Natural Resources Committee on Sept. 25th, 2017

[The Chair, Liberal, James Maloney]

Good afternoon, everybody. We're going to get under way. Thanks to all of you for joining us today.

Mr. Schmale, thank you for joining us today. We're glad to have you as part of the team. Until today, you were just a rumour. We're glad this is real. Welcome.

We have three witnesses in the first hour and two in the second.

In person for the first hour, we have Steve Coupland from Bruce Power. By video conference from PowerHub, we have Etienne Lecompte, and from the Alberta Electric System Operator, we have Jerry Mossing.

Thank you for being here, gentlemen. We'll give each of you up to 10 minutes for a presentation, which we encourage you to do in either official language. There are earpieces available for all of you, because you will be asked questions in both official languages.

Mr. Coupland, why don't we start with you?

[Steve Coupland, Senior Advisor, Regulatory Affairs, Bruce Power]

Thank you very much.

First let me thank the committee for the invitation to appear today. This is an important study. Interties are a very important component to the electricity system and I'm glad to see the committee studying it. I do want to stress that while it's an important key, I sometimes think people see transmission and interties as a bit of a silver bullet. They're not, and I'll elaborate on that a little more as we go along. However, that's not to dismiss them. They're a very important part.

I'll begin with a quick overview. Bruce Power runs the world's largest nuclear operating site. We supply 6,400 megawatts of power, 30% of Ontario's electricity, and we do that at 30% less than the average cost to generate residential power. We are Canada's only private sector nuclear generator and we're a Canadian-owned partnership. Our principal owners are TransCanada Corporation and OMERS Infrastructure. We have two other important owners. We are 90% unionized, and our two unions, the Power Workers' Union and the Society of Energy Professionals, are both owners of the company. Both have small pieces.

Operations at the Bruce Power facility have a significant economic impact. We're one of the drivers in our region of the province. We support 22,000 direct and indirect jobs annually and provide about $4 billion in annual economic benefit through direct and indirect spending on operational equipment, supplies, material, and labour income.

Over the past 16 years, Bruce Power has been one of the largest investors in Ontario's electricity infrastructure. We've invested billions of private dollars into the Bruce site, which remains a site owned by the Ontario government. Bruce Power runs it through a long-term lease.

We're also one of the few nuclear facilities globally that has the ability to produce cobalt-60, which is a valuable resource in treating cancer and other diseases, both domestically and across the world.

I want to just touch on something we call “major component replacement”. In December 2015, Bruce Power signed a long-term agreement with the independent electricity system operator in Ontario to extend the life of the Bruce facility out to 2064. This is a $13-billion private sector investment and will enable us to continue providing low-cost, emission-free power for decades to come. The agreement has two parts. It allows us to immediately invest in life-extension activities, which are currently on time and on budget. Our major component replacement program begins in 2020 and will see $8 billion invested in our units over the 15 years, ending in about 2035. It will create or support 5,000 direct and indirect jobs annually and provide $1.2 billion in labour income.

Before I get to interties, I'm going to touch quickly on isotopes. As I mentioned, Bruce Power is one of the largest cobalt-60 suppliers in the world. Cobalt-60 is a mainstay of the global health system. It's used as a radiation source to sterilize medical devices and supplies such as gloves, syringes, and other medical equipment, and in the decontamination of spices and consumer goods, as well as a phytosanitary measure for the reduction of pests on produce, which is a growing and important asset. We have a partnership with Kanata-based Nordion, which is a leading provider of gamma technologies and medical isotopes, and we're able to supply them with a stable supply of cobalt-60 for the next three or four decades. We also have an agreement with Nordion to supply something called high specific activity cobalt-60. It's produced in only very few reactors globally and is used in innovative radiation-based treatments of cancer, such as something called the Gamma Knife.

In regard to interties, I'll start with the battle against climate change. As I think most of the committee members are aware, Ontario's decision to shutter its coal-fired generation is probably the single largest step that Canada has taken towards fighting climate change. It wouldn't have been achievable without nuclear power.

