heating. So that'll be another sector.

[00:08:59]  Blake Shaffer: You had Chris Bataille on your last episode. Chris is the specialist I think of when I think about the harder to decarbonize industrial sectors. And so those might trail, but we're already seeing some inroads into some of those areas like steel and cement that he looks at. The challenge there is really high heat needed, but, but w- eventually we'll get there.

[00:09:18]  Blake Shaffer: But transportation is really one of those ones, and, you know, David's a prime example. There we've got a recent convert into electric vehicles, not without its challenges, but that's one where the, the switchover is going to be relatively easy. Uh, the cost d- differences are shrinking, and so I think we're gonna see that move very quickly here in the, in the next few years.

[00:09:39] Ed Whittingham: Gotcha. So I mean, to, to summarize, it's a bet that we're gonna electrify parts of our transportation system. We're going to electrify, uh, heating for not just residential buildings, but also commercial buildings. We're gonna electrify parts of heavy industry like, you know, electrify, say, cement kilns where, where possible.

[00:10:00] Ed Whittingham: But what... So what degree are, of increase in electricity supply are we talking about? Just use finger math, and maybe, Ed, turn to you. This would be a good time to just touch upon the difference between, uh, capacity and generation because that's gonna play out throughout our conversation. 

[00:10:18]  Blake Shaffer: Sure, sure, sure.

[00:10:18]  Blake Shaffer: Happy to do that. Um, in terms of numbers, studies differ on this. I always use a rule of thumb is around a doubling. Of energy, so of actual generation needed, so electricity. So we're gonna increase the amount of electricity generated because we're gonna be using less en- uh, of other energy forms. If you look at overall energy use, this tends to decline 'cause many of our electric uses are more efficient.

[00:10:42]  Blake Shaffer: The car is a great example. You use that electric battery, it's far more efficient than an internal combustion engine because of all that heat that comes out and it's wasted off of internal combustion. The overall energy might decline, but electricity as a share of our final energy use will increase. So a doubling is a good rule of thumb, and I've seen anywhere from an increase of, you know, one and a half to three to four, and that probably depends on just the extent of electrification that occurs.

[00:11:09]  Blake Shaffer: The thing you mentioned, generation for capacity, I love that. That's part of my, like, lecture one in my electricity markets course. Sara and I taught a Electricity 101 for Journalists workshop for a few years, and we also use that 'cause it often gets confused. So think of capacity, we measure that in units of watts or megawatts.

[00:11:27]  Blake Shaffer: That's the instantaneous ability to provide power. So instantaneous, it's like a flow. Energy would be measured in watt hours or kilowatt hours or megawatt hours. So if we have something that can produce one megawatt and it runs for one hour, it produces one megawatt hour of energy, and that's actually what we use, so think of that as some stock, some amount.

[00:11:48]  Blake Shaffer: So this matters a lot as we move to a system that has a lot more renewables in them 'cause historically, energy and capacity were kind of coupled. Uh, you have a gas plant, it's got 100 megawatts of capacity. You can rely on it maybe 80 to 90% of the time to deliver you 100 megawatt hours over an hour. Uh, with wind and solar, that changes, so we're kind of decoupling this concept of firm capacity and the energy it produces So we're likely to see a larger build-out of capacity because the assets that we're gonna have in the system with more renewables run at a slightly lower capacity factor.

[00:12:26]  Blake Shaffer: They run less frequently. Ballpark numbers, solar, you can think about getting around 20%, wind around 40%, whereas a gas plant, an efficient gas plant would be somewhere around 70 to 85%. And so we'll probably, we'll be getting a lot more energy out of these other sources, but we'll need more capacity to deal with the lower capacity factors.

[00:12:47] Ed Whittingham: Okay, so generation capacity have been moving roughly in lockstep to date, but if you need to double generation, then finger math again, you, what, likely need to triple, triple capacity? 

[00:12:58]  Blake Shaffer: Perhaps more. Perhaps even more so. Now, one thing I think we'll get into today, this is really the area of focus for me in my research, is the answer to that question, how much extra capacity you need, really depends a lot on when you're gonna need the electricity.

[00:13:15]  Blake Shaffer: To the extent we can be flexible on our demand and, and start moving demand around, you need less capacity. Historically, we don't like to do that. You know, when I want my electricity, I want my electricity, and I don't think that's gonna change, uh, for a lot of people, but there's some margins where it will be possible.

[00:13:31]  Blake Shaffer: Again, I'll go back to EVs, that's a, a really interesting area that we can talk about in terms of more flexibility there. So to the extent we can have some more flexibility on the demand side, we won't need as much capacity on the supply side. That is a really interesting area 'cause there's technical engineering aspects, but really the bulk of it is social, it's behavioral, it's, it's how we're gonna interact, and it's asking people to potentially change the way they interact with their electricity system, which will deservedly get some pushback.

[00:14:02]  Blake Shaffer: And so I, I'm really interested in that because there's huge savings to be had if we can get some more flexibility. 

[00:14:08] Ed Whittingham: Sure. Well, maybe you can expand upon that because, you know, a change in how consumers think about their relationship with electricity, so I'd say my relationship with electricity right now is, is parasitic or one way.

[00:14:19] Ed Whittingham: I demand and it supplies. 

[00:14:22]  Blake Shaffer: Yeah. 

[00:14:22] Ed Whittingham: So what, what, w- what kind of change are you talking about? 

[00:14:25]  Blake Shaffer: Yeah, so let me use a concrete example of something where, like EVs. So EVs are interesting because unlike most electrical devices, when we want the service that comes out of them, say a light bulb, we want the light, that's, uh, coincident with when we have the electric draw.

[00:14:43]  Blake Shaffer: Those two things happen at the same time. Because of those, that big battery that's sitting in David's car, that isn't the case for EVs. The driving service, moving that, you know, moving around your city isn't gonna be, uh, happen at the exact same time when you're charging. So we decouple that, and by decoupling that, that gives us tremendous flexibility.

[00:15:03]  Blake Shaffer: We probably don't have flexibility around when we want to use the service. You know, when David needs to commute to work, he's gonna commute to work. There's small margins of adjustment there, but there might be a lot of flexibility around when we charge. And so what do we need to think about rather than just, you know, come home, plug in at 5:00 PM, which is really gonna lead to a huge increase in capacity needs.

