- Sorena Rahi
- Oct 15, 2021
Sorena Rahi is a PhD Candidate in Business, Economics, and Public Policy at the Ivey Business School and a Research Assistant with the Ivey Energy Policy and Management Centre. He shares the key takeaways from each panel event as part of the Centre’s annual Workshop on the Economics of Policy and Markets.
The Ivey Energy Policy and Management Centre is hosting its 5th annual workshop on the Economics of Electricity Policy and Markets. The theme of this year’s workshop revolves around electrification as part of the transition to a clean energy economy.
On October 6, in the first of the workshop’s four sessions, panellists from academia, government, and industry discussed electrification scenarios and the opportunities and challenges ahead in being able to achieve Canada’s net zero goals by 2050.
The session was hosted by Brian Rivard, Director of Research for the Energy Centre, and moderated by Adam Fremeth, HBA '00, Associate Professor of Business, Economics and Public Policy, and E.J. Kernaghan Chair in Energy Policy at the Ivey Business School.
Watch the full video above.
The road ahead: Electrification scenarios
Normand Mousseau, Professor of Physics at Université de Montréal and Scientific Director of the Institut de l'Energie Trottier at Polytechnique Montréal, presented various scenarios for the future of electrification in Canada, produced as part of the Canadian Energy Outlook 2021 – Horizon 2060. Compared to the reference scenario with no greenhouse gas emission reduction targets, scenarios which impose a net zero emissions target on total CO2e are projected to decrease total energy consumption. Mousseau argued that this reduction would be achieved optimally through a decrease in the production of energy from hydrocarbon sources, as well as an increase in electricity generation as a more productive source of energy. Over the next 10 years, to achieve Canada’s objectives, the electricity sector is projected to decarbonize as renewable energy sources replace thermal generation. Between 2030 and 2050, we expect to see a significant uptick in electricity generation, which will be mainly driven by solar, wind, and nuclear power. Most of electricity demand by 2050 is projected to come from residential, commercial, and agricultural sectors, which can be considerably electrified. The industrial and transportation sectors will also see partial electrification, but they will still rely on a diverse mix of energy sources. Mousseau finally noted that achieving the goals laid out in these scenarios and taking into account the specific energy consumption patterns from the various sectors as they electrify, requires immediate planning for the major investments in both generation as well as transmission and distribution.
The need for consistent policies
Caroline Lee, Senior Research Associate with the Canadian Institute for Climate Choices, presented results from the Institute’s analysis of different potential scenarios across multiple studies that project electricity to comprise between 28 to 55 per cent of total energy consumption in Canada by 2050, up from 23 per cent in 2015. The lower end of these predictions characterizes scenarios in which innovative emission-reduction technologies such as carbon capture are widely adopted. However, if these “wildcard” technologies do not bear fruit, electricity will make up a higher share in our energy mix. She also explained that an increase in electricity generation would correspond to an even higher increase in installed capacity because renewable sources such as wind and solar have a lower generation-to-capacity ratio compared to hydrocarbon sources.Higher capacity building must be accompanied by prioritizing improvements in energy efficiency, smoothing demand to off-peak times, as well as encouraging coordination and trade across regions. Lee argued that electrification requires policy interventions with consistent targets and mandates across different decision-making bodies at the federal and provincial levels – something which is lacking at this point. We need to strengthen carbon pricing signals, adopt targeted policies for electrification, and pursue greater integration not just across governments and sectors, but also across demand and supply.
Electrification challenges and a diversified pathway
Tyler Bryant, Low Carbon Policy and Strategy Manager at FortisBC, explained the trilemma of affordability, system resilience, and low carbon emissions from a utility perspective. He argued that one of the main challenges utilities face is that they must pursue all three objectives in unison. If one objective is prioritized, it will be held back by at least one or the other, meaning that an ambitious low carbon objective cannot come at the cost of significant impacts on affordability or the resilience of the energy system. He further emphasized that each province has its own specific energy systems with idiosyncratic characteristics, and low-carbon solutions should be tailored to each jurisdiction’s unique circumstances.
For example, British Columbia already has a clean power sector with the relevant infrastructure in place and expanding solar and wind generation in the province would not help reduce overall emissions. Bryant introduced FortisBC’s diversified pathway that incorporates a significant amount of fuel switching to renewable gas and hydrogen sources. He noted that this alternative approach is more viable compared to the complete electrification pathway for two reasons. First, catering to peak heat demand during the winter would require a significantly higher increase in electricity generation capacity under the electrification pathway. Second, heat can be stored with relative ease and requires a much lower storage capacity compared to electricity. Clean and renewable gas fuels can use the existing gas systems and be stored cheaply.