When Bruce Power took over the Bruce site in 2001, the four Bruce A units were not operational. We invested money to bring them back, and as a result we were able to restart all four units, which provided about 70% of the baseload electricity needed to shut down coal-fired generation. It has not only dramatically reduced our greenhouse gas emissions, but it's also had a profound impact on air quality. In Ontario in 2005 there were 53 smog days. There haven't been any since 2014.

As I said, I want to talk about greenhouse gases. One of the keys to meeting Canada's greenhouse gas targets is to reduce emissions. We do that through greater electrification, but of course this will only work if the electricity we use is non-emitting generation. Canada is blessed to have vast hydroelectric resources, as well as a strong, vibrant nuclear industry. These two sources are able to provide us with vast amounts of baseload generation, which is what we will need if we are to achieve our climate change targets.

With respect to interties, interties are an important tool for balancing the peaks and valleys in daily and seasonal demand, as well as ensuring grid stability and reliability. Provinces are in need of power or sometimes have excess power over a certain time period, and they can benefit from these interjurisdictional electricity trades to ensure that the power is available to consumers at the best rate possible.

Of course there are differences in our provinces in seasonal demand, as well as different characteristics in the nature of generation. This provides opportunities for reciprocal benefits between neighbouring electricity systems through open, competitive electricity trade. I want to give an example, one I'm most familiar with, which is Ontario and Quebec. It's a good case to look at.

Ontario is able to supply Quebec with electricity in the winter, because there is baseboard electric heat in most homes. That is when the peak is, and in a cold winter it is often tight and often needs additional supply. Ontario is able to supply it through our four different interconnections. Because we have a surplus, we'll also supply some power to Quebec in the summer, which allows them to back up their hydro dams and store water there, which allows them to generate more electricity during the day when the peak is a little higher.

In contrast, as I said, because Quebec is able to store that power, they are able to supply additional power to Ontario, particularly in these hot summer months. I didn't look at the grid before I came, but I suspect the trade is pretty good between the two provinces today, although it's the same weather in both provinces so both provinces will be using a lot of their own supply.

As the committee knows, electricity is a provincial responsibility. Canada's been blessed with vast and varied sources of electricity generation. One of the results of this is that we've developed an independent provincial electricity system with a large focus on local generation. As mentioned previously, interties have largely been seen as supplemental to domestic generation.

I want to go back to what I said at the beginning. It's important to bear in mind that interties are a major asset and continue to do more, but they're not a silver bullet. Large-scale transmission, in my view, is not much easier to site than pipelines. It has a long time frame and is expensive. Canada should pursue it, but only where practical and cost-effective.

Going forward, a Canadian energy strategy should focus on energy solutions that drive innovation, support local economies, and provide affordable power to people who rely on it every moment of every day. Ensuring a diverse, affordable emissions-free supply mix to maintain the reliability of the grid should be a permanent consideration. Affordable emissions-free electricity is an extremely valuable commodity on all sides of the border in the fight to battle climate change.

In our view, investments in these resources, along with the socio-economic benefits to local economies, will create a benefit for all Canadians over the long term.

Thank you for your time. I look forward to your questions.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Coupland.

Mr. Mossing, we'll move on to you.

[Jerry Mossing, Vice-President, Transmission, Alberta Electric System Operator]

Thank you, honourable members of the committee. I appreciate the opportunity to appear before you to discuss Alberta's electricity interconnections or interties, as I will refer to them, and to provide context from an Alberta Electric System Operator point of view. I'll provide an overview of the Alberta Electric System Operator, and I'll discuss Alberta's interties, their role, and the value they provide to Alberta's electricity system. I'll also provide a view of the value of interties in the future.

The Alberta Electric System Operator, or AESO, is a non-profit, independent, statutory corporation charged with providing the safe, reliable, and economic operation of Alberta's interconnected electric system. We also facilitate the fair, efficient, and openly competitive market for electricity.

Alberta is one of the least-interconnected system operators in North America, with the third-largest peak demand for electricity among all provinces at around 11,500 megawatts. Our intertie capability is less than 15% of our peak demand. Our intertie with B.C. has approximately 1,000 megawatts of transfer capability and connects the Alberta grid with the B.C. Hydro grid. Our Saskatchewan intertie connects us to the SaskPower grid and is capable of transferring 150 megawatts, and the Montana intertie is capable of transferring about 300 megawatts.