[00:15:24]  Blake Shaffer: If everybody is coming home, adding to what is already a peak at around 5:00, 6:00 PM with, you know, lighting and uses around their home, all of a sudden everybody's charging in a level two charger, which- draws around six to 10 kilowatts, which is three to four times a normal home, and everybody's doing that, that just means we need a ton of capacity in the peak.

[00:15:46]  Blake Shaffer: We need to encourage people to, to change when that happens. So one is we need incentives, and I've got some studies, and there's been others where we show, like, a moral suasion, a nudge. It does nothing. It really does. Sad, but it does nothing. You need some incentives. You need some money on the line. A- and it can be really small is what we're finding, like really small.

[00:16:04]  Blake Shaffer: Um, but you also need to make it easy, and that is the key thing, and I think that's sort of common sense to most of us. Um, you need to make it easy for folks to shift. Y- Asking people to run around the house, turning lights off or changing when they heat their oven, those, those aren't gonna work. You know, there's just, there's inflexibility there, and there's too much opportunity cost in your time.

[00:16:25]  Blake Shaffer: But making it easy, and increasingly we can 'cause all of these devices are connected now through telemetry. I can use my phone and talk with my, my car. I can use my phone and talk with my oven. I, I'm not that bored or lonely to do so yet, but, uh, it's, it remains an option. But EVs especially, there's apps now where we can control it really easily, and it's also material.

[00:16:48]  Blake Shaffer: You know, asking people to do this for saving money on one kilowatt hour shifting, if that's a dollar per kilowatt hour, it's a big number, um, they're not gonna do that. Run around and create discomfort in your home, save a dollar. You know, I, I risk, you know, leaving a cold shower for my spouse for, and tell her I made a dollar.

[00:17:06]  Blake Shaffer: That's not gonna work. But an EV has a 75 kilowatt hour battery in, in some of them these days. If you can save a dollar per kilowatt hour avoiding some critical peak, uh, you're gonna do that, and it doesn't have to be that much by any means. But, uh, all of a sudden the dollars start to add up. 

[00:17:23] Ed Whittingham: Yeah, yeah, and but it gets, gets to that challenge of, for instance, just because my phone can talk to my thermostat doesn't mean I'm actually gonna use my phone to talk to my thermostat if I really don't have a strong incentive to do so.

[00:17:35] Ed Whittingham: But let's... So Sara, I'd love to turn to you. You s- you, you look at electricity a lot, so you know, Blake had just mentioned that generation capacity, you know, needs to triple or higher, let's say quadruple. That's, that's aggressive for us to get to net zero when we face nimbyism We face BANANAism, you know, the more virulent cousin of NIMBYism, build absolutely nothing anywhere near anyone.

[00:18:02] Ed Whittingham: We require these behavioral changes of people. We need to do this to get to a net zero grid, and we've got some regulatory sticks and carrots, but it still seems aggressive when the challenges are often societal and political rather than just purely economic. 

[00:18:19] Sara Hastings-Simon: Yeah, I mean, two, two thoughts on that. I mean, you definitely make it, make it sound challenging.

[00:18:23] Sara Hastings-Simon: I think one thing to keep in mind, um, when we think about the build-out that we need and, you know, that doubling of, uh, electricity, say, let's call it to out to 2050, you know, that translates to, to something like 2.5% of growth per year, which is really significant if we compare that to the last decade or so, um, of growth in electricity in, um, Canada and in North America.

[00:18:45] Sara Hastings-Simon: But it turns out that that's actually, that last decade is sort of special in that it was the decade where we actually made some really significant progress in energy efficiency, a lot of it coming from lighting in that case, so, um, you know, LEDs and really being able to reduce the amount of energy that we need that really cut the, the, the growth.

[00:19:02] Sara Hastings-Simon: And so if you go back a little bit earlier to the period from, say, 1960 to 1990, we saw electricity growth in Canada of 4.8% a year during that period, so, um, almost double the kind of growth that we're talking about we had. Now granted, as you said, I think that there were perhaps less issues of NIMBYism during that period, and are, and, you know, arguably also there was, there was much less, um, you know, kind of proper consultation with First Nations groups.

[00:19:30] Sara Hastings-Simon: Um, a- and so I'm not proposing that we, you know, go back and do everything like we did in the '70s, but I do think that that's an important metric to keep in mind, in that, you know, this is a challenge that we have to build, but it's not a challenge that we haven't, in some ways, done before. I, I think the other thing when it comes back to electricity, and particularly, you know, the significant amount of electricity that we use in our homes, is that it is, you know, it's, it's about finding different ways to make- this attractive to people and make it work and make it work for them, right?

[00:20:03] Sara Hastings-Simon: Like Blake was saying, you know, there's opportunities to have savings that are material, and that gets people excited. There are opportunities to have ways that you're using electricity to do things that are actually just more convenient or more comfortable. You know, when we talk about electrifying, uh, heating in homes and, and doing that, you know, yes, there's an element of an efficiency piece there, but making a home that's more efficient and that has a, a better heating, uh, system, that's also just a comfort issue as well, too.

[00:20:31] Sara Hastings-Simon: And so I think that we do have to get away from kind of selling this, if you want, as just purely a, "Well, we've all gotta do this because of the climate challenge," and look for the opportunities that are gonna get people excited about maybe it's not talking to their, uh, oven with their phone, though I have to admit, I have used my phone to preheat my oven to make dinner while I was, uh, on a call.

[00:20:51] Sara Hastings-Simon: So it can, even that, even that can be convenient as well, too. 

[00:20:55]  Blake Shaffer: Yeah, quick story- Can I just add to that, Ed? 

[00:20:56] Ed Whittingham: Sure, yeah. Go ahead. I, 

[00:20:57]  Blake Shaffer: um- Well- 'Cause I, Sara said this before, and I, I fully agree with her. When we're forecasting the future and looking historically at, like, well, we've, we haven't built that many batteries.

[00:21:07]  Blake Shaffer: How are we gonna build that many batteries? A, a lot of the, you know, past gives us an indication, but it doesn't portend the need because we didn't need to. So why would we look at flexible demand? We've never done that. We've never gotten people to be comfortable with that because we didn't need to. We had a system that was comprised of dispatchable flexible supply.

[00:21:25]  Blake Shaffer: As that's changing, we need to change our mindset. We also have the technology. The other one on the build-out, I fully agree with, with what Sara said there. Yeah, we haven't seen that type of growth because- Energy efficiency has slowed down the need for it. However, if you look at a, a microcosm of Canada, if you look at Alberta, we did get that kind of growth because we had that massive industrial growth.

