Power Plays
Posted October 14, 2011
Nova Scotians are unhappy about their power bills which have been increasing rapidly. High energy costs are difficult for homeowners and potentially fatal for the Newpage mill and other large energy intensive employers.
If Newpage closes hard working Cape Bretoners will have to commute for work to Alberta, where they use enormous amounts of natural gas to extract crude oil from the tar sands. Meanwhile the paper production might move to China where 70% of electricity is from coal. Is this a win for the environment?
Against this backdrop the Province’s Renewable Electricity Plan proposes ambitious goals for energy from various renewable sources but does not propose any accountability for controlling costs to customers.
The Production Problem
At present our largest source of electricity generation is coal, followed by natural gas and other fossil fuels and a small but growing amount from renewable sources.
Burning coal is the still cheapest but the cost has been rising and it produces a lot of greenhouse gases and other pollutants. Both federal government policy and greenhouse gas considerations require a movement away from coal. But shutting down a plant before the end of its useful lifetime is a very expensive choice. Reducing greenhouse gas is an important goal, but not so urgent that we should be throwing away a valuable asset.
Natural gas emits less than half the carbon of coal and fewer other pollutants. It has become more cost competitive in recent years and is likely to remain so for many years into the future. In Nova Scotia it is mostly used in converted oil-burning plants, which are not as efficient as purpose-built gas-fired plants will be in future. The plants are presently supplied by provincial sources from Sable Island, to be supplemented by Deep Panuke. But both of these are expected to run out in the next 10-15 years and the Plan does not reference any government commitment to search for replacements.
The technology for producing energy from wind is proven and has grown rapidly in Nova Scotia. Because the supply is produced entirely independent of demand it must be paired with other sources such as gas or imported hydro which can be easily turned on or off. The cost is still higher than coal or gas but is improving. Existing installations are not vulnerable to volatile input costs.
Nova Scotia’s modest potential for hydro is already exploited. Both Newfoundland and Quebec can become sources of supply if the necessary transmission is installed. The pricing could be more than either wind or gas.
Tidal energy has enormous potential for Nova Scotia’s own needs and as an export industry. There is no proven technology and no clear sense for when one will arrive. But it could easily be less expensive than imported hydro because of the much shorter transmission distance, and a valuable source of jobs for Nova Scotians. So the potential should be closely monitored leading up to the decision to the evaluation of imported hydro.
The Province’s goals of reaching 25% of our electricity from renewable sources by 2015 and 40% by 2020 are arbitrary and inflexible. How it can be achieved will depend greatly on the timing and pricing of hydro power from Newfoundland and Quebec, and on whether and when cost-competitive tidal power becomes available.
A New Start for Nova Scotia’s Renewable Electricity Plan
The Province’s Renewable Electricity Plan needs adjustment:
1) The goal should be expressed in terms of greenhouse gas reductions so that natural gas can be appropriately recognized for its contribution to reducing them.
2) We must create an environment that supports onshore exploration for natural gas. A sensible regulatory regime for “fracking” near populated areas is needed but an outright ban is not justified and would be very harmful to prospects for development.
3) The prospect of hydro power is exciting but price matters. Any long term agreement must have a demonstrably helpful impact on power rates.
4) Present policy calls 100 MW of capacity to be provided by small scale community-based projects. It is argued that this is good for rural economic development. These projects are acknowledged to be uncompetitive and in fact produce electricity that costs almost double today’s average power rate. They are also the projects most likely to be annoyingly close to populated areas. Worse, the eligible sponsors (municipalities, co-ops, First Nations groups ,non-profits) are not experienced in managing projects of this type. Some of them are bound to get into trouble and turn to taxpayers for help. This is uneconomic development. No future projects should be eligible for these higher rates.
5) The goals for energy from renewable sources are acknowledged to be ambitious, especially because a limited proportion can be achieved by wind. Rigid adherence to the goals has the potential to further escalate electricity rates. Coal-fired plants should be allowed to continue to the end of their useful lives.
The goals need to be recalibrated as the prospects for onshore gas and for tidal and hydro power sources clarify.
The destination must be clear but the timetable made flexible enough to protect consumers and energy-intensive industries from excessive costs.
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