Natural Resources Committee on Oct. 30th, 2017

[Mike Marsh]

The existing intertie we're looking at right now is to facilitate a contract we currently have with Manitoba Hydro to move 100 megawatts. That contract will not start moving energy until about 2021-22, the early 2020s, so we're busy looking at an upgrade to one of the existing interties. That will not be a significant transmission infrastructure compared with the north-south transmission interties from Manitoba into the United States.

When you start to look at 500 megawatts or 1,000 megawatts being moved into a province, from Manitoba to Saskatchewan for example, you're looking at substantial costs for transmission lines and for switching stations, which would require, potentially, a high-voltage direct current, HVDC, to AC conversion. Those are extremely expensive facilities. I said a billion dollars-plus. It could be two billion. I think this is what the studies are intended to show us.

If the potential were there and we were to look at the block of energy that we could move—what transmission would be required and how much that would cost—then we could see what kind of case could be made for that type of investment.

[Ted Falk, Conservative, Provencher, MB]

Other than the costs that you've indicated, what other types of barriers are there to moving power interprovincially?

[Mike Marsh]

One barrier is certainly around permitting and regulation. A lot of that is federal but some is certainly provincial, on the environmental side of the equation. Once you get into big transmission towers and big lines crossing several hundred kilometres of territory, it becomes a significant issue. Site and permit approval processes on these projects take one to two years.

Anything we can do to help streamline that process and identify these barriers up front would be very helpful.

[Tim Eckel]

In terms of the other barriers we have, from a technical point of view, if you install a generating plant within your own system, you can put it by a load and it will help keep the whole system stable. As soon as you start to bring power in from a fair distance away, its ability to support your system locally declines. You have to put in extra equipment just to keep the system reliable and stable, even as you start importing more power. Those are some of the things you have to do.

The other thing is that you have to get to the load. Bringing it to the border is one thing. In Saskatchewan, Regina and Saskatoon are our big load areas. Once we get it to the border, we still have to move that power to those load centres.

[Ted Falk, Conservative, Provencher, MB]

Addressing the baseload issue with importing power is a significant issue for you folks, and one of the barriers that you contemplate.

[Mike Marsh]

Absolutely. Baseload power is a big requirement for us.

Two-thirds of the energy we produce here in Saskatchewan goes to serve the industrial load: potash mining, steel mills, uranium mining, the oil and gas sector, and pipeline capacity as well.

[Ted Falk, Conservative, Provencher, MB]

I have just a quick question. Do you have any capability to store power in Saskatchewan? Do you store power?

[Mike Marsh]

Yes. We have about 900 megawatts of hydro today. We manage our hydro very carefully so that we can store energy throughout the off-peak hours and run our hydro facilities in our peak times during the day.

We have one small pilot project now that's looking at wind battery storage, and we're looking at other options for storage pilot projects in the very near future.

[Ted Falk, Conservative, Provencher, MB]

Thank you for letting me get that in. I'm out of time.

[The Chair, Liberal, James Maloney]

You took the words out of my mouth.

Mr. Cannings.

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

Thank you for taking the time to come before us today.

I want to start with this, which you touched on in your presentation. Previous witnesses have talked about it. One put it in these words: that the future of energy production will be “local generation” for “local load”. I think you mentioned this. I just wondered how SaskPower is approaching that opportunity, I guess you could say, with plans for future generation projects in Saskatchewan.

[Mike Marsh]

I'll start and then let Tim add in here.

We have embarked on a grid modernization program, certainly, much like other utilities in Canada. The future of electricity is very exciting, but it's also very transformative for our industry. Distributed generation, whether it's located at the residential premise or is a community project, will certainly have the benefit of having that capacity and those electrons available very close to the load, which would eliminate the need for a lot of transmission and distribution facilities.

The speed at which that transformation occurs, however, is as yet unknown. There's a lot of work to be done on battery storage technology that can be integrated into the grid and will allow the safe and secure movement of electrons in two or more directions, which is what the future ultimately holds. As to whether there's going to be a transition phase here of 10, 20, or 30 years, I think that's what the industry is wrestling with.

High baseload requirements will require a substantial amount of our generation to come from current baseload stations today, including coal, until the coal fleet meets that retirement date and we're able to do something with it. Natural gas combined cycle plants and hydro are the two main areas where we would see baseload providing that opportunity.

As this technology becomes available, storage becomes available, and we modernize our grid, we'll be looking to have those supply sources close to the load sources everywhere in the province. Currently, we have about 600 people with residential solar in Saskatchewan. We have about five megawatts of installed solar. We are proceeding through an RFP process for 10 megawatts of utility-scale solar, and the announcement of that successful proponent will be made early in 2018.

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

Moving on, you made a comment about interties and expressed some caution as to who is going to pay for these. I don't know if you were talking about between Saskatchewan and Manitoba. I wonder if you could expand on that concern.

[Mike Marsh]

Traditionally, because the energy decisions within provinces are developed on business cases within the province with the available technologies we have today, there's been very little incentive to look east or west. That's precisely why you don't see the intertie capability today.

There have been substantial opportunities for Manitoba Hydro to sell their energy into the United States. That's where the contracts have been and that's why they have developed it.

If there is an opportunity to look at moving large amounts of energy but the business case for moving off fossil fuels faster can't help make that business case come alive, then the addition of federal incentives to help accelerate that development is important.

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

As you mentioned, and as I think we all know, Saskatchewan was a leader in the carbon capture and storage technology. I wondered if you have plans to do any more of that in Saskatchewan.