[00:21:47]  Blake Shaffer: So we were building probably around two to three percent per year because of the electrical need for the oil sands largely. So there's a huge electrical need there, and we did it, and so it is possible when it's needed. 

[00:22:00] Ed Whittingham: Yeah. And we, and we've had explosive growth, frankly, of, of solar generation in Alberta in the last, uh, three years that has exceeded even the most optimistic of forecasts.

[00:22:11] Ed Whittingham: All right, David, I know you've done a lot of work electricity earlier in career. The first time actually I met you, you came in to talk about some of the research you'd done on, uh, large scale wind generation, and I remember you talking about some of the exciting challenges that we would have around decarbonizing grids.

[00:22:26] Ed Whittingham: So what, what are your thoughts? 

[00:22:28] David Keith: Yeah, a couple things. Uh, that was a great primer, but I guess I have a couple nerdy, uh, comments to say. One is it's important to be clear about the difference between capacity factor and availability. So capacity factor, as you know, is the average amount the system asks for something to produce as a fraction of its peak.

[00:22:44] David Keith: So yeah, wind is sort of, with solar is twenty-ish, and, and, and, uh, gas plants are seventy-ish. But availability is the fraction of time that they're there if you ask for them. Mm-hmm. And, and gas plants are typically in the high nineties for availability. And in terms of the challenges of managing a plant, that's really a better comparison.

[00:23:03] David Keith: The point is that twenty percent for solar is just as much as there is for solar. The seventy percent for a gas plant, and some gas plants will be higher and lower, is an economic outcome of a system that's trying to optimize for lowest cost, so it's really not... You gotta be careful comparing those numbers.

[00:23:19] David Keith: I guess another thing to say is, maybe I'm just picky about this, but I think, I think it's very fair to call wind or, uh, solar or hydro zero emission 'cause they're effectively zero emission. No problem with that. I, I, I'd be a little cautious about just blanketly calling them clean. There's no question that fossil fuels are terrible and that we need to move away from fossil fuels, but these alternatives are not necessarily so perfectly clean, and particularly on some environmental measures, hydro is pretty bad, and wind also has significant land use footprints and, and even a climate footprint.

[00:23:52] David Keith: That's not to say that given a choice, of course, I would choose wind over coal, but, uh, any large energy system has impacts, and I think one thing I worry about is in our rush to deal with the climate problem, which we have to deal with, that we forget other environmental consequences that we need to keep thinking about.

[00:24:09] Ed Whittingham: Yeah, that's a good point, David. And though we can trust the opponents of renewable electricity, and there are many out there, to always remind us that there is no free lunch when it comes to energy, which we talk about a lot on this show. And going back to when I first met you, a- and perhaps I've said this before, but I think you said when large, uh, production and you're imagining the sort of the heartland of North America, you know, full of wind turbines and the, the, uh, the spots for the highest wind resource, you thought the environmental benefit to liability ratio might be 20 units of benefit to one unit of liability, and you revised that down to probably five units of benefit to one unit of liability, if I 

[00:24:49] David Keith: recall correctly.

[00:24:49] David Keith: Well, the Pepsi, I, I, I think I would try to never do that without saying what benefit. Yeah. But, but I think the specific thing I remember saying when you had me talking to the Pembina leadership at one point was I'd looked at the Pembina website, and it just talked about, uh, bioenergy as, like, a clean energy source.

[00:25:02] David Keith: And I tried to really shake you guys up and say, "Look at what happened in the UK." We switched to being dominantly, uh, fossil-fueled from dominantly biofuel around 1800, and it was because there was kind of environmental holocaust where that use of biofuels was just immensely destructive. And I think there certainly may be places where biofuels are the right answer, but I was trying to poke you guys a little bit to say there's kind of a problem with a group that's an environmental group, and sort of that's the, the, the sticker on the can as an environmental group, just kind of unabashedly saying biofuels might be a good thing when we have this just immense historical and ecological knowledge that they can be hugely harmful.

[00:25:37] David Keith: So I get that we all sort of know that, and we certainly say this in the show a lot, but I think that certainly gets lost in current environmental advocacy, and it's important that we keep thinking about that balance 'cause we have real choices to make as we decarbonize. 

[00:25:48] Ed Whittingham: Yeah, I remember that time you briefed Pembina's leadership and you and I went canoeing together on the solstice float after that.

[00:25:54] Ed Whittingham: Some of my colleagues, after you poked them, wanted me to poke you out of my canoe- 

[00:25:58] David Keith: Yeah, 

[00:25:58] Ed Whittingham: I know. I know ... while we're sort of mid-river. All right. Let's- 

[00:26:01] David Keith: Luckily, you restrained them. 

[00:26:03] Ed Whittingham: I, I, yeah, I, I've shown great restraint over the years, great restraint. Um- 

[00:26:07] David Keith: But actually, maybe just one... I really like the way, uh, sorry, Blake and Sara both ended.

[00:26:11] David Keith: I think one way to, to talk to people is to show them this steady kind of century-long increase in the fraction of final energy, which is electricity. I think there really is a deep way in which it, which because of climate, we have to accelerate the transition, but we're pushing the system in the way it was moving anyway, which is basically to electrify everything.

[00:26:31] Ed Whittingham: Let's, so let's talk about, uh, on this feasibility question, let's talk about transmission because, and Blake, maybe I could turn back to you. Why should transmission... I, I, I constantly hear of transmission being a bottleneck, and particularly in this province where it's become terribly politicized. I don't quite understand why it should be a bottleneck when we've got non-wire solutions at our disposal, and we've actually, I mean, to Sara's point, sure, it's not the, the halcyon days of the 1970s where we're building new generation capacity here, new pipelines there, social license wasn't even a term, but we are clearly still building generation capacity.

[00:27:09] Ed Whittingham: We're building new transmission, but everyone talks about it being this massive barrier. We could say, "Okay, well, it's a barrier. It's gonna be difficult to build. We'll build less," but we also have non-wire solutions at our disposal. You know, we've got in this province, in Cypress County, uh, a solar project, Jurassic, coming online next year, 220 megawatts AC with 80 megawatt hours of battery storage, and there are more, plenty more examples like that.

[00:27:35] Ed Whittingham: So help me to understand why transmission continues to remain the sticking point. 