Our neighbouring provinces each have crown corporations in charge of their power grids. B.C. Hydro and SaskPower are able to offer supply and withdraw electricity from Alberta's market through their respective interties. Both B.C. Hydro and SaskPower have implemented open-access tariffs designed to enable commercial entities to access their transmission systems, including their interties.

Interties can flow power in both directions. Over the past several years, exports from Alberta averaged about 1% of the power produced in Alberta, and imports averaged between 2% and 5%. While these percentages are low, the times when the flows occur are often important to reliability and to market operations. Interties can provide both reliability and market operational benefits. It's also important to note that the benefit of interties is mutual. Grid stability, emergency assistance, and added competition extends to parties on both sides of the intertie. From a reliability perspective, interties play a valuable role in emergency situations. They can assist with stabilizing frequency by allowing grid operators to access supply during emergencies and supply shortfalls.

During emergencies, Alberta, B.C., Saskatchewan, and Montana are able to receive or extend power to assist each other in providing the high level of reliability that consumers have come to expect. From a market operation perspective, interties also play a key role, and Alberta's interties provide market participants with the ability to access the Pacific northwest and Midwestern U.S. electricity markets. Similarly, B.C. Hydro and SaskPower can also provide electricity in and out of the Alberta market.

Looking forward to the future, Alberta's electricity landscape is evolving. As Alberta moves to phase out coal generation and meet the target of providing 30% of electricity from renewables by 2030, a fundamental change to grid operations, planning, and the market will occur. Interties can play a role in this transition.

First, renewable resources in Alberta are expected to be largely from wind and solar generation. By nature, both wind and solar generation are variable, non-dispatchable resources. As electricity supply and demand must be kept within very close boundaries, dispatchable resources must be available to balance the variability of wind and solar. Interties can provide this dispatch capability in large blocks in both directions, up or down, quickly and reliably. They can do this because they harness the dispatchability of the generators on the other side of the intertie. This does require close coordination between grid operators.

Second, renewable electricity portfolios have increased in many other jurisdictions. As predicted, the diversity of renewable resources over wide geographic areas can help balance out the overall changes in supply levels. For example, when wind is increasing in Alberta, it may be decreasing somewhere else. Interties can be used to help balance the overall variability. In fact, some jurisdictions are implementing programs to capture this diversity over wide areas.

Energy storage can help to manage the variability of wind and solar generation. One of the many storage solutions includes large hydro reservoirs. These have been used historically to balance variability and can be used in the future.

Fossil fuels—primarily natural gas—will provide the majority of the supply-and-demand balancing of renewables and baseload electricity in Alberta for years to come, but by using the diversity of variable renewable resources over a wide geography, and by accessing other renewable resources such as hydroelectricity and reservoirs, interties can facilitate overall lower greenhouse gas emissions. While interties are a vital component to a functioning grid, a careful balance must be struck to maintain reliability and facilitate a competitive market.

In conclusion, Alberta's interties will continue to play a key role in Alberta's electricity grid and its evolution. Careful planning and analysis must be undertaken to establish a plan that considers all aspects when determining if, when, and where new interties should move forward.

This concludes my opening statement. Thank you, honourable members of the committee, for your time.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Mossing.

Mr. Lecompte.

[Etienne Lecompte, President, PowerHub]

First and foremost, thank you for the opportunity to speak on this topic about strategic interties. Before I start, this is a little about myself and our company, PowerHub.

I am a co-founder and entrepreneur in both clean tech and software, so I bring a different perspective to the table. We're a homegrown Canadian company. We were born and bred in the Ontario feed-in tariff program, starting in 2011. We're a small company that's been growing successfully. Our head count grew by about 60% this year. We work globally, in North America, Latin America, Europe, Asia, and so on.

