A grid-zero electricity system in Alberta by 2035 is possible, but not without significant costs, according to an assessment of the province’s electricity market.
The Alberta Electric System Operator (AESO), in a 78-page analysis released last week, said meeting the ambitious federal emissions target would require up to $52 billion in additional capital investment, primarily from power generators.
The Trudeau government has pledged to achieve a 100 percent electricity system that emits no electricity by 2035, a goal the Alberta government has criticized as unrealistic and lacking in detail.
AESO, which operates the provincial power grid, examined the potential effects of transforming Alberta’s power grid to meet the 2035 target. The assessment considered three scenarios with different levels of renewable energy sources, thermal generation and energy storage.
“The multiple possible routes to reaching net-zero, three of which the AESO has studied, are highly uncertain and pose a significant risk to reaching the final target by 2035,” the report states.
“It is ambitious to meet the timeline of less than 13 years given the policy/regulatory uncertainty, layered regulatory approvals required for projects, timing and cost curves for technology commercialization, supply chain challenges and long development timelines. for all types of energy-related infrastructure. †
Meeting the 2035 targets also relies heavily on the future development of key infrastructure in areas such as carbon capture, hydrogen production and transportation, the report said.
Kevin Dawson, AESO director for forecasting and analysis, told stakeholders the report is a launching point for discussion, with much still unknown about future technology, costs, government policies and electricity demand.
What is certain, the study found, is that significant investment is needed to meet future supply, supply and demand needs.
“We see a cumulative cost effect over the next 20 years of somewhere between 30 and 35 percent. Most of that cost comes from investments in generation capital and operating expenses,” Dawson said during a review of the report on Thursday.
“The bulk of that investment and cost will have to come from mostly private investors in our deregulated market structure and bringing capital to market.”
The report identifies the required investment costs of $44 billion to $52 billion, with power generation expansion being the largest forecast cost.
Some form of emissions compensation or credit would still be needed to meet emissions targets, with full reductions in any assets that are “operationally unrealistic,” the report said.
“We see that achieving zero physical emissions in the electrical system would be a major challenge from both an operational and cost perspective,” Dawson said.
“As you try to get closer and closer to physical zero emissions, the operational difficulties increase enormously, and the associated costs increase exponentially.”
Dale Nally, Alberta’s associate minister of natural gas and electricity, said the AESO report supports the province’s view that the idea of a grid-zero electricity system in Alberta will negatively impact consumers.
“Any plan that implies that families and businesses cannot afford to heat their homes or keep their lights on is unrealistic,” Nally said in a statement.
“Electricity markets, power sources and grids vary widely across Canada. A one-size-fits-all approach just doesn’t work.”
The AESO review did not examine potential cost effects for consumers, but suggests that energy costs could be $50/MWh, or 40 percent, higher by 2035.
The Calgary City Council will this week renew its discussion of an updated climate strategy after declaring a climate emergency in November.
A report to the council suggests cutting city-wide emissions to zero by 2050 would cost about $87 billion.