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Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.
Welcome to episode 316 of the Energy Talks podcast. I'm energy and climate journalist, Markham Hislop. 2 days ago, the White House announced a major initiative with 21 states to modernize the American power grid. The idea is to use new technologies, like replacing old transmission lines with new ones that can carry twice the electricity, to upgrade the grid without building new infrastructure. The ultimate goal is to facilitate the installation of a tremendous amount of new wind and solar generation over the next decade.
Markham:The US plan got me thinking about Canadian plans, more specifically Western Canada. There has long been talk about more east west trade of electricity between the 2 hydro provinces, BC and Manitoba, with the 2 Prairie provinces, Alberta and Saskatchewan, that have the best renewable energy resources in Canada. Virtually nothing has been done to put a good idea into practice. But why is that? To discuss why not, I'm joined by doctor Madeleine McPherson, assistant professor of engineering at the University of Victoria and an experienced energy economics modeler.
Markham:So welcome to the interview, Madeleine.
Madelaine:Thanks so much for having me. I'm very happy to be here.
Markham:Well, this is a a you know, it's a bit of a nerdy question, bit of a nerdy topic, but really central to the evolution of the Canadian grid in particular that in Western Canada as we electrify economies. But before we get into discussing east west trade, between those provinces, I wanna discuss I wanna ask you a question that has been on my mind for a while now. There seems to be 2 basic models of how of how we think about the grid. And one is keep the grid more or less the same and in Alberta as, as the same as possible while, finding new supplies that fit that grid, and I'm thinking nuclear to replace gas is more often the the not the the the prime the the, I don't know, preferred, source of generation versus reengineering the grid to integrate low cost renewables wind and solar, which is a much more dynamic process and requires a whole lot more investment, and and it's it's really about change. And what do you think about that?
Markham:Is that a a useful way for us to think about this issue?
Madelaine:Yeah. I think I think that that's a, yeah, that's a nice way to frame it. And, I mean, the key distinction and and maybe not to get too nerdy here, but the key distinction between those two different systems that you just described is really the inertia and grid stability on the system. So wind and solar are inverter based resources that have different grid characteristics than the big spinning masses, that are, you know, that that nuclear and and thermal coal natural gas generation have. So what that means is when it comes to power system design, as we integrate more wind and solar or inverter based resources onto the power system, we need to find other ways of delivering those grid services, inertia, frequency regulation, voltage control, etcetera, on the system.
Madelaine:Part of doing that comes down to market design. So I think, you know, we've seen other jurisdictions around the world, you know, for the last 10 years, the tinkering with their market design. Air grid in Ireland, you know, was a a leading example, still is a leading example of this. I think they have now 14 products in their market, which, procure those grid services that really are needed if you're if you're gonna switch to an inverter based system. And and that that kind of market redesign if if you're in a market, obviously different if you're not in a market, but if you're in a market, somehow, the system operators and the and the market design need to signal that we need those new services on the grid.
Markham:Right. And it seems to me, that the folks I've talked to in Alberta don't believe it's possible to procure those services to stabilize the grid. They seem to think that that, there has to be a large rotating mass generation, and there's no other way to do it. And yet I've interviewed and I keep coming back to this interview I did with Gerhard Schlage, who's the chief technology officer of Hitachi Energy. And he makes the exact opposite argument.
Markham:He says, you can build a grid today with, power electronics and and digital controls and all sorts of things and storage. Of course, that would be a big part of it. He said, you can build a grid that's actually more flexible and more reliable and lower cost if you reengineer it. And but then I've I've talked to people in Alberta, and they are absolutely and utterly convinced that that is impossible. And I don't understand why, because their engineers, just like, you know, the other engineers, are they are they reading the different textbooks?
Markham:I mean, how why is there such a big disconnect?
Madelaine:Yeah. I mean, this has this has been an evolving field, and and I I, you know, abs like, Alberta is nowhere near the level of wind and solar integration penetration that other jurisdictions around the world, Ireland, Denmark, Texas. You know, a lot of other jurisdictions have a lot more inverter based resources on their system, and they are the system operators there are managing that. It does require new technologies, new ways of thinking about the grid, as well as, as I was sort of saying before, new market design. Right?