We have a varied perspective on renewable energy because we're dedicated to the renewable energy sector as a software company. We work with global and local portfolios of renewable energy assets to help them run more effective and efficient operations to ultimately lower their costs of operation. We've seen a lot of renewables entering the grid in a variety of ways, and those are the things I would like to bring forward today.

When I received the invitation to join this committee, I wondered why strategic electricity interties. I think there are very important questions regarding options here. Regarding the reasons to look at interties, be it the import-export of power, its grid stability, better trade between jurisdictions, reduced dependence on fossil fuels in certain instances, you can also consider grid expansion to underserved areas.

If I look at grid interties overall, I think the important question to bring forward today is whether the investment in interties has a greater social benefit than the costs from these investments. I think it's very important to look at this opportunity to invest in interties, invest in interconnections, from a ratepayer point of view, where there are basically ratepayer-funded improvements. Even if this is a provincial jurisdiction, I think greater ratepayers in all of Canada need to consider it. We can look at the social benefits of good interties and good grids. Reducing the costs of energy to ratepayers brings great positives to system balancing, impacts on jobs, or even other social benefits.

I think we have a great opportunity to look at this across Canada and a more cohesive juncture than simple market by market, which we see all across the globe. I think now is a great time to be asking these questions.

If we look at what our clients are saying about interconnection, interties, they're looking for a grid that has more capacity, certainty, reliability, modernity, and transparency. The transparency aspect is very important, as grid operations can be fairly opaque to a lot of people, even people in the industry. We have clients, for example, who are currently stalling in a few projects that have been built. They are awaiting commissioning for their specific interconnect reason, so they're looking for more transparency there. Ultimately this leads to an opportunity to look at this in a really smart way, and see how we can manage not only interties, interconnections, but all of the grid in a smarter fashion.

I'll preface this by saying that PowerHub is not a company operating in a smart-grid format, first and foremost. We're simply a software provider for renewable energy providers. Depending on the goals that we have for interties, the key thing to consider, in my opinion, is to invest in tomorrow, looking at this as grid modernization and intertie modernization rather than simple expansion, and smarter ways to do that. It's looking at building a better integrated grid instead of simply a bigger grid.

This is supported by baseline trends that we see everywhere, not only in North America but worldwide, for increased investment in energy efficiency, which can have an impact on demand-side management. On the flip side of that, the growth of distributed energy resources, the infamous DERs of the grid, where customers are becoming a generator as well, so enhanced customer participation.... You lay on top of that the rise of EVs, and the electricity mix and functions are changing drastically.

We have an opportunity to look at how we can build a state-of-the-art electricity system where benefits really outweigh the costs for the ratepayer. In my humble opinion, we should look at smart grids as a method above and beyond simple interties. We should look at how we can automate, monitor, and control the grid in a dynamic way, to basically better integrate renewables on one hand, improve reliability on another, drive operational efficiencies, plan the grid, enable EVs, and ultimately bring in some storage, which will deal with some of the dispatchability issues that are inherent to renewables.

If I look at the Canadian energy strategy, focusing on smart grids can also have areas of focus on the energy efficiency side, on the transition to a lower-carbon economy, on anticipating the rush of renewables, and on developing a modern and reliable transmission system. I think there are some great opportunities here for us to look at this as a federal point of view.

As I mentioned, I think electricity is a provincial purview, but if we look at this as Canadians, the real question for me is whether we can create the right climate for innovation and development around those problems, around those opportunities regarding the grid, interties, and so on, because I think the time is right. Looking at this from an entrepreneur's standpoint where we've developed capabilities that we're now exporting worldwide, I ask how we can do the same in the grid. When I say “we”, I don't mean it personally, but I'm looking at the whole Canadian community. How can we cultivate this innovation to ultimately drive long-term wealth creation and exportable knowledge, IP, which is going to create resilient jobs, create growth and create knowledge?

Ultimately, in my opinion, that is going to create returns for the ratepayers and create the possibility to really set ourselves up for success in the long term.

Thank you very much and I look forward to your questions.

[The Chair, Liberal, James Maloney]

Thank you very much, all three of you, for your presentations. I will open the floor for questions.

We're going to start with Ms. Jones from Labrador.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you very much, Mr. Chair.