[00:27:40]  Blake Shaffer: Sure. W- w- well, let me start with where you just left, though, on non-wire solutions, which, uh, perfectly correct what you just said. Those will be increasingly useful because We've now got this situation where we're building a lot of solar in the south and really southeast part of our province where there wasn't as much generation before.

[00:27:58]  Blake Shaffer: And so if you're gonna build transmission to meet the peak of solar, say it's a 200 megawatt solar farm, Jurassic, and that line's only gonna get used 20% of the time if that was the only thing there, that's clearly gonna be an expensive proposition to add it on. Now, obviously you're gonna have other assets, so you're gonna try to increase the utilization rate of that transmission line.

[00:28:19]  Blake Shaffer: But if you can co-locate storage, what that does is not just about smoothing the generation of solar into the evening. It's not really about that. It, it's doing that for the sake of, um, using more transmission, allowing us to build less than the peak solar output of transmission and get a higher utilization rate on the transmission.

[00:28:40]  Blake Shaffer: So that's gonna be really important as we build out in new parts of the province, that we think about that co-locating aspect to allow us to build less transmission t- for the, for these same assets, get a higher utilization rate. Where transmission presents as a real bottleneck in my view is when we start talking about things like interprovincial transmission.

[00:28:58]  Blake Shaffer: There's already challenges building in province, but interprovincial in Canada is a beast into itself. Um, largely because in Canada, every electric- every province is really its own master of its electricity system, and they also have very different structures. Most of Canada is on a traditional cost of service, uh, monopoly utility, often government owned.

[00:29:24]  Blake Shaffer: Alberta is very different in that it's a competitive generation system, and so trying to connect those is really challenging because there's, um, there's really differences in outcomes. You have a lot of different players with different roles here that stand to gain or lose, uh, with different power in terms of their voice and, and how much they're heard.

[00:29:47]  Blake Shaffer: And so tying those together, uh, is challenging. And there's just the general aspect of building linear infrastructure in this country and all, you know, US as well is, is hard. Y- yesterday there was actually an announcement, the TransWest Express, which is a very large high voltage DC line running from Wyoming wind down into the Nevada, California border.

[00:30:09]  Blake Shaffer: It got approval from the, I think it's the Bureau of Land Management yesterday to start construction. That's a big deal That was first proposed twen- uh, where are we now? Two, two, 2023. It was first, first proposed in 2006. So however, however many years that is, that's how long it's gotten to the point of, okay, shovels in ground, and, and we're not that much better here.

[00:30:32]  Blake Shaffer: So that, that, that's one of the issues we face in terms of building out transmission, is you have, uh, the different players who stand to benefit, who are gonna create opposition. You have traditional, uh, land rights and treaty rights challenges of building li- linear infrastructure, um, mega-project risks. So there's a lot of obstacles.

[00:30:50]  Blake Shaffer: The reason folks like me and Sara and others, you know, speak so highly of this is pretty much every study you look at in terms of the cost of decarbonizing shows how much cheaper it is to try to decarbonize electricity supply when you aren't just making yourself little electric islands, when you can...

[00:31:08]  Blake Shaffer: You know, it's like principles of trade. I'm an economist, so when you can trade with your neighbor, you're gonna find some advantage, and BC, Alberta makes a great case because we have a much better solar and wind resource here. We have much higher capacity factors, uh, of those two things. BC is much lower and is higher cost in terms of the sites they have to build them.

[00:31:29]  Blake Shaffer: BC has much better assets in terms of flexible capacity. They've got a lot of storable hydro and about to add to that with Site C. And so the mix there, the trade, and it's a two-way trade, is really mutually beneficial, and I've been trying. I've been working on this for many years. I've worked on both sides.

[00:31:46]  Blake Shaffer: I was at BC Hydro for part of my career. I was at TransAlta for part of my career. I advised both governments, but there's a lot of obstacles. I won't, uh, I won't pretend there aren't. 

[00:31:54] David Keith: I've advocated at both governments for a thing. I've ... I mean, I feel like we've tried forever. It's, uh, it- there's just a way in which it seems to get no traction.

[00:32:02]  Blake Shaffer: It's really hard. The only difference now, of course, like, you know ... So my dad is actually an economist as well. It's, uh, the family business. Uh, he told me, like, he went to the Senate, uh, Canadian Senate, and presented on the Grid West proposal, I think, in 1984. So the same concept, and then here I am doing the same testimony 40 years later.

[00:32:21]  Blake Shaffer: The big difference is there wasn't much reason to do it before. You know, everybody was so self-sufficient, mostly trade with our US neighbor, bigger markets. The biggest difference now is this push for decarbonization. That's the increased value, so that's why you have the feds suddenly really motivated, excited, willing to throw some serious dollars at it.

[00:32:41]  Blake Shaffer: I'll, I don't know if I can be political at all on here, Edmiel. Yes. Uh, the, the Trump years showed us that, you know, relying solely on the US as our main trading partner is potentially risky. So having a little bit more East-West connection, I'm not talking about trans, across Canada wires. It'll be regional, but having a little bit more trade within the country and a little less reliance on the US is probably not a bad idea to diversify a little bit that way.

[00:33:06] Ed Whittingham: Yeah, and going back to budget 2023's big bet on electrification, so there was a new tax credit in there that is a clean electricity investment tax credit largely for Crown corporations. It's eligible for taxable, non-taxable entities, but it's seen as a big bet and a big fund for Crown corps for big transmission projects, and it's eligible for inter-provincial.

[00:33:31] Ed Whittingham: The challenge is it isn't so much economic. It's that to what you're talking about, and, and we've talked about a lot on this show, Blake. Um, you know, we know where the strategic interties are, but there's inter-provincial politics, Crown corporations, little fiefdoms, all these barriers, and, uh, one intertie that also makes sense is between Saskatchewan and Manitoba.

[00:33:53] Ed Whittingham: Yep. But you've got SaskPower, Manitoba Hydro at each other's throats. And Manitoba is going through a drought period. So right now, you know, you could say, "All right, well, this, we want to do this," but Manitoba would say, "Hey, you know, if we're worried and we're hydro-based and we're going through this drought, the last thing we want to do is be exporting our electricity to Scat- to Saskatchewan right now.

[00:34:14] Ed Whittingham: And oh, by the way, we don't like each other." Yeah. 