Madelaine:So I think that part of the problem in Alberta is that the market has it it there is an ancillary services market in Alberta, but it really only procures 3 services. And that's not enough. That was enough in a thermal system because those thermal units sort of produce that inertia innately, so you don't need to explicitly procure it in the market. But as we switch to these inverter based resources, we really need those market signals to procure it explicitly. And what that means in Alberta is a new market design to, to signal to to to to remunerate generators and and and other actors on the power system to to deliver those services.
Madelaine:And and I think that's where's that's where we get into an issue. Like, this is not a this is not a technical issue. It's some it there is. I'm not to say that there there's been a huge amount of innovation. This is a active area of research.
Madelaine:Grid forming inverters is one of the, you know, top topics in renewable integration conferences around the world right now, and that's been the case for, you know, 5 plus years. So this is an active area of research. This is new technology, but it is out there to some extent, and there are other grids that have figured out how to integrate it. The issue in Alberta is is that the market has not been designed to procure those those services. And there seems to be, a barrier in terms of market redesign in Alberta.
Madelaine:You probably recall a couple of years ago, the system operator tried to, add a capacity market to the to the Alberta system. That was a major, market redesign effort that sort of failed at the last minute. Right? It was, you know, a month away from from getting regulatory approval, and the government changed, and and the whole plan was scrapped. So I think that that left a little bit of a bitter taste in the in the mouth of the system operator, and I think it also pointed to the, you know, major political interference in the operation of the power system.
Madelaine:So I think that's, you know, that is part of the part of the issue.
Markham:Let's talk about east west trade. Now this has been going been talked about for a long time. This is, it's not like it's surfaced recently. And I was reading this morning a report from the Canadian Academy of Engineering, and it's called electricity interconnecting Canada, a strategic advantage report of the Canada power grid task force, and it was written in in 2010. It was 15 years old already.
Markham:And it set out some basic information. So here, Canada has more electrical connections with the US, 34, than it does between provinces with only 31, and the the interprovincial connections are much smaller. The so the the to the extent that provinces export electricity or trade electricity, it's more much more north south than it is east east west. The the issue now of what's changed is that the hydroelectric dams can be used as storage for renewables, and there's more much more interest or should be much more interest in connecting the, you know, wind and solar development in sunny and windy Alberta and Saskatchewan with the 2 bookend provinces, the hydro provinces. And that's really not happening.
Markham:There's not there's no discussion about I'll bet that you have been involved in this conversation. What can you tell us about it?
Madelaine:Yeah. So you're absolutely right. We we recently completed some modeling, about looking at specifically a new BC Alberta intertie and a new Saskatchewan Alberta intertie exactly motivated by the argument you just laid out there. In this new modeling work we did, though, we actually added, so classic you know, in sort of normal power systems modeling, we usually look at savings for capital cost, savings for production cost, and emission savings. Those are sort of 3 kind of classic metrics that we always look at.
Madelaine:In this recent round of modeling, we also looked at resilience, reliability, and resource adequacy, especially under climate change. And what we found in that work is that those other three categories, resilience, reliability, resource adequacy, outweighed the kind of typical, metrics that we've quantified in the past. And so, you know, our our modeling is suggesting, you know, $3,000,000,000 of net benefits to the combined power system, BC and Alberta, going out to 2050. 50. So this is you know?
Madelaine:And that's net benefits after, you know, sort of paying the transmission line off. Huge, huge net benefits to both systems, for for building an intertie. And I think that, you know, that this is not this is not new work. There have been a number of studies that have demonstrated the benefits of greater transmission interconnection, not just in Canada, by the way, but also in the States and also in Europe, especially as we try to decarbonize. But I think that this new I think that this new perspective that it's not just about, emissions and cost benefits.
Madelaine:It's also about the security of the system, reliability, resource adequacy. How are we gonna keep the power system going in a in a in a in a world with a lot more weather volatility, and and changes in, in in weather patterns?
Markham:I I've had the opportunity to interview a number of times, energy economist David Gray. And Dave, back in the late nineties and early 2000 when Alberta was deregulating its generation capacity and designing its market was, employed as by the government as part part of that process and then was went on to be the, provinces, electricity consumer advocate. So he's been intimately involved in these discussions for years years. And his comment on why we don't have more east west trade and why it's not part of the conversation as much is that the provinces involved really have a hard time seeing what their benefits would be to them. What the in you know, where are the incentives to do more of this?