I'd like to thank all three presenters for your presentations today and for the information that you've been able to provide to the committee in terms of what's happening around energy development in Canada.

I will tell you a little about me. I'm from the subarctic region of Canada, from Labrador. Of course, we're home to some of the largest hydro development projects in the world today. Ironically, we're also home to some of the most dependent communities on diesel-generated power, including industry using diesel-generated power. I have a vested interest in many ways in terms of how we move forward with power grids in Canada that are going to help us reach out to the industry, communities, and individuals who need them.

I'm going to start my questioning today with Mr. Coupland, if you don't mind. First, I want to say to you that I am a supporter of uranium mining. I voted to support uranium mining in Labrador in the provincial legislature and so did the indigenous people whom I represent. In addition to that, I'm a big supporter of nuclear generation of power and especially of the work that you guys have done around medical isotopes and the work around cobalt-60, which I believe is helping change not just the Canadian economy and how we do and deal with medical services but the whole world is watching us right now and learning from the examples that we've set. I'm a cancer survivor, so I'm very prone to what's happening in this side of the business. I wanted to preface my comments with that.

As a government we have worked very hard to try to set the right framework for energy expansion, development, intergrid operations, and energy corridors in Canada. As a person who's in the business, is involved with building new grids, providing supply in Canada, how do we as a government that's very much committed to this process help make sure that we can strengthen the process as it goes along but also to ensure that there is reliable and stable generation of power for people across the country?

[Steve Coupland]

I think the starting point is to look at the way our system has grown up. We have the provincial jurisdictions with the electricity, but we have local grids and there is local generation. There's been a lot of investment over the years in that and that has to be where we start from. We can't start in some different direction. I think using that is the base and then looking about at what fits and what works.

One of our challenges is geography. It is an extraordinarily difficult thing to try to take, for example, a large amount of clean, non-emitting hydroelectricity from Labrador and get it into Ontario, for example. You are well aware of the interprovincial challenges, the other jurisdictions you have to go across. I think we have to look at it in realistic bites and try to see where we can make small steps first, where we can make the grids connect, and where we can make the most of our assets.

I think one of the federal government's biggest roles is to try to encourage that and try to support some of it through some of the innovation funds and those sorts of things in terms of development. That's where the federal government can best contribute, but it is about trying to get the provinces to work together. That's one of the key steps.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you. I appreciate your comments, because you're telling me that we're on the right road in terms of where we need to be going as a government.

The concern for me arises when you have provinces that can develop large quantities of power, yet don't have an interconnected grid or a transmission mechanism to get power to markets that need it in Canada. I know this is mainly a provincial jurisdiction, but I always look for a better solution to bring it together.

Maybe that will allow me to ask Mr. Mossing a question here.

You talked about the success that you've had with inter-regional groups and the interperforming grids that you guys have been involved in. As the federal government, how do we allow for the reliability and stability that comes with such interconnection for other Canadians? How do we build the bridge to make it stronger, from where we have power available through generation and ensure that it gets to Canadians who need it?

[Jerry Mossing]

Again, in the context of provincial jurisdiction, I think the federal government can play a role in encouraging provinces to establish goals and objectives that are common, and in addition, as is being considered, establish through federal funding new or enhanced capacity that would allow transactions to occur.

Coordination between provinces will be required to make sure that the transactions occur and that benefits are shared across all provinces, but east-west among the four western provinces, as opposed to or in addition to the north-south transactions that occur primarily between B.C. and the U.S., as well as between Manitoba and the U.S.

[The Chair, Liberal, James Maloney]

You have about 20 seconds left.

[Yvonne Jones, Liberal, Labrador, NL]

I'll pass to the next questioner.

Thank you very much for your answers.

[The Chair, Liberal, James Maloney]

Mr. Schmale.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

It's great to be here with my new committee colleagues. I look forward to working with all members on all sides, their staff, and the staff at the committee. Thank you to Shannon and Ted for letting me come in and join each and every one of you.