[00:34:17]  Blake Shaffer: Yeah. Al- although I'd say on those two, you're right, they don't necessarily like each other, but there has been a little bit more cooperation. Smaller scale, but there actually are some deals and some transmission expansion happening. It's, in a way, a little bit easier because they're two Crown corps.

[00:34:31]  Blake Shaffer: So yeah, maybe sometimes they butt head, but at least they have the same structure, and so deals are a little bit more possible. I mean, that one's a great example. If you think about if that was one Saskatoon and they were looking at decarbonizing Saskatoon, well, you've got ... I mean, they, they just built the Keeyask Dam, which instead of dealing with Saskatchewan, they deal with Wisconsin and North Dakota in contracts.

[00:34:55]  Blake Shaffer: They have the Conawapa hydro facility as their next big project. And I fully agree with what David said in terms of caution around, you know, mixing up clean versus zero emission. Like, large, large reservoir hydro is not without environmental consequences, so you w- really want to think through that. But if, if it, if it still made sense, there, there is a massive potential decarbonization with flexibility Very close in terms of being able to connect through to a region that doesn't have those types of options 

[00:35:23] David Keith: I think the point is we have a bunch of hydro now, and for the hydro we have, we have this terrific resource that we could use to help manage intermittency that really is a kind of national treasure, even if that treasure was bought at big environmental cost.

[00:35:36] David Keith: Uh, I can't resist, you kind of implied that big hydro is a problem and small hydro is somehow better. I have, uh, that's a common claim in the environmental community. I've looked hard for evidence to back up that claim, but I've never found it. 

[00:35:47]  Blake Shaffer: Well, I would say the biggest difference there would be the reservoir, the flooding, and 

[00:35:51] David Keith: potential methane Sure, but you've got to measure it, got it, but you've got to measure it in, in, in per unit benefit, and, and run of river has lots of impacts, so I think it's, it's one of these common things that advocates like to say where you search, I've literally spent hours looking.

[00:36:04] David Keith: I just don't think there's evidence to back it up. 

[00:36:07] Ed Whittingham: Okay, I want to bring Sara back in. Sara, love to get your thoughts on transmission, and then, uh, I'd love to talk about local stakeholder concerns. Hmm. Um, you know, I've made this sort of flippant quote about the halcyon days of the '70s when we're building energy infrastructure left, right, and center.

[00:36:22] Ed Whittingham: It's harder today. Social license is an issue, and frankly, in the province where three of us s-sit right now and where David spends a third of his time, we have real local stakeholder concern around the explosive growth that we've seen, particularly in solar electricity in the last few years, and we've got a premier who frankly has been on the warpath, uh, against renewables, and it could very well become a, a pointy election issue.

[00:36:49] Ed Whittingham: But Sara, your thoughts. 

[00:36:50] Sara Hastings-Simon: Yes, I mean, start, maybe starting with the interties, you know, I think I, I mean, I come to all of this with a technical background, right? But I think the more time that I've spent and is looking at these challenges, the more convinced that I am that it's really not so much in many cases about the technology, but about the people or the structures that they're operating in.

[00:37:07] Sara Hastings-Simon: I think that's very true for the interties situation, and, you know, when it comes to especially the crown corporations, but then also the, um, entities that regulate, you know, Alberta's deregulated market, I think one of the big challenges there is that they simply don't have a strong enough mandate and a strong enough requirement to look at decarbonization and to have that as a target or a goal at the same level that they have, um, you know, providing electricity, uh, reliability, uh, cost, things like that.

[00:37:37] Sara Hastings-Simon: So I think that that, you know, until you get there- It's going to be very hard to get the kind of coordination that we actually need because as, you know, as, as I think Blake was saying before, the, the, the big thing that pushes us towards interties as a solution is the decarbonization challenge, right?

[00:37:56] Sara Hastings-Simon: And so as long as you say that you should decarbonize, then, you know, every study that I've ever seen, uh, about Canada shows that it's, you know, completely advantageous to do so by building interties. If you're not necessarily trying to do that, it's, you know, it, it may may still make sense because there's trade, but it's harder to make the case, and that is, I think, part of the challenge when you go back to, you know, these Crown corporations.

[00:38:17] Sara Hastings-Simon: You can have individuals within them that have, say, good intentions, or you can have sort of a general sense of, oh, yes, we want to somehow, you know, reach these decarbonization goals. But they both, you know, by law are following these very strict, you know, mandates that they have around what they need to prioritize and what they need to focus on.

[00:38:36] Sara Hastings-Simon: And then also simply they are, you know, all individuals working within a, within in- institution and, and so they, you know, have their own views and opinions. And so I think that to me, one of the biggest pieces missing that, you know, it ... And I'm not trying to say that it's gonna solve all these other questions that we're gonna talk about in a second, but it will, I think, still go a long way towards saying, you know, if everybody, if every Crown corporation across Canada, every Crown, uh, you know, electricity corporation across Canada, had the mandate of decarbonization at the same level, you know, obviously we need to have reliable electricity, it needs to be cost effective, but if we could add that third pillar of the stool of it needs to be zero carbon, that would, I think, really change the way that those different organizations and groups are working with each other and lead to a lot of that collaboration where, you know, if you're worried about your drought year, what you might actually do then is look at, you know, can there be wind and solar development that happens in Saskatchewan that helps to, you know, we can be importing that power in Manitoba in a certain way.

[00:39:33] Sara Hastings-Simon: And, and then I think that then ties to this broader question of, you know, landowner impacts and, and stakeholder concerns where I ... You know, I think one of the challenges that I see there is that There are two pieces to it, or I would separate it out into two distinct groups, right? And I think there is one group, and this is starting to be better documented, right?

[00:39:52] Sara Hastings-Simon: There's one group of these concerns that are really not legitimate concerns. And, and there, there's a second group. So I'm not saying that everybody who has concerns sits in this bucket. But there is a significant effort ongoing by legacy, uh, you know, fossil fuel producers to create, sometimes people call it, you know, astroturfing, but to create this sense of concern, um, and give the impression that there are a local or landowner or, you know, community concerns that are simply trying to prevent an acceleration of a transition, right?

[00:40:27] Sara Hastings-Simon: And that is, I think, very effective, and I, I imagine that, you know, groups are doing this, uh, organizations are doing this because it's very effective. It very much mixes with, you know, the real concerns that individuals have around how we create consultative processes that don't just run roughshod over, you know, environmental and, uh, land concerns.