Markham:They they if they trade north and south, they see that they're gonna make lots of money. Like, BC and hydro has a PowerX trading arm, and it it buy the minister has talked about it. He said, why why wouldn't we buy cheap California solar during the day and sell them expensive high hydropower at at night? You know, it's who wants to trade east west? How do we get a how do we fix that problem, or how do we address it?
Madelaine:Yeah. I think that we need I I mean, there's also a lot of, sort of history that we also have to get over in Canada that maybe we don't have to get over as much when we talk about interties with the state. So there is a BC Alberta intertied right now. It's rated at 1200 megawatts. It's been derated now to 3, 400 megawatts.
Madelaine:The reason being those grid stability issues on the Alberta power system that that we were talking about before. By the way, that's the same as the line that goes from, Alberta down to Montana. It has also been derated for for the same reasons. And so this isn't just an interprovincial issue. This is also an international issue in Alberta.
Madelaine:But that, you know, that that is not you know, if BC Hydro and Powerex as well as Berkshire Hathaway, the the owners and operators of the other line, or is not happy about that, right, that derating of the of the line, that that's very unusual behavior, basically. Alberta using the interties to, stabilize their power system instead of having a stable power system that, you know, within the province. This is something that in other jurisdictions in the world, you have to actually buy transmission rights. And so that would that wouldn't be an option on the table in in FERC regulated jurisdictions or in NCOE regulated jurisdictions. That would not be an an option on the table.
Markham:Is it fair to say like, if if the the Alberta system seems to be in trouble, and it was just in late February, early March that the government announced that AISO, Alberta Electric System operator, was going it it basically gave a direction to to restructure the market, designed to do some market redesigns in part to address some of these issues that you were you were talking about. But should we be pointing a finger of blame somewhere in Alberta, at ASO, at the provincial government, at the the the regulator, the Alberta Utilities Commission. What about in other provinces? Has BC Hydro been, you know, at a drag on these conversations or Sask Power or Manitoba Hydro? But particularly in Alberta, can we point a finger of blame someplace?
Markham:Is somebody not keeping up with the changes that were required?
Madelaine:Yeah. I mean, I think that that that market redesign question I think to be fair to the AESO, you know, they did try to do a market redesign in a different area about capacity expansion, not about ancillary services. But they did try a market redesign. And then at the last minute, political interference and an election and a new government, you know, kiboshed it, you know, really in the 11th hour. And and so I think, yes, the the market design in Alberta has not been keeping up with the changes, that are required to bring more inverter based renewables onto the onto the power system.
Madelaine:At the same time, I think that the political interference that we've seen, in into the power system in Alberta is is not helping. And I think there's reticence on the part of the AESO and and the, regulator, the utilities commission there to, you know, to pursue a lot of market reform when the when when there is this political interference. That being said, Alberta is is going through a major, you know, set of consultations and, you know, potential for major market, redesign. I think that we're supposed to hear, back, you know, July, in July. And so, you know, they are aware of this issue.
Madelaine:They what they say is that they are working on it, and I think, you know, we'll know more in July, when when that when that when that comes out.
Markham:What about BC Hydro now? They, 3, 4 months ago, they released their, new 10 year capital plan, and it was a major departure. They're now planning for, again, they went through they used to plan for 2% a year load growth, and then they had we had the big financial collapse in 2008, 2009, and that destroyed a lot of their load. Paper plants, went bankrupt, sawmills went bankrupt, and so load growth was flat for about 13, 14, 15 years, and now they're back because of the electrification issue. They're back to planning 2% load growth, And they're going to do it, ironically, just the way the the the pre the current government was criticizing, which is they're going to enter into power purchase agreements with private contractors like First Nations and communities and and, independent power producers, so that wind and solar and small hydro and whatever.
Markham:But in their capital plan, they they call for transmission upgrades, but they're from west or, sorry, east to west. There's nothing going from from west to east over the border into Alberta. That doesn't seem to be enter at all into BC Hydro's planning. And is that a big blind spot, or is there just business as usual and nobody's given them direction to do otherwise? So what do they care?