It looks like quite an interesting topic, especially when we hear about nuclear power. In the riding I represent, parliamentary secretary Kim Rudd and I share a border, mine to the south and hers to the southwest, and we have—at least I have and I think you have, Kim—many people who commute into Darlington or Pickering, where there are nuclear facilities in Ontario. For us, it's quite a significant part of the local economy because of the jobs.

I think, Steve, you touched on that. I believe you said there were 22,000 direct and indirect jobs tied to nuclear in your area.

[Steve Coupland]

That's just from Bruce.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

That's what I meant, but it shows the significant impact of what nuclear does.

As I think we've all said, energy is a provincial issue, and for the most part—not all but for the most part—each province has been fairly concerned about providing energy for their own population. We're trying to work around that.

Going into the future and looking ahead—and I think some of the questions just before us touched on this—what other, cost-effective solutions are we looking at for the generation of energy? Here in Ontario we have had the Green Energy Act, and I think it was touched on also, which has caused us to have some of the highest energy prices in North America.

It has driven out manufacturing. It has pitted community against community. In my area we've had wind turbines that community members have fought against tooth and nail because local consultation was basically torn right out of the Green Energy Act when it was written. It went over the Oak Ridges Moraine, which was an environmentally sensitive area. and just basically steamrolled all local consultations.

Now we have solar panels going up that are heavily subsidized like the wind turbines, and they are being placed, in some cases, on good farmland, and we're seeing family farms, because of the benefits of the subsidies.... Now, at some point, and I think we are breaching that point, the subsidies are being toned down, because the province just can't afford them and neither can the population.

I was in Massachusetts over the summer, and they're having the same problem. The issue with their subsidies and their solar and wind turbines is that their grant program was put on hold and then reduced, just like Ontario's, because their population couldn't afford it and their government couldn't afford it.

How do we move forward? What are the most cost-effective ways of moving forward by which we can work on these interties without crippling the public and the provincial purse?

I open the floor to anyone who wants to answer.

[Steve Coupland]

Let me take a crack at that to start.

When you're talking about forms of generation, we need to bear in mind that all forms of electricity generation have different characteristics. They have different strengths and weaknesses. One of the strengths of our country is that we have all of them. When we're building a grid, we need to balance that out.

Obviously, if you look at B.C. or Manitoba, they've developed hydro, because they have a lot of it. Ontario used most of its hydro, accessible hydro, and went to nuclear. You use the kinds of assets you have.

Going forward, and let me just kind of talk about my own industry for a minute, I would say two things. In the province of Ontario, we've undertaken a massive refurbishment project. We're refurbishing the Darlington and Bruce units. They will continue to supply somewhere in the vicinity of 60% of Ontario's electricity to 2060. That's largely because there is no form of new generation that is cheaper than refurbishing existing generation. That's the approach we've taken there.

There are a couple of things that my industry is working on that we're hoping will have some impacts. One is in the context of something we call small modular reactors. Small modular reactors can break down into two different sizes or reactors. There are reactors that are anywhere from 50 megawatts to 200 megawatts, which are actually designed to be connected to the grid, and largely looking at replacing fossil fuel generation. But there's another category that we're working on called the very small modular reactors.

These are things that are in the 5 to10 megawatt range. I should have actually mentioned this to the member from Labrador last time. The hope behind them is that they're specifically designed to go into small off-grid communities, and be able to supply steady power there and replace diesel. That's a targeted goal.

I wouldn't want to tell you we're going to get there overnight. One of the things about the nuclear industry is that we don't do anything real quick. Our national lab at Chalk River has just launched a program to research some of those with a view to building a prototype. We're hoping that sometime in the next decade we might be able to move something like that forward. I know that's not a good answer to the people who are relying on diesel right now, but that's one of the things that we're doing.

Again, I would just talk about the need to use interties for what they can give us in terms of stability and in terms of providing support and reliability. I'm not convinced that transporting thousands of megawatts of electricity across long distances is economically viable at this point, which is not to say it won't be somewhere down the road, but we should understand that interties are an important asset. They're important to stability and reliability, and need to be connected in multiple locations in multiple jurisdictions.

[The Chair, Liberal, James Maloney]

Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you, and thank you all for being here. It's been very interesting.