[00:40:49] Sara Hastings-Simon: Um, I think on the second one, you know, with good processes in place, I think you can get there, not least of which, because as a s- the systems as a whole are much lower impact when they are renewable than the fossil alternatives. And so, you know, I think you can arrive at that, um, at that better outcome.

[00:41:05] Sara Hastings-Simon: But I think one of the biggest challenges is the mixing in of the sort of delegitimate concerns, if you want, um, that, that are being manufactured. 

[00:41:14] Ed Whittingham: A- and let's not discount the, the increasing distrust of institutions, and particularly public institutions. And if you look where a lot of the development is happening and the explosive growth in r- renewable energy, and particularly in solar, it's gone from seventy-five megawatts to eleven hundred megawatts in, in three years.

[00:41:32] Ed Whittingham: It's like, in the analogy I heard recently, it's like the car replacing the buggy in terms of, you know, electricity generation locally. But this is in a place where, uh, a lot of landowners and municipalities, they're saddled with orphan wells, they've lost their property taxes, and they've frankly been screwed over by not all, but some parts of the oil and gas sector.

[00:41:54] Ed Whittingham: And they don't think that the regulator Um, even if it's a different regulator, it's not the AER, the Albertan Energy Regulator, it's the AUC, the Alberta Utilities Commission, they don't, they don't think they're protecting them from basically orphan wells 2.0. And these big public institutions say, "Don't worry, trust us."

[00:42:13] Ed Whittingham: And we've got this massive movement of, "No, we don't trust you, and so we're gonna put up these barriers to you kind of doing what you want to do when we have control over our home turf." But- 

[00:42:23] Sara Hastings-Simon: Yeah, and I think that points to part of the solution, right? Which is you have to actually go back and fix the orphan wells 1.0.

[00:42:28] Sara Hastings-Simon: I think that's not indistinct from the challenge of, you know, the next- Yep ... round of infrastructure that you wanna build in a re- you know, especially in a region like Alberta where you're living with that challenge. Because of course, why? You know, you can say, "Trust us," and I mean, I think there is something to the argument that the underlying economics of it all is a bit different 'cause you're not, you know, getting to a point with a solar farm at the end of its useful lifetime that it's, you know, really just a liability.

[00:42:50] Sara Hastings-Simon: You can either keep it running or redevelop it, so it's, I would argue it's an easier problem. But I, but yeah, I mean, I think that, that's all the more reason that we should be, you know, doubling down on, on fixing the orphan well problem now. 

[00:43:03] Ed Whittingham: Yeah. And, and I was, I was at the Canada Strong and Free Network Conference, which is the annual, uh, premier gathering of conservatives in the country.

[00:43:12] Ed Whittingham: I was joke, I was like the, uh, the hen let loose in the fox house when progressive like me comes in, but full kudos to them for inviting me in and letting me say my piece. Premier Danielle Smith spoke there the day before, and she said three things about electricity. She said... Well, energy. She said, "Alberta is a natural gas basin, and heating stoves electricity should be natural gas-based.

[00:43:32] Ed Whittingham: Our grid instability this winter is due to solar and wind, and the federal vision for Alberta is making Albertans dependent on unstable energy." Uh, that's, that's a softball, by the way. A loft ball, Blake, if you wanna get political on this show. If, uh... And may- maybe we'll give you 30 seconds on that, and then we're gonna start taking questions from the audience.

[00:43:54]  Blake Shaffer: Oh, great, great. You got a lot to go by there. Um, I like what Sara said, we've gotta fix orphan wells 1.0, because that is being leveraged as a opposition to something that is r- materially different, solar farms, because, you know, you deplete an oil well, you don't deplete the sunshine. You can repurpose that right away with new panels.

[00:44:13]  Blake Shaffer: Um, but that is being used for opposition, is what about the end of life liabilities on solar? We, maybe we need to impose bonding requirements on solar, yet we have this massive oil and gas end of life liability where that's not seemingly part of the discussion. On the instability thing, just briefly there, um, I mean, this is something where- I would say there's this issue of like the, the perils of bad forecasting becoming, uh, a real problem.

[00:44:41]  Blake Shaffer: So we're not alone here in Alberta. The, the International Energy Agency puts out a solar forecast every year that becomes almost a running joke 'cause every year needs to be increased. It's systematically under forecast every year in, year out. It's a classic chart. We have the same version of it here in Alberta.

[00:44:58]  Blake Shaffer: Our system operator has a forecast of renewables and even la- 2021 was the most recent one, and they forecast less solar in 2030 than I think we have now, and that was the reference case And we can joke about it. You know, they're my friends, so I can chide them, but here, here's the real issue with that.

[00:45:17]  Blake Shaffer: Here we are now in 2023, we have 5,000 megawatts of wind and solar on the system, and these are what we call inverter based resources. So they don't provide something that is crucial to the grid, which is frequency response. This is the, you know, millisecond to couple second responsiveness that deals with, you know, Ed plugging in his toaster.

[00:45:37]  Blake Shaffer: It's not a generator going up and down, it's frequency regulation. And so this is a stability issue. This is, this is the problem. And so what has the grid operator done? They responded by saying, uh, maybe we're at a threshold for inverter based resources. We need to look at spinning resources that are in fossil fuels.

[00:45:55]  Blake Shaffer: We need to curtail the intertie. So they're curtailing the intertie down to one quarter of its capacity so that they can lean on the intertie to provide this in times of need. That's clearly not going to bode well, A, with our neighbors, and B, for the prospects of expanded interties. They have a plan to procure frequency response assets over time, and this can easily be done with batteries.

[00:46:18]  Blake Shaffer: They're a great resource for providing frequency response. So we have solutions. We're not alone in this. They have a plan to procure that, but it won't be ready for, till 2025. So for the next two years, we're going to be dealing with some instability potential, so there's, that's the reliability challenges, and we're going to face higher cost of electricity because we're curtailing imports during peak periods, and those are essential.

[00:46:41]  Blake Shaffer: It's like a large power plant effectively equivalent. And this could have all been avoided if we had forecast a reasonable level and gone and got ahead of the issue with all of the solutions that are out there, from batteries to making wind and solar grid forming rather than grid following to improve demand response products.

[00:46:59]  Blake Shaffer: So I can see this report, which just came out being something that's waved around as yet another, you know, sort of knock on wind and solar when it, it... I don't think I interpret it that way. I interpret that as bad planning. 

