The Long Term Plan For Nova Scotia’s Electricity Needs
Posted December 11, 2020
Nova Scotia Power Inc. (NSPI) has recently released its Integrated Resource Plan (IRP) outlining the expected requirements for power over the next 25 years and its proposals for responding to them.
It evaluates scenarios based on differing rates of demand growth, the pace of decarbonization, and the cost of alternatives for providing additional power.
Legislative constraints affect the recommended choices. The federal and provincial governments have prescribed minimum levels of power to be produced by renewable sources, and decreasing limits on greenhouse gas emissions.
These apply to electricity generation, but also more broadly. For Nova Scotia’s total carbon emissions to decrease sufficiently, fossil fuels will need to play a diminishing role in powering vehicles and heating houses.
The IRP anticipates that a growing share of passenger vehicles will be electric and that electrically powered heat pumps will play an increasing role in both new construction and retrofits of existing housing. Electrification will increase the demand for power generation at a rate higher than would be caused by a growing economy.
On the other hand, Port Hawkesbury Paper, which represents about 10% of total demand, receives a 25% discount on its power rates until the end of 2023.
This is supported in part because there is available capacity that would otherwise go unused. That argument disappears when NSPI is having to invest in new generation assets because of demand growth. The question of whether the discount should be renewed is not addressed in the IRP.
Coal is today’s largest source of power. The power plants have already been paid for, so energy from coal is the least expensive, being just the cost of operations and of fuel, which has been going down. Unlike wind or solar, coal can be available 24 hours a day but cannot be ramped up quickly to act as a backup when the wind stops blowing.
No new coal plants will be built and the legislative requirements will cause some to be retired or converted to use natural gas before the end of their useful lifetime. Gas is cheaper, less carbon-intensive, and can be ramped up more quickly to act as a balance when wind power weakens.
Retiring plants early puts upward pressure on rates because it accelerates the pace at which new sources of power must be purchased. Proposals to retire coal plants more quickly should be accompanied by a disclosure of the cost to ratepayers.
The least expensive option for additional power is onshore wind installations. Offshore installations are twice as expensive today, but that difference may narrow over the next two decades.
Solar is not cost competitive in Nova Scotia, especially because winter is our period of highest demand. Biomass is likewise expensive.
The report dismisses the prospects for new tidal technologies. It uses the unit cost of the small scale experimental projects without any of the future reductions that have occurred with emerging technologies such as wind or solar.
This may be in part because of Emera’s disastrous experience with the Open Hydro tidal experiment. Emera is NSPI’s parent company. It may also be because NSPI cannot make much profit on an energy source provided by an external supplier.
Wind power has limitations. There must be a reliable on-demand backup source for times when the wind subsides. Natural gas plants can provide some of this but the most viable alternatives are hydroelectric power from other jurisdictions. There is little opportunity for increasing Nova Scotia’s hydroelectric production.
Quebec and Labrador have a lot. Creating adequate transmission facilities for large scale imports has a significant capital cost. The Maritime Link connecting Nova Scotia to Muskrat Falls power cost more than $1.6 billion.
The deal championed by Emera resulted in the link being completed three years before the power will be available. When it comes on stream, Nova Scotia will be entitled to blocks of power for 35 years. Most of it is the on-demand kind that can be used to balance variations in wind power.
The plan anticipates more infrastructure to enable imports at the New Brunswick border. That will be more profitable for NSPI than using the already paid for Maritime Link.
The overall direction is for reductions in coal usage, accelerating demand growth, more wind, and more imports. Flexibility is maintained to allow for changes in assumptions, such as the cost of tidal power or the prevalence of electric cars.
This is a complex topic that is poorly understood by voters and politicians. The principal line of defence for ratepayers is the Utilities and Review Board (UARB).
Unable to impose it, they recently asked Emera to take a slight cut in its rate of return in view of the costs to ratepayers of the prematurely completed Maritime Link. Emera politely declined. The UARB needs a broader authority.
NSPI’s direction serves the interests of Nova Scotians but it also maximizes the opportunities for Emera profit.
Politicians should be wary of prescribing requirements on energy resources without a complete understanding of the cost implications for ratepayers. They should respect and strengthen the role of the UARB.
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