Evidence of meeting #68 for Natural Resources in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was electricity.
A recording is available from Parliament.
Conservative
President and Chief Executive Officer, Capital Power Corporation
That is correct.
Conservative
Ted Falk Conservative Provencher, MB
Six years ago, I think you were quoted as saying that we have 800 years of coal in the ground.
President and Chief Executive Officer, Capital Power Corporation
We in Alberta have a tremendous amount of coal resource. It actually dwarfs all other hydrocarbons.
Conservative
Ted Falk Conservative Provencher, MB
Okay.
You've also indicated that there's a cost to abandoning or stranding investments and assets.
President and Chief Executive Officer, Capital Power Corporation
In Alberta, and to be clear, the agreements that our organizations reached with the Alberta government were that post-2030 there would be no coal emissions from the coal plants. We can reuse them. We can convert them to natural gas. We can build new gas on the site. There are a number of things that we can do.
We collectively worked with the Alberta government and came to a resolution late last year where, in aggregate, the government is paying the three companies involved approximately $1.3 billion over a 14-year period to compensate for the stranding of the assets, so to speak.
Conservative
President and Chief Executive Officer, Capital Power Corporation
That's a very difficult question to answer in isolation.
One of the things about interties is that if you take British Columbia, it's in a position, particularly if Site C does go forward, of having a slight oversupply.
Saskatchewan is reasonably well supplied and has steps to maintain its supply profile. Alberta right now is in an oversupply situation. Certainly today, a large intertie to an area that's more depressed from an overall price perspective may well be positive, but I don't really see the markets today.
We can wheel power into Minnesota from Alberta. We can run power down into California from Alberta. It's just that there's a depressed power price across North America right now. There really isn't.... We have cheap power, but everybody else does too.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thank you.
Thank you both for being here today.
Mr. Stensby, I have a technical question. We've heard this before and I haven't really got a clear...perhaps because I didn't ask it correctly. You talked about two of the new transmission lines that you're building. I think you said the eastern one was DC.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Could you tell me and the rest of us here why you would have some AC and some DC. I assume DC is better over long distances. What does that mean when they come together? What kinds of technical issues do you have to overcome?
Managing Director, Electricity, ATCO Group
I'll try. The vast majority of transmission and distribution systems in the world today are alternating current. Aside from the history lesson, part of the reason that's done is that you can use transformers to transform voltage relatively effectively, efficiently, and cost effectively. One of the things that designers of transmission networks do is that they attempt to use the highest voltage possible, reduce the current, and by doing so, they reduce losses, so it becomes the most efficient way to transmit volumes of electricity.
If you have a very long distance, as Quebec would have had with their early James Bay projects and Manitoba Hydro has done, you have significant losses over these long distances. Therefore, traditionally DC, or direct current, was reserved for these very long, substantial transmission projects. They convert alternating current in a converter station, they transmit it on direct current transmission lines, and they reconvert it at the other end back to AC.
Historically, those converter stations have been very expensive. They're essentially electronics. For the same reason that your phone.... I don't know if it's cheaper, but your television is cheaper than it used to be. Converter stations have become cheaper than they used to be, so the technology has caught up to us to now allow relatively efficient and lower cost conversion to DC.
The advantage of a DC system is that it gives you a gas pedal, like in your car. You can actually control the amount of flow that goes down the transmission line, whereas an AC system just allows the flow to occur. It gives system designers and operators some more control and more flexibility. They can actually force power to leave. They can import power. It's still generally considered economical, but only for relatively long distances.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
I'll ask Mr. Vaasjo this next question, but you can also jump in if you like, Mr. Stensby.
I'd like to expand on the idea of unintended consequences. The impression I have is that one of the reasons that we're considering these interties is to help facilitate the integration of renewables and diverse sources of power into the grid. At least that's how I understand it. Please, correct me if I'm wrong.
When I talk to groups, such as the wind power people, they say be careful what you wish for because there may be unintended consequences that would make it more difficult for renewables. I think that you both mentioned this. Could you expand on what conditions we should watch out for and consider before we move ahead with projects such as this?
President and Chief Executive Officer, Capital Power Corporation
I think, just from the highest level and a principle perspective, probably any answer to what is done with the energy mix would suggest that you need some diversity. You can't be all hydro. You can't be all nuclear. The wisest thing to do is to have some diversity around that.
Each region in Canada has its own resource base. Alberta has been historically blessed with hydrocarbons. Obviously British Columbia and a number of the other provinces have very tremendous hydro resources, and they've developed their resources accordingly.
