Les­sons Al­berta wind power can learn from oil

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En­ergy pro­duc­tion. Price dif­fer­en­tial. In­fra­struc­ture. Mar­ket ac­cess. If you’re from Al­berta, these words prob­a­bly make you think about oil. But they should also make you think about an­other type of en­ergy mak­ing head­lines in Al­berta: wind.On Dec. 17, the Al­berta gov­ern­ment an­nounced the pro­cure­ment of more than 700 megawatts of wind gen­er­a­tion at a weighted av­er­age price of 3.9 cents per kilo­watt hour — a very low price for elec­tric­ity and fur­ther proof Al­berta has high-qual­ity wind re­sources and the ex­per­tise to de­velop them at low cost.Yet while this an­nounce­ment is cer­tainly cause for cel­e­bra­tion, Al­berta needs to be­gin think­ing about the fu­ture as it moves to­ward its goal of 5,000 ad­di­tional megawatts of re­new­able gen­er­a­tion ca­pac­ity by 2030. With­out a more in­te­grated grid that im­proves ac­cess to neigh­bour­ing elec­tric­ity mar­kets, Al­berta’s grow­ing wind re­sources may face the same prob­lems its oil re­sources are fac­ing to­day.Al­berta oil is suf­fer­ing record price dis­counts be­cause of con­strained mar­ket ac­cess. Al­berta is pro­duc­ing more oil than can be ef­fi­ciently trans­ported to those who want to buy it with ex­ist­ing in­fra­struc­ture (e.g. pipe­lines). The re­sult of all this en­ergy get­ting bot­tled up in the prov­ince? De­creased value.Elec­tric­ity works the same way. With­out the abil­ity to get elec­tric­ity from where it can be pro­duced to where it can be con­sumed, it is worth­less. With re­new­able elec­tric­ity such as wind, the prob­lem is more se­vere than other com­modi­ties be­cause elec­tric­ity is hard to store, and gen­er­a­tion from wind is not con­trol­lable. As more wind is added to the grid, it can over­take elec­tric­ity de­mand dur­ing par­tic­u­larly windy pe­ri­ods. If there is no place else to go and no one else to buy it, the value of the elec­tric­ity drops, and ex­cess gen­er­a­tion must be cur­tailed — es­sen­tially wast­ing it.Other places are al­ready ex­pe­ri­enc­ing this prob­lem. On par­tic­u­larly sunny days in Cal­i­for­nia, so much so­lar elec­tric­ity is pro­duced that grid op­er­a­tors must shut some off at times. In re­sponse, the state’s largest grid op­er­a­tor has es­tab­lished a mar­ket with neigh­bour­ing grids to sell ex­cess so­lar gen­er­a­tion.Al­berta’s grid is rel­a­tively iso­lated. There are some in­ter­con­nec­tions with its neigh­bours, but stud­ies show that more trans­mis­sion ca­pac­ity is needed to take full ad­van­tage of the abun­dant and cheap wind re­sources on the Prairies.Al­berta knows first-hand what hap­pens when there is not enough in­fra­struc­ture to get its en­ergy prod­ucts to those who want to buy them.Im­prov­ing in­ter­provin­cial trade is about more than just trans­mis­sion lines — an ar­gu­ment made in a re­cent re­search paper from the Canada West Foun­da­tion en­ti­tled Power with­out Bor­ders: Mov­ing to­ward an in­te­grated West­ern grid.Buy­ing and sell­ing elec­tric­ity is a highly reg­u­lated busi­ness where the rules dif­fer from prov­ince to prov­ince. For ex­am­ple — right now, Al­berta and British Columbia can­not trade elec­tric­ity via the trans­mis­sion ca­pac­ity that cur­rently ex­ists, on time scales smaller than one-hour in­cre­ments. This con­straint can de­press the value of wind elec­tric­ity since it fluc­tu­ates by the minute. Rules like this will need to change to en­able more valu­able elec­tric­ity trade be­tween the prov­inces.A more in­te­grated grid will also help Al­berta man­age the in­her­ent vari­abil­ity of re­new­able elec­tric­ity such as wind and so­lar. Since British Columbia has large amounts of con­trol­lable hy­dro­elec­tric gen­er­a­tion, it can ramp elec­tric­ity pro­duc­tion up and down as need be with­out pro­duc­ing emis­sions. Bet­ter in­te­gra­tion means Al­berta could ben­e­fit from this as well and avoid pay­ing for emit­ting gen­er­a­tors that often sit idle ex­cept for when elec­tric­ity de­mand is the high­est — a hand­ful of times ev­ery year.Al­berta wind should take some les­sons from Al­berta oil. It is not a good thing to have plen­ti­ful nat­u­ral re­sources but no way to get them to mar­ket. Al­berta can im­prove these mar­ket op­por­tu­ni­ties by pur­su­ing a more in­te­grated grid with its pro­vin­cial neigh­bours, while also mak­ing it cheaper to re­duce emis­sions from the elec­tric­ity it needs to power Al­berta homes, busi­nesses and in­dus­try.

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