[00:47:12] Ed Whittingham: Yeah. Well, I want to turn to questions now, but you, to your point about me turn, plugging in my toaster, true story, my wife and I were looking at new microwaves over the weekend, and, uh, the one that we're interested in, the shopkeeper said, "Well, it's not Wi-Fi enabled.

[00:47:27] Ed Whittingham: Are you okay with that?" And I was like, "Why would I ever need Wi-Fi my, to talk to my microwave through my phone?" But, you know, maybe in terms of demand response, I need to block out the hours when my daughter will heat her bunny pasta in the microwave so that we're properly managing the load. All right, Robert Tremblay, uh, well-known to EvC listeners, you've got a question around hydro provinces and decarbonization.

[00:47:52] Speaker: Hey, you guys can hear me? 

[00:47:53] Ed Whittingham: Yeah. 

[00:47:54] Speaker: Perfect. Okay. So the question is, while in Alberta, Saskatchewan, the Maritimes, there's more work to be done in decarbonization, in many of the hydro provinces, there's been a pretty slow uptake of non-hydro generation, um, maybe with the exception of Quebec. So w- we're getting legacy hydro utilities to take renewables more seriously as a source of energy, be a challenge to roughly doubling the amount of energy from electricity 

[00:48:17] Ed Whittingham: in 

[00:48:20] Sara Hastings-Simon: Canada.

[00:48:20] Sara Hastings-Simon: Matt, maybe to- Yeah, I'm looking at three places. Go ahead, Sara. I'll, I'll jump in here. I mean, I think may- maybe I pre-answered this one a little bit in terms of saying, you know, I think part of it is really needing those legacy utilities to have the mandate to consider that. Um, and, and part of that is really having their governments basically give that mandate to the utilities to do so.

[00:48:37] Sara Hastings-Simon: Um, but I do also think that, yeah, there is a challenge, and it's not, you know ... I, I don't wanna come across as, as knocking the people that are working for these utilities, as that's not the intention. But I think that it is challenging when there is rapid change within a sector, right? And I mean, as we just talked about, that manifests itself in a deregulated electricity market like Alberta, where you end up having, you know, it's individual companies that are making the choice to build, and so they build much faster than the system operator is expecting it.

[00:49:08] Sara Hastings-Simon: Um, I think the way that manifests itself in the, um, in the Crown corporations, in the regulated utilities, is that th- they are probably not building as fast as, you know, would make economic sense. And that can be, you know, things as simple as access to information and access to, um, prices, you know, having a lag to them.

[00:49:28] Sara Hastings-Simon: And so when we have a situation where the costs, say, of renewables are falling quickly, and you have, uh, uh, you know, cost data from a couple years ago that you're using for your integrated resource planning, that can lead t- to outcomes that say, you know, "You shouldn't build this next solar wind farm.

[00:49:45] Sara Hastings-Simon: Instead, you should do something else." And, you know, n- not to turn this into an argument about whether, you know, deregulated electricity systems are, are better or worse for decarbonization, but I think on this one specific point, we've seen that the deregulated systems where you do have, you know, competitive generators coming in who are able to kind of, you know, that's their, that's their business, is to be looking at how to make money out of this, and they are able to, you know, move more quickly and be more nimble.

[00:50:12] Sara Hastings-Simon: Um, they are also, you know, able to be in the situation where they, they don't, some of them don't, say, own those older assets, um, that would be, um, you know, see, see less generation or less utilization as a result of the build-out of renewables. And that is, I think, another, you know, well-documented challenge, too.

[00:50:29] Sara Hastings-Simon: So, you know, I think that there is a challenge there. You know, flip the challenge on its head, though, and say that there's a massive opportunity, and if you get this right, you can get those Crown corporations to, to move quickly, um, and, you know, be, be thoughtful about where they're building and, and put the full power of the, the state behind that build-out.

[00:50:49] Ed Whittingham: Yeah. And I'd, I'd say if you're in a hydro province and you're a Crown corp, and what you know is hydro, I'd also know, like, where is the new mega hydro gonna be developed? Like after, after Site C, after Muskrat Falls, and the boondoggles, and the public concern, and the cost overruns, um, I may be missing it, but I have a tough time seeing large new hydro going ahead in the pr- in, in Canada when the alternatives right now are, are much cheaper.

[00:51:17] Ed Whittingham: Maybe that's simplistic, 

[00:51:18] Sara Hastings-Simon: David. Yeah, I think that's 

[00:51:18] Ed Whittingham: true. 

[00:51:19] Sara Hastings-Simon: I mean, I think there's, I've seen some interesting numbers. I don't have them in front of me, but there is some, uh, room for some upgrading of turbines on existing facilities, right? And so I think that is part of, you know, we need to, we need to be looking at an all-of-the-above solution.

[00:51:32] Sara Hastings-Simon: Yeah. I usually hate that, but, uh, but when it comes to hydro, I think we should be looking at turning over those rocks of where can we be getting more out of our existing assets. Yeah. Looks like David maybe knows more 

[00:51:40] David Keith: than me. Yeah, I mean, I just c- I agree so strongly, and I also want to add, uh, I, I, I really agree with what you said earlier, Sara, about the, the challenge of siting and the need to get the Crown corporations to think differently, and that's really about the f- siting laws.

[00:51:51] David Keith: But on the point you just made, which I also agree with, I think it's crucial for Canada to fund some kind of strategy and study to look at its existing hydro resources and ask not about adding new total capacity, but about adding the ability to swing that capacity up and down, being clear that's not going to be cost-free or environmental impact-free, but it's a huge potential benefit.

[00:52:12] David Keith: We need some kind of serious study to play off the benefits of using hydro as a way to manage intermittency, 'cause it's still much cheaper than batteries against the risks on a site-by-site basis, doing the engineering, really understanding how we do it, 'cause it's a really unusual natural resource that we have.

[00:52:27]  Blake Shaffer: Mm-hmm. My, my first job at BC Hydro was exactly that, David. This, this was 1999, um, was, was looking at diff- changes to our ramp rates- Mm-hmm ... uh, so the movement of up and down, and also looking at the adding of more turbines in existing dams. So I, I don't know if, uh, Quebec probably does this too, but BC built their dams with empty slots- Yep

[00:52:49]  Blake Shaffer: for more turbine expansion. And so those are great incremental projects, um, being- 

[00:52:54] David Keith: But, but- And also maybe pump storage. So in places where you've got a dam and a river and a little bit- Mm ... you've got to ask how much it would cost to add a little incremental pump. Yep. And then you've got to have some coherent way to look at the trade-off.

