The Danielle Smith government’s recent moratorium on approvals of renewable power developments is good policy. Turns out not knowing where your electrons come from can cost you a lot of money..The old saw 'how does a car work? Well you push on the gas and it goes,' has a more scary parallel in electricity. How does electricity work? Well, you put a plug in the wall and 'voila' electricity comes out..Unfortunately, it is a bit more complicated..Why are we getting all these conflicting messages?.“Green electricity is the most economic and environmentally responsible option.”.“Alberta is adding the most renewable electricity generation of any province.”.“Household electricity bills have never been higher and will be increasing in the future.”.What’s going on?.The first thing to realize is electricity is absolutely fundamental to everything we do. It is not optional. It is not just our lights, phones and TVs but even our cars and our heating. Without electricity your furnace will not run..It is the provincial government’s responsibility to ensure that every Albertan from High Level to Milk River has access to a reliable source of electricity 24/7/365..This is especially true on the days of peak demand, invariably on the coldest and darkest days of winter..Rotating blackouts which are used in other jurisdictions to deal with grid failures are not an option in the dead of winter in Alberta. So when the wind turbines are too cold to turn and the sun has gone down, coal and natural gas must supply the needed power..But this built-in redundancy costs money..The Alberta regulatory authorities must provide this redundancy and Alberta electricity consumers must pay for it. The more the grid depends on renewable sources, the greater the redundancy and thus the greater this cost..The second reason for increasing costs is an unintended consequence of a unique feature of the Alberta electricity system — the deregulated 'wholesale' market for power..In essence, the price of electricity supplied to the grid by power producers is determined by the interaction of supply and demand. Demand from consumers through distribution companies, and supply from private producers using whatever means they choose to generate the electricity..The original dream of the Ralph Klein government was to harness the universal availability of cheap natural gas to supply electricity wherever in the province there was a growth in demand..The hope was to get rid of huge generating facilities and long transmission lines and replace them with local sources responsive to the needs of a growing province. However, regulatory authorities are still obliged to provide transmission capacity to producers regardless of where they are. And of course, consumers must pay for this transmission capacity..So, with the huge growth of renewables also came a growth in the need for transmission to the full extent of the capacity added, regardless of the amount of power actually supplied..So on Dec. 21 at 5 p.m. when renewables are providing nothing to the grid, consumers still need to pay for the transmission capacity that they are not using. This is the second source of the increased costs to consumers..The Smith government’s recent moratorium on approvals of renewable power developments is good policy..The touted green transition is already too expensive and it will only get worse. Hopefully this will turn into a permanent policy regardless of all the exploding heads..Another side benefit is that it pokes a rather large stick into the eye of Liberal global warming minster Steven Guilbeault..If not a permanent ban, then there may still be a place for renewables but only if these projects fully bear all their costs..Going forward, any new renewable power project must be required to also build the redundant capacity from a reliable source..Second, any new project would have to provide the transmission infrastructure required to get its power to the grid. With these additional costs, the perceived economic advantage of renewables is laid bare and investors may be much more wary to commit..In the meantime, the current debate will at least inform Albertans that not everything is as it seems in the renewable option. This is good..If you haven’t done so already, subscribe to a guaranteed rate. Your local power company has a much better idea about long term electricity costs..William D. Marriott is a retired economist who specialized in public policy analysis of the oil and gas industry.
The Danielle Smith government’s recent moratorium on approvals of renewable power developments is good policy. Turns out not knowing where your electrons come from can cost you a lot of money..The old saw 'how does a car work? Well you push on the gas and it goes,' has a more scary parallel in electricity. How does electricity work? Well, you put a plug in the wall and 'voila' electricity comes out..Unfortunately, it is a bit more complicated..Why are we getting all these conflicting messages?.“Green electricity is the most economic and environmentally responsible option.”.“Alberta is adding the most renewable electricity generation of any province.”.“Household electricity bills have never been higher and will be increasing in the future.”.What’s going on?.The first thing to realize is electricity is absolutely fundamental to everything we do. It is not optional. It is not just our lights, phones and TVs but even our cars and our heating. Without electricity your furnace will not run..It is the provincial government’s responsibility to ensure that every Albertan from High Level to Milk River has access to a reliable source of electricity 24/7/365..This is especially true on the days of peak demand, invariably on the coldest and darkest days of winter..Rotating blackouts which are used in other jurisdictions to deal with grid failures are not an option in the dead of winter in Alberta. So when the wind turbines are too cold to turn and the sun has gone down, coal and natural gas must supply the needed power..But this built-in redundancy costs money..The Alberta regulatory authorities must provide this redundancy and Alberta electricity consumers must pay for it. The more the grid depends on renewable sources, the greater the redundancy and thus the greater this cost..The second reason for increasing costs is an unintended consequence of a unique feature of the Alberta electricity system — the deregulated 'wholesale' market for power..In essence, the price of electricity supplied to the grid by power producers is determined by the interaction of supply and demand. Demand from consumers through distribution companies, and supply from private producers using whatever means they choose to generate the electricity..The original dream of the Ralph Klein government was to harness the universal availability of cheap natural gas to supply electricity wherever in the province there was a growth in demand..The hope was to get rid of huge generating facilities and long transmission lines and replace them with local sources responsive to the needs of a growing province. However, regulatory authorities are still obliged to provide transmission capacity to producers regardless of where they are. And of course, consumers must pay for this transmission capacity..So, with the huge growth of renewables also came a growth in the need for transmission to the full extent of the capacity added, regardless of the amount of power actually supplied..So on Dec. 21 at 5 p.m. when renewables are providing nothing to the grid, consumers still need to pay for the transmission capacity that they are not using. This is the second source of the increased costs to consumers..The Smith government’s recent moratorium on approvals of renewable power developments is good policy..The touted green transition is already too expensive and it will only get worse. Hopefully this will turn into a permanent policy regardless of all the exploding heads..Another side benefit is that it pokes a rather large stick into the eye of Liberal global warming minster Steven Guilbeault..If not a permanent ban, then there may still be a place for renewables but only if these projects fully bear all their costs..Going forward, any new renewable power project must be required to also build the redundant capacity from a reliable source..Second, any new project would have to provide the transmission infrastructure required to get its power to the grid. With these additional costs, the perceived economic advantage of renewables is laid bare and investors may be much more wary to commit..In the meantime, the current debate will at least inform Albertans that not everything is as it seems in the renewable option. This is good..If you haven’t done so already, subscribe to a guaranteed rate. Your local power company has a much better idea about long term electricity costs..William D. Marriott is a retired economist who specialized in public policy analysis of the oil and gas industry.