I'm going to start with Mr. Lecompte from PowerHub.

You talked about grid modernization, and how it would be good to work to a better grid, not perhaps a bigger grid. You talked about distributed energy resources, the challenge, and opportunity there. You also mentioned that you work globally.

Do you have any good examples from outside Canada of where countries have got it right, where they've been able to make these advances, and how we could perhaps use those lessons, if you will, in Canada?

[Etienne Lecompte]

Thank you very much for the question.

There's no one recipe that works everywhere unfortunately. The electricity mix and local conditions make for different recipes adapted to different realities, but there are some examples that do stand out. It really depends on what kind of support we're looking at to roll this out. I think the Canadian government supporting innovation is a great one, but creating local conditions to encourage investment in certain fields also goes well.

We'll use the U.S. as an example. You have renewable portfolio standards as more of a state-sized kind of policy, but you still have the income tax credits for renewables that are set up federally. That spurs on investment there.

One of the key examples regarding grid modernization and grid investment that we've seen is pretty much more in Germany, where we have local communities that have invested and are trying a very diverse energy mix to integrate a grid, and that's seen great resources. Now the next move for them is to scale that out and see how that works on a greater regional or even country-wide basis. We see there's a lot of investment going out in these types of projects for remote communities. As an example, that would be a great place for us to start here in Canada, to trial out some of these microgrids of sorts, where we can combine multiple generation sources together.

Then it's about adapting to local realities. In Chile, as an example, interconnection issues and intertie issues have led the government to move away from larger-scale plants, both in renewables and the traditional sense, and to look to what they refer to as PMGDs, which are a smaller-sized generation facilities that interconnect on the node side to bring them closer to consumption centres and then have an impact. They're looking at opportunities to better balance the grid by bringing generation closer to the point of consumption, and that's always something that can be learned from and considered.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay, thank you.

You also briefly mentioned the future of storage in terms of dealing with some of the renewable energy challenges. Can you expand briefly on where you think that storage issue is right now?

[Etienne Lecompte]

Storage is just learning to walk, if we use the development cycle for humans. It's going to start running pretty soon. We have views that in the next 10 or 15 years storage is going to be prevalent everywhere and completely reshape the grid as we know it. In my humble opinion, we need to consider where things are going. We can take a longer outlook. That's really what we need today, because storage is going to be prevalent, cheap, efficient, and create multiple value-added services to the grid very soon.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I'd like to move to Mr. Mossing in Alberta.

We've heard that Alberta, of course, is phasing out coal, moving to renewables and other sources, and we've heard of some of the challenges that Ontario has had there. I just wonder if you could comment on how perhaps Alberta might be doing things differently from Ontario.

[Jerry Mossing]

The challenge of phasing out coal in Alberta is, I think, a little bit harder than Ontario's challenge. Ontario had more coal capacity to phase out, but it was a smaller percentage of their overall generation portfolio. In Alberta we are dealing with three private companies that own coal generation as well, where in Ontario they were provincially owned.

In terms of phasing out coal and implementing more renewables, we've had to make adjustments to our market. We are adding a capacity market to go along with our energy and ancillary services markets, and we value the competition that comes with the market framework to drive the lowest cost, whether it's the cost of renewables, which are reducing over time and will become economic.... If storage is added to that mix, it helps balance the variability and it becomes economic. We would see a natural evolution to those technologies. In terms of the coal phase-out, as the provincial government has chosen to implement a tax to encourage the reduction in greenhouse gas emissions, we see that as an economic signal as well.

For sure, Alberta is blessed—along with B.C., northeast B.C. in particular—with a lot of natural gas resources. It is a fossil fuel, but at 50% fewer emissions as compared to coal. We see that natural gas generation will provide the baseload energy and some of the ramping to go along with the renewable energy that we get.

As I said in my opening statement, accessing renewable in the form of hydroelectricity from the west, B.C., and on into the Pacific northwest, and/or use of the hydro reservoirs as storage, can go along with the provincial programs to lower greenhouse gases over time, but our preference is to see that happen in an economic fashion to help keep the cost to ratepayers as low as possible.