You've just mentioned the retirement date for your coal fleet. Is that going to move ahead and you'll stay with the one...? I'd like you to comment on the future of carbon capture and storage in energy production in Saskatchewan.

[Mike Marsh]

We have about 1,650 megawatts of conventional coal in the fleet today. Most of that, except for one 300-megawatt unit, is scheduled to retire before 2030.

We will have to be making a decision on the next two units—our units four and five at Boundary Dam—by the end of 2019. We're working through that decision process today. Of course, in the first place, it has to be an economic decision, and we have to look at all the alternatives that are available to us.

It's a very complex decision that we are undertaking here, and it certainly will be a big decision for SaskPower and for the province, but we have not made that decision yet. We expect that decision to be coming forward probably in the spring of 2018.

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

Okay.

Just quickly, then, you've talked about how you've invested a billion dollars, more or less, annually in upgrading your infrastructure. Can you perhaps describe what that upgrading entails and how much of it now deals with planning for the future smart grids or these changes that will allow that sort of technology to happen?

[Mike Marsh]

I'll make just a brief comment.

Yes, we spend about $1 billion a year. About $400 million of that is for sustainment infrastructure on existing assets in the ground. Given the growth we've had in the province over the last decade, about $500 million of that is to deal with growth: connecting new customers, adding new line capacity, and adding new generation capacity. We also have about $100 million tagged for what we call “strategic investment options”, whether that's new buildings, IT systems, or other technology platforms.

With respect to modernizing the grid, I'm going to turn it over to Tim to explain what we're doing in that area.

[Tim Eckel]

First, as we're replacing aging assets on the distribution side, we're looking especially at how we modernize the grid, so we're putting in equipment at the same time to facilitate that. It's a cost-effective way of introducing this new technology into our distribution system.

As well, we have a grid modernization program going on right now, and we're starting off with a few projects. Our AMI meters, the commercial and industrial meters, are starting to roll out. We have an enhanced distribution management system that we're implementing so that as the numbers of customers with renewables come online, we're able to operate the system effectively and have good visibility and control of everything.

Those are the first two stages of the system we're working on. We're probably spending in the order of about $100 million on the distribution side just for sustaining assets and preparing for grid modernization.

[The Chair, Liberal, James Maloney]

Thank you.

Ms. Ng.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Hello, gentlemen. Thank you very much for coming and for providing us your testimony and your thoughts.

I'm going to begin by commending the work that you're doing in modernizing your grid and trying to achieve ambitious targets to reduce greenhouse gas emissions. Maybe I'll follow up on the point that you were talking about both in your testimony and in one of the questions, which was around the role that the federal government could play.

As you said, there are some jurisdictions in the country that have developed clean energy and have done the work around north-south. Could you talk to us and give this committee some advice about what some of those barriers are and what it is that we could be doing that would actually enable Saskatchewan to have greater interties and reach targets faster, for example? If you could talk to us about that, I'd appreciate it. What would it take?

[Mike Marsh]

It's going to take a lot.

I think that when you look at where we are placed geographically in Canada, at where Alberta is placed, and at the abundance of fossil fuels that we have had the benefit of being able to use for the past many decades now, you can see that as the world shifts to a cleaner future, both Alberta and Saskatchewan have to move relatively quickly to move off fossil fuels, or to reduce emissions in some way, shape, or form.

I think the expense that we in the electricity sector see relative to other utilities in Canada is going to be significantly higher. Because we're paying relatively much, much more in order to move by the year 2030 to that cleaner emissions environment that has been directed, there should be an opportunity, I think, to leverage some federal funds if the federal direction is to clean up emissions on coal-fired generating stations, on conventional coal. We either move to gas or we move to carbon capture. Also, if there's another opportunity to import hydro to help reduce emissions and move to an even cleaner grid faster, I think that incentivizing the western provinces that have the high fossil fuels component is a realistic option that should be looked at and potentially exercised.

As I've said, between now and 2030, there will be 1,650 megawatts of conventional coal potentially retired. At the same time, we are also building a combined cycle natural gas facility. Potentially in the 2020s we would have to build one or two more combined cycle natural gas facilities in order to keep up with our baseload requirements, but also in order to follow the wind because of the intermittency of wind and solar. The combination of gas and wind still allows some emissions into the environment. If the interest is in taking advantage of Canadian opportunities to help Saskatchewan, or where other provinces help Alberta, then I would suggest that having a federal incentive to help us do that would be very welcome.

[Mary Ng, Liberal, Markham—Thornhill, ON]

What about any role that the federal government could or should be doing around collaboration among the provinces? Is there anything that could be done that is helpful in that way and, obviously, is respectful of provincial jurisdiction? Is there anything the federal government can do in that regard around the interprovincial collaboration to facilitate this, aside from money?

[Mike Marsh]

The work that's being done with NRCan is certainly helpful. It's a chance for common interests to be put on the table and for technical solutions to be developed that would help promote east-west co-operation in an east-west grid.

As for where there's an opportunity to be more actively engaged with the provinces, I'm not sure that I can name it today. I think there has to be a technical solution. There has to be some economic value established. Then you look at what it will take to get those projects over the line and whether it requires a little bit of federal incentive or a lot of federal incentive. I think each project would have to be looked at on its own merits.

[Mary Ng, Liberal, Markham—Thornhill, ON]

I'm going to pick up really quickly on the point that my colleague MP Bagnell made on getting reliable electricity. On getting reliable energy to some of the remote areas of the province, are there challenges or opportunities that you see in strategic interties that will also accomplish that initiative and that may include our indigenous communities as well?