[00:53:06] David Keith: Uh, I agree, new, new, I mean, Site C is over $10,000 a kW, as well as being an environmental disaster, it's an economic disaster. So I think new hydro is not what we want, but figuring out how to deal with the hydro we have and even add, uh, pump storage is something we should look at very seriously. 

[00:53:23] Ed Whittingham: Absolutely.

[00:53:23] Ed Whittingham: And David, let's not forget, it's, it's an archeological disaster too, environmental, economic, and archeological. Yeah. Okay. Uh- All right ... I want to, I want to get to, get us to another question. Uh, Tom Cullen, uh, I'm going to read your question. Uh, Ontario's just announced a new TOU system, uh, TOU is time of use system, with ultra-low overnight rates, uh, from 11:00 PM to 7:00 AM of two point, 2.4 cents per kilowatt hour.

[00:53:47] Ed Whittingham: Uh, daytime rates of over 20 cents per kilowatt hour, and this is the, uh, particularly for EV charging. What do you think about this approach? Blake, can we turn to you? 

[00:53:56]  Blake Shaffer: Yeah, I can speak. I'm running a pilot right now, or just finished, with, with ENMAX, which is the utility here in the City of Calgary, where we offered a discounted overnight rate.

[00:54:05]  Blake Shaffer: Not that cheap. That's amazingly cheap. That would be the equivalent of... So the per kilometer equivalent would be five cents a liter for a gasoline car. So that... This is really, really cheap. Wow. But what we found was that before offering any incentives, when we just had, uh, flat prices across the day, here in Calgary, it's about 45 to 50% of all charging is done in the off-peak hours, those, those hours listed there.

[00:54:32]  Blake Shaffer: When we gave people a three and a half cent per kilowatt hour discount So I'm not, we're not, they're not paying three and a half cents. That's three and a half cents off of, like, what is all in around 15 cents these days. So they're still paying around 11. Just that little discount, the share of off-peak moved up to 80%.

[00:54:47]  Blake Shaffer: That's a massive treatment effect. So it, it suggests responsiveness that is unheard of in electricity demand right now. And th- this sort of speaks to how EVs are just so different in terms of ability to respond. It's super easy to do so. And it's not, not everyone, there's gonna be some that have workplace charging or daytime, but for the large majority, at least of current uptake of EVs, that rate is gonna get, you know, probably 90% of EVs charging shifted.

[00:55:16]  Blake Shaffer: There'll be some other homes. I saw some chatter on the internet of people with water heaters putting in timers. I've got other pilots where we're seeing that is extremely effective as well. The water, tanked hot, hot water systems will probably shift as much as they can into the off-peak. Um, obviously, there's a lot of load that you can't shift, but th- this, this will be very effective in shifting.

[00:55:37] Ed Whittingham: I was gonna say, do you think, I mean, a- anytime soon, and I know it's Alberta specific right now, but we're gonna get time of use advantages for people like me and, and becoming increasingly common, we've got solar systems on our roof. Mm-hmm. But right now, there is zero incentive to, you know, engage in any kind of arbitrage to put in a solar s- to put in a storage system- Yeah

[00:55:57] Ed Whittingham: and export to the grid when the pool price is the highest because no matter when those electrons flow out, then we're just getting the same rate. Do you see that cracking anytime soon? Uh, 

[00:56:06]  Blake Shaffer: eventually. So we have two big barriers there. So one is lack of smart meters. We need interval meters that record the hourly flow of usage and export.

[00:56:15]  Blake Shaffer: Y- you probably have that with your, uh, solar, but it's not ubiquitous around the province. It's, it's rolling out. Uh, I'm also working with Fortis. Their rollout plan is by 2032, everybody will have one. We need that faster to take advantage of these things. ATCO is running a pilot right now in Grand Prairie, so it- it's coming, but that's the first thing.

[00:56:34]  Blake Shaffer: The second would be we need our retailers, and that's kind of unique again here, we need retailers to have exposure to the household meter, so that way they can be really innovative in offering products that create those incentives, just like in the UK where they have that. And I don't know if you guys follow Octopus Energy.

[00:56:52]  Blake Shaffer: They're my favorite utility these days. Um, they, they are doing really innovative things in terms of incentivizing folks, and they can only do that because they have exposure to the household meter. So they have the incentive. Right now, if a retailer were to do something innovative with, with, with you, Ed, uh, what would they be doing?

[00:57:10]  Blake Shaffer: They would only be benefiting your wires provider. I, I don't know, in Canada more, maybe your Fortis or ATCO. They're only benefiting them because they face the average shape. So we need, that we need to, to give exposure to the household and we need to get those smart meters in place. 

[00:57:24] Ed Whittingham: The, the fact that you said favorite utility-

[00:57:28] Ed Whittingham: betrays a certain degree of geekiness when it comes to utilities. I have their trading card, 

[00:57:33]  Blake Shaffer: yeah. 

[00:57:33] Ed Whittingham: Yeah. Yeah. Yep. Which is exactly why we wanted to have you on, Blake Shaffer. And I apologize to everyone out there in EvC land, we have just run out of time after only two questions, because they're such great questions.

[00:57:50] Ed Whittingham: We know that there are a bunch more there. We can always try to continue this conversation offline in some sort of social media forum. But let me just say, uh, on behalf of the three of us, thanks, Blake. Uh, this was terrific. Uh, you're a wonderful guest and, uh, we're really grateful to have had you on Energy Versus Climate today.

[00:58:10]  Blake Shaffer: Thanks for having me. Thanks for listening to Energy Versus Climate. The show is 

[00:58:16] Ed Whittingham: created by David Keith, Sara Hastings-Simon, and me, Ed Whittingham, and produced by Eva Voinejescu. Thanks to Hannah Tighe, Priyakani Kulate, and Crystal Hickey for their production support. Our title and show music is The Wind Up by Brian Lips.

[00:58:31] Ed Whittingham: Sign up for updates and exclusive webinar access at energyvsclimate.com, and review and rate us on your favorite podcast platform. This helps new listeners find the show. You can also send your feedback to info@energyvsclimate.com.