Decarbonizing Alberta electricity by 2035 could result in brownouts: AESO CEO

Canada's proposed Clean Electricity Regulations "unfairly disadvantages" the Alberta Electric System Operator to the point that the grid operator would have to impose brownouts to safeguard the system's continued operation, AESO President and CEO Mike Law said Sept. 28.

The draft CER, released Aug. 10, targets net-zero carbon emissions from the nation'' electricity grid by 2035, but is subject to a 75-day consultation period that ends Nov. 2. A Norton Rose Fulbright research paper said a final version "is expected in 2024," with the draft regulations slated to become effective Jan. 1, 2025.

In particular, the draft CER sets a carbon intensity cap of 30 mt/GWh with any net electricity delivery to the grid. This is a key issue for AESO, which relies in part upon industrial cogeneration, "which will be put at risk of retirement or disconnection from the grid," Law said.

Ben Levitt, S&P Global Commodity Insights associate director of North American power research, said newer gas-fired generation has more time to comply, but "a significant share of the remaining gas-fired generation capacity would be required to retire, invest in emissions abatement or limit grid exports by 2035."

Costly quick deadline

An AESO news release states it has made progress toward a goal of a decarbonized energy mix by 2050, cutting the sector's emissions from 49.8 mt in 2005 to less than 28 mt by the end of 2021.

But 2035 is too soon, impractical, and extremely expensive—adding an extra C$118 billion ($87.6 billion) in cost compared with the 2050 decarbonization goal, said Adam Gaffney, AESO manager of generation forecasting and resource adequacy.

"We need to take a [slower-]paced approach to understand which developing technologies are best positioned to help Alberta's power system decarbonize, whether those are small modular nuclear reactors, utility-scale storage, hydrogen, carbon capture and sequestration, or others," Law said. "Managing pace will expand the options available and help manage the costs."

S&P Global's Levitt said, "Relying on new technologies with limited commercial track record to replace the reliability attributes provided by the gas fleet within a 12-year time span would be very challenging and costly."

Also, Law complained about CER's plan to place "complete cogen facilities under a truncated 2035 timeline," compared with the purely industrial facilities' 2050 deadline.

The 2035 deadline "does not recognize the industrial nature of these facilities, and that they deliver highly efficient and low net emissions power to our province as a byproduct of their primary industrial process," Law said. "Putting the existing and future cogen at risk significantly increases the likelihood of supply shortfall and reliability challenges in the province."

Interties insufficient

Increasing interties to neighboring grids does not resolve the situation, Law said, "since other jurisdictions have similar supply challenges as they look forward through the next 20 years." Such improved transmission connections "can be part of the long-term solution, but they are not the panacea for our challenges as some might have us believe.

"The increased risk is primarily a result of the restrictions that the CER places on firm dispatchable natural gas assets, exacerbated by an increasing demand for power in the province as our society electrifies," Law said.

Coal-fired generation once dominated AESO's generation mix, but the capacity of coal plants has dwindled to the point that all coal-fired capacity is slated to end in 2024, Law said.

Another issue is that the CER is currently drafted "under a criminal law construct," which could put individuals and organizations in danger of "potential criminal" prosecution, Law said. "And it becomes exceedingly difficult for organizations publicly traded entities to justify both at their executive level and the board level to undertake highly expensive, long-term investment decisions that can expose individuals and organizations to criminal risk if they fail to meet the stringency obligations.

"AESO cannot and will not allow this to happen," Law said. "We honestly hope that cooler heads prevail over the next while, in that a logical and pragmatic decision is taken."

S&P Global's Levitt said his group's analysis of the Alberta power market does not "assume that the CER gets fully implemented in Alberta for at least a decade after the 2035 target."