Madelaine:Yeah. I mean, I think that the the response from from BC Hydro and from PowerX right now on the on the question of a new intertie is, well, let's get that existing intertie back up and running. Right? Like, it's there's already an intertie that is underutilized because of grid stability and contingency issues in Alberta. And so before we start talking about building a new line, we have to get that line up and running.
Madelaine:And I think, you know, for BC Hydro and Powerex, you know, I think there's some trust issues there now. Right? Like, why was this how is it that this line was able to be derated because of, essentially, internal issues within the Alberta power system. So I think any new line, any new infrastructure into Alberta would have to come with, some kind of guarantee. Well, a, that that that initial the the first line, the existing line, not be derated to the extent that it is now, and then, b, that any new line would be regulated, or that there's a long term contract in place that wouldn't allow for that kind of derating in the future.
Markham:Now the a couple of, federal budgets ago, the, the federal government in Canada, budgeted 1,000,000,000 of dollars for new inter ties. It's already anticipating you wanted it it's wanted to stimulate this for for a while now, but given what the Americans are doing with grid enhancing technologies and what they're doing in in other areas of, I mean, that would be mainly for transmission, but what I'm getting at is, should we worry about building more inner ties, or should we worry about fixing the integrating new technologies into our existing grids and using technologies to get more out of the transmission infrastructure we already have, like the the reconductoring, where you take the existing wires, basically, replace them with modern wires, and get twice the electricity out of the same infrastructure. Should we do both or should
Madelaine:All of the above.
Markham:All of the above. Right.
Madelaine:I think, you know and and and they're a little bit they're a little bit different issues. You know, we need those grid forming, inverters, to help with grid stability issues. Absolutely, we should be reconductoring those lines at a fraction of the cost. You know, you don't run into the sighting issues that you do with the new line. So absolutely reconductoring where possible to increase capacity.
Madelaine:You know, the there there there there's there's sort of different issues, though. Right? The intertie issue is really about system balancing at on on, you know, sort of a daily and seasonal basis. So, you know, BC going we're gonna be going into a we had a dry winter, you know, you know, and this is gonna happen from time to time that we have a dry winter. Our reservoirs are low.
Madelaine:Having a better intertie with Alberta when the wind is blowing and the sun is shining helps BC Hydro. Likewise, you know, the the, you know, the the Dunkelflout, you know, the weeks of no wind generation, it's gonna be really handy for those weeks for Alberta to be able to, you know, rely on on BC Hydro reservoirs for those weeks. So so that's over the course of a day. Also, you know, you know, a day or or season to be able to do that kind of energy balancing between jurisdictions and jurisdictions that have access to, as you pointed out at the beginning, different renewable energy resources. Right?
Madelaine:So we we need that from and especially from a reliability resilience perspective, we really need that. We also need those technologies that help with inertia, grid stability, like grid forming inverters, for example. So both.
Markham:What about let's talk about Saskatchewan and Manitoba because apparently there have been discussions going on for a while about beefing up the inner ties between those two provinces. And there has been I had one, professor of engineering say, you know, instead of thinking about a east west market between 4 provinces, it might be, smarter and easier just to think about Alberta and BC as 1, Saskatchewan and Manitoba as another one, and so there's an option there. What what can you tell us about the, you know, Saskatchewan and Manitoba?
Madelaine:Yeah. So we did similar modeling, and I and I completely agree. I don't I don't think that we need to have a a a transmission line that spans the 4 provinces. I think really what we're talking about here are provincial pairs. Right?
Madelaine:BC and Alberta, Saskatchewan, and Manitoba. Because, really, it's just about combining those hydrodominate provinces with the wind and solar rich provinces. So I I completely agree with that idea. We did similar modeling, sort of that multi benefit modeling between Saskatchewan and Manitoba and found similar results. There's, you know, absolutely benefits on the kind of classic capital cost, production cost, emission side of things.
Madelaine:We've known that for years. We're not the 1st people to to model that or to suggest that. But the bigger benefit is actually on the reliability, resilience, and resource adequacy side of things, which is really about making sure that the that the grid is robust, you know, in in times of change and, with climate change and with more reliance on on weather dependent resources. So similar findings, not quite as large in magnitude, both the intertie, not quite as large, as well as the benefits, not quite as large, but similar story. It's there are huge benefits there, especially on on the res reliability resilience side of things.
