In the coming decades, power infrastructure will only increase in importance. Electricity allows for so many gains in efficiency that it will continue to be a fundamental driver of future advancements. Compare a gasoline-fuelled car with an electric car: EVS are approximately five times more efficient (meaning they require five times less energy to use an EV than a traditional car).

To decarbonize our societies and reach our climate targets, electricity must be the central energy source. We’ll need to produce it from sources that don’t emit greenhouse gases and substitute it for most of the hydrocarbons we currently use. For continued growth as we prepare for a cleaner future, we will need to ramp up Canada’s green power infrastructure.

But that new infrastructure will also need new operating systems. No one would run a brand-new computer with MS-DOS, the operating system that dominated the computer world in the 1990s. But this is the mistake we could easily make in electricity: invest billions of dollars in new, smart and green infrastructure while running the system the same old way.

Pierre-Olivier Pineau speaking at Corporate Knights’ 2nd of 7 roundtables on Building Back Better.

In Canada, each province oversees its own electricity system. Each province has its own generating companies, its own transmission owner and grid operator, its own distribution companies and, of course, its unique approach to price setting, planning and interacting with the government. Do you remember back when you could not read a Windows file on an Apple computer? This is still the case in electricity in Canada – but here there are 10 systems and almost no one talks about setting common standards. Before upgrading to the next generation, we’d be wise to develop the right software for our new electricity infrastructure.

Fixing Canada’s electricity generation patchwork

The institutions that run Canada’s 10 electricity sectors were mostly designed in the 20th century. Computers were not very powerful, financial tools were not sophisticated, pricing was constrained by the basic metering technology, and climate change was not an issue.

We are now in a totally different context, but most Canadians still get their electricity and pay for it as they did 50 years ago. What was good then is not good now. There is no economic or environmental reason for Quebecers to pay seven cents per kilowatt-hour when Torontonians pay 14. There is no good reason to plan Site C (a 1,100-megawatt hydropower project) in British Columbia without linking it to wind developments in Alberta, where balancing issues are a concern, to smooth out the intermittency of wind. In the East, how could Newfoundland and Labrador run into a financial disaster for building another hydro project (Muskrat Falls, 824 MW) when its direct neighbours are desperate for renewable energy?

All these absurd but real, examples stem from the quarantined approach provinces have adopted in their electricity planning and operations. As we emerge from the pandemic and reopen the economy, we need to plan for the opening of our electricity markets.

Transmission lines should be considered as a transparent exchange platform. Common rules should be developed across Canada and North America to minimize the transaction costs to send electrons from one place to another. Transmission should be planned and operated independently from government and generation and distribution companies.

Power system operations should similarly be managed independently and for large areas – not by province. As an example, the UK, with a population of 66 million, has one system operator (National Grid), while Canada, with 38 million people, has 10 system operators. We should follow the lead of European countries that are working toward a harmonized electricity market. They are more advanced across countries than we are now between provinces.

Beyond transmission and system operations, renewable energy targets and incentives should be jointly planned (to minimize the overall investment costs), prices should better reflect the actual value of electricity (and not its production cost, based on historical accounting information), and storage and demand response strategies should be shared.

If the federal government simply injects billions into hardware, without incentivizing a fundamental reset of our electricity institutions, it will waste large sums of money to reinforce the status quo. Absurd planning and aberrant price and consumption-level differences will prevail across the country. The best opportunities will be missed because we will focus on building more instead of getting smarter.

One possible approach could be to follow what we have done in health, with a federal set of standards under the Canada Health Act, while leaving to provinces the control of the sector. Power-sector stimulus funding could be tied to the implementation of key transparency and openness principles in transmission and system operations. A roadmap for electricity harmonization should be created, to make the ways we generate, transmit, distribute and use electrons more coherent.

The current and future role of those electrons is too precious to let them be ruled by dated historical institutions.

Pierre-Olivier Pineau is chair in Energy Sector Management at HEC Montréal.

The post To invest in green power infrastructure, we’ll need to reboot Canada’s electricity markets appeared first on Corporate Knights.

Whatever that stimulus looks like, it will need to accomplish two things: get Canadians back to work and address the climate crisis with strategic infrastructure investments. The smart approach would involve investing in infrastructure that leverages existing competitive advantages and builds on and secures that edge. Three moves would accomplish that.

First, in a carbon-constrained global economy, jurisdictions that produce goods and services with low embedded greenhouse gas emissions will have an edge over those that don’t. For a glimpse of things to come, think of Apple’s recent first purchase of aluminum from Quebec. Federal leadership, and collaboration with the provinces and territories, should be focused on cleaning our electricity supply first and foremost.

Provinces with significant hydroelectricity surpluses share borders with others still reliant on coal and diesel that are looking for cleaner alternatives. Ottawa can facilitate the simple solution of stringing new “extension cords” from clean and renewable energy supply to demand (i.e. new transmission lines), as it recently did between Manitoba and Saskatchewan.

Ottawa could also help waterpower generators looking to optimize the performance and longevity of their facilities. By refurbishing and redeveloping existing generation facilities, some producers could increase annual output by a quarter or more. These investments represent a win-win: they typically yield a lower cost of electricity than investments in any other supply options do, and they increase clean and renewable electricity supply with a negligible additional environmental footprint.

Finally, like any savvy investor, Ottawa should be planning for the future. The falling costs of harnessing wind and solar energy means our electricity supply will be increasingly variable and weather-dependent. At the same time, Canada will need to significantly increase flexible and dependable generation and energy storage to balance supply and demand during periods of planned and unplanned wind and solar energy surpluses and deficits. Waterpower does this well. Augmenting our existing fleet with more energy-storage approaches, such as “pumped storage” and “green hydrogen,” will also be needed. Proposals for both are already being developed across Canada. For instance, five of the most promising pumped hydro projects could add up to 2,400 megawatts of installed generation capacity with an estimated capital cost of $6 billion.

Canada needs more investment in green infrastructure. It’s only common sense to focus on both our green and our blue (waterpower) economy. Six out of 10 Canadian homes and businesses are currently powered by clean and renewable hydroelectricity. Leveraging and building on our existing competitive waterpower advantages would add billions of dollars of investment and tens of thousands of new jobs each year, to a sector that already contributes more than $30 billion to the Canadian economy and supports a labour force 130,000 strong.

Anne-Raphaëlle Audouin is the president & CEO of WaterPower Canada, the national trade association for hydroelectricity producers and their goods-and-services providers.

The post Corona response: How blue power can spur a green recovery appeared first on Corporate Knights.