When you look at what might be the answer, what might be the build in the longer term, as basically communicated and positioned by the Canadian government, hydro is a significant part of the Canadian future in power generation. Most of the work is suggesting that hydro power in Canada has to double. I think we'd agree with that. That it is definitely a renewable resource and is, to some degree, readily available.
That, in combination with interties, can't be the only answer. If you take Alberta, southern Alberta has the best solar resource in Canada. It has a tremendous wind resource. There's a tremendous amount of renewable energy, green energy, that's available other than hydro. There continues to be good strong hydro potential in Alberta, as well.
Each region has its own unique characteristics, and in each region there is likely a different answer. Some of that answer may well be interties. Certainly I would agree that connections to northern Canada definitely have some tremendous benefits. The intertie between Alberta and B.C. today is derated, and should basically be doubled in effective capacity through improvements.
There's definitely a lot of work that can be done around interties and around transmission. The unintended consequence is when there ends up being an answer arrived at and you end up with overreliance on a particular source or particular intertie, or whatever. That creates a significant risk of a different nature. That's a part of the unintended consequences, and specifically when you look at the Alberta market.
When it was announced that there may be an intertie between Alberta and B.C. and that Site C power would go there, it had implications for our market. In the long run, people are looking at that and asking how they can build an asset and all of a sudden be swamped by hydro energy coming from British Columbia, which crashes the market.
There are some definite consequences associated with it.
Liberal
Geng Tan Liberal Don Valley North, ON
Thank you, Chair.
I'm going to ask a few technical questions to both witnesses.
The high-voltage power transmission system suffers electrical losses on the line, partially due to the old system design or the outdated technology. On Monday, we heard from another electricity producer, who seemed to suggest that such an electrical loss is not a big concern, since it occurs more on the end point than during the transmission.
Would you agree? Can you comment on that suggestion?
October 18th, 2017 / 4:20 p.m.
Managing Director, Electricity, ATCO Group
We would say that losses in the transmission system are not a tremendous concern for us. I think there are larger losses in the conversion of energy at the customer's place, at the use of that energy, when they convert it to other uses.
That's not to say that we shouldn't do everything we can. I mean, losses are losses, and you're much better off to try to tackle greenhouse gas emissions from an efficiency perspective than you are to.... You know, if we all became more efficient, that's a better way to produce fewer emissions than simply trying to get lower emissions generation in the first place.
I think the losses are important, but I don't see the intertie conversation as being all that germane to the losses discussion. I think it's a bit of a red herring, personally.
Liberal
Geng Tan Liberal Don Valley North, ON
A part of the funding for the green infrastructure goes to the upgrading of the current transmission line.
Another question is about DC versus AC. No matter what kind of advanced technology we have right now, that kind of conversion will lead to additional intertie costs, for sure. I'm asking whether there are there other large hidden intertie costs that we should be aware of, similar or different, technically?
Managing Director, Electricity, ATCO Group
No, I don't believe there are large hidden costs, and I don't believe that even the discussion on DC and converter stations are actually hidden costs. I believe they are quite obvious when you price out and get capital cost estimates. The basic design principles will set forth a technology and the technology will drive a cost, and I think that's pretty well understood in the industry. I don't think that element of costing would be a surprise to the study.
Liberal
Geng Tan Liberal Don Valley North, ON
Okay.
I have another question, to Capital Power.
You talked a lot about thermal natural gas. I'm curious. What percentage of your current assets are thermal versus renewable? Do you have any plan or strategy to invest more on the renewable energy?
President and Chief Executive Officer, Capital Power Corporation
As a rough measure, today we're about half thermal and half renewables, from a capacity perspective. We are decreasing our intensity around our coal facilities by moving down to natural gas, but of course that's still thermal.
In terms of what we're doing from a renewables perspective, we have participated in the Alberta RFP for the 400 megawatts, and we'll see if we're successful or not. So far this year, we have completed one wind farm in Kansas, we announced another one being constructed in North Dakota, and we expect to announce another one by the end of the year. We're building a lot of wind.
Liberal
Geng Tan Liberal Don Valley North, ON
Okay.
My final question is for both witnesses.
In the current year, you both generated power within the same provinces. Let's say if a single major new intertie were to bisect a major geographic area of the shared interests, could you foresee working together in some kind of a partnership to achieve better efficiency or cut costs, since you're both linked up to the same intertie?