Markham:Yeah. I can see why the the benefits would be different because you have 2 in Alberta and BC, you have 2, provinces with 5,000,000 in population each, whereas Alberta sorry, Saskatchewan and Manitoba each have 1,000,000.
Madelaine:So it's a
Markham:it's very different sized markets and and capacities. So if there's a lack of trust between BC and Alberta, does this come down to requiring some political work, first and foremost, to get people talking and saying, hey. You know what? Look. This is an idea we need to pursue.
Markham:It's beneficial to to both provinces, and and we need to put aside some historic spats that we've had, like, over the trans mountain expansion. That there was a lot of bad blood created there. Is that it, or are there are the technical issues larger than the political ones?
Madelaine:No. I think that the technical issues can be solved, and, I mean, maybe this is the engineer that is coming out, but I think the technical issues can be solved. I think, you know, the market redesign is is a big issue. It needs political support though to to as we've seen in Alberta, there has to be political support for it for it to actually manifest. And and then that that sort of building of trust and and thinking about long term contracts.
Madelaine:So, yeah, I think that the political issue is a big one. I think what I'm what I'm hoping to do with my work, with the modeling work, is quantify the benefits so that we can hold the the political conversation a little bit more to account. Right? So that it's not so that we can so that as consumers, and as taxpayers, we can really go to our provincial governments and to our utilities and say, look. Here here's here are the dollars and cents as well as the reliability issues that we're leaving on the reliability issues that we're leaving on the table by not doing this and sort of corner them, sort of force them to to to take responsibility for that.
Madelaine:I think without modeling and without evidence that this is a good idea, it's too easy to kind of just get away with not doing it. Right? And it's a risk it is a risky thing to do. I think, politically, I don't I don't envy those teams who have to try to navigate how to do that in a way that's not going to alienate their own voter base. But I think that having that evidence on side is is a critical piece of the puzzle so that we can really hold our governments and our utilities to account.
Markham:Yeah. Very often, you know, when I'm doing these kind of interviews, because I've done them with a number of American, experts and and a few European experts, and, you know, the question always comes up in the interview, well, why would anybody want to use intermittent wind and solar? And the answer is always, it's dirt cheap and getting cheaper. You know, we've seen what's happening in China the last 12 months, in various particularly in solar, but also in wind. I mean, they're down their levelized cost of of energy now is down around $20 a megawatt hour versus 50, 60, $70 a megawatt hour.
Markham:I mean, it's it's just it's really cheap. That's why you'd wanna do it. And the, the IEA has called for it. It appears that we're going globally, we're gonna have we're gonna triple renewable, deployment between now and 2030, and we know from rights law that that will lead to significant reductions further significant reductions in cost. So as as cheaper as it is today, it's gonna be cheaper down down the road.
Markham:That's why you want to do this, and it's all and it's and it's clean. Any thoughts? We've only got a couple of minutes left in the interview. Any final thoughts on the this idea of the east west trade and and how important it is?
Madelaine:Yeah. I mean, I'm I'm I think I'm I'm hopeful. And, you know, I think this is a conversation that's been circling circulating for decades. I do and maybe this is, maybe this is is just because I'm, you know, this is the first time I'm really engaging in this conversation, and so, you know, maybe this is, naive on my part. But I really do feel like there's a different kind of energy and that there's a different that we can, yeah, I'm I'm I'm hopeful that this is a is this is a a nut that we can crack.
Madelaine:It's just a question of how, you know, and and, and how how do we actually how do we actually get there. And I think, you know, learning lessons I'm I'm actually I'm just starting my sabbatical right now and my sabbatical plan is basically to go around the world and and learn how other jurisdictions are doing this. Other jurisdictions also have a hard time building transmission. It's it's you know, sighting is a major issue in, in Europe. You know, there are major, interregional issues in the states.
Madelaine:It's an it's a problem everywhere, but other jurisdictions are coming up with solutions to move forward with this. And so that's a little bit my curiosity is how do we you know, I think there are solutions out there, and I think we can do it. It's just, maybe not just, but, figuring out how figuring out what the right right pathway is.
Markham:Well, Pamela, thank you very much for this. This has been very insightful, and, we'll be staying in touch to, see how your research goes. So thank you very much.
Madelaine:Thanks so much for having me. Nice to chat.