Natural Resources Committee on June 10th, 2024

[Gilbert Bennett]

Our policy is that a price on carbon is a good means of facilitating a migration to renewables. A policy decision can be taken on what to do with the revenue, but we think that imposing a price on carbon changes the balance from fossil fuels to renewables in our economy.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

I have the same question for the other two witnesses.

[Alex Simakov]

If I could go next, I would like to distinguish between a carbon price for household consumers, which I don't believe in any meaningful way directs them towards decarbonization, versus a carbon price for large industrials and system operators, who do have extensive planning and long-term investment views and can properly make decisions that contribute to long-term diversification.

Therefore, for household and consumer goods, no, but for large industrials, yes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Do we have another witness? No? All right.

[The Chair, Liberal, George Chahal]

Thank you.

I'm now going to go to Mr. Angus from the NDP for five minutes.

Mr. Angus, the floor is yours.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Mr. Chair.

We have a huge oil and gas and nuclear lobby, and we're often told how difficult it is to make things happen and how regulations and everything are standing in the way.

California went from 770 megawatts in battery capacity to 10,379 megawatts in a period of five years. That now allows them, for 40 out of 48 days, to run pretty much straight on renewables, and they can go to natural gas or whatever else as a backup, so that battery capacity has been revolutionary. It has been even more revolutionary in Texas.

Mr. Simakov, what is the potential in Ontario? We see that they're talking about, I think, 1,784 megawatts from 10 projects coming online by 2028. However, that's still like one-tenth of what California has done in six years. How much more capacity can we get online, and how will that change it, not just for going to clean energy but for consumers and the price they're paying for household energy and for industrial operations?

[Alex Simakov]

Thank you, Mr. Angus.

I note and appreciate that California has been a great leader in this. Their storage resources are backed up by extensive thermal resources, which represent 45% of the grid's capacity and have been essential to ensure—but not always—the reliability of the California grid. Those resources will continue to be invaluable for at least well past 2035.

For Ontario, we see the capacity for energy storage to completely exceed all thermal resources, certainly well before 2050. There is a great variety where, between 2035 and 2050, energy storage resources can fully displace natural gas.

At this point, we envision the goal for 2050 to be 88,000 megawatts of capacity. That's more than doubling where we are today. Energy storage will have to fulfill close to the entirety of that, notwithstanding existing hydroelectric and nuclear resources, to ensure that we have a reliable grid.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

The prices of the various energies are different, depending on the project. However, what we've heard from testimony is that the bottom line on solar and wind now is about $24 per megawatt, while nuclear's bottom line is $141 per megawatt and natural gas is $39 per megawatt.

When you began your testimony, you were coming in at 40% of the cost compared with natural gas. Did I hear you right, and can you explain that?

[Alex Simakov]

Yes. In the LT1 procurement from the IESO results released on May 9, the 10 energy storage projects came in at an average cost of $672, and the average cost for the 411 megawatts of gas was $1,681, so we are just below 40% of the new bids that were put forward. Again, that is obviously a limited context, and I don't want to over-extrapolate from that, but from the last competitive tender in Canada, we were the cheapest new resource.

[Charlie Angus, NDP, Timmins—James Bay, ON]

That's very important, because one of the questions we always hear on solar and wind is about their flexibility, because they are not always running at peak capacity. However, if we could store that at the cost it's being delivered at, it would be very beneficial not just for the clean energy sector but also for the bottom line for consumers.

I'm going to have to switch to Mr. Vichie now. I'm very interested in green hydrogen, but there's the need to get these projects up to speed. It's not just that we are dealing with a climate crisis; our competitors in the United States are moving on the U.S. seaboard at an extraordinary rate with projects getting off the ground that are going to be producing offshore wind for hundreds of thousands of homes.

Are you concerned that we're going to get swamped? When they have to dump their excess capacity, wouldn't Nova Scotia be a natural place for them to dump that and maybe make some of our projects a little less viable?

[Trent Vichie]

No. I think it's the other way around in that there's actually...if you look at the map of U.S. generation, they have a lot of decarbonization work to do. In fact, if you can get offshore wind in Nova Scotia, which is some of the best in the world, into the U.S. market, there is clearly an opportunity there.

On the green hydrogen—

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm going to jump right on you. How important is it to get these ITCs up and running so that we can—

[Trent Vichie]

It's critical.

[Charlie Angus, NDP, Timmins—James Bay, ON]

It's critical. You can lose your mind on this. We've been pushing this government and asking, “Where are these ITCs?”

How important is it that we get them on the table now?

[Trent Vichie]

It is absolutely critical, because getting started first and early is paramount. Other parts of the world, not just the U.S., are moving on this...the Middle East and other places in the world. It is absolutely critical.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Angus.

Mr. Vichie, if I may, I have a quick question. I was in the Taiwan Strait, where Northland Power, a Canadian company, is investing $9 billion in another pension fund as well.

What's the opportunity on Canada's east coast for wind power from an investment perspective? That includes your projects, plus all the other projects you think might come forward in the future.

[Trent Vichie]

There are two different parts to that question.

Firstly, offshore wind is 100 gigawatts of potential resource. Under 50 metres, you'll do fixed-bottom. You need transmission, though. You absolutely need transmission, and it's a really good complement with some of Quebec's hydro resources and pushing into other markets there.

On the hydrogen side, I'll talk about the first phase of our project, which has two billion dollars' of economic benefit associated with it. About half of that is in Nova Scotia. The other half of it is federal. We're talking about a game-changer here.

[The Chair, Liberal, George Chahal]

Thank you.

Thank you to all of the witnesses. You can submit briefs to the committee clerk if there's anything we may have missed, or if there's anything else you'd like to provide for the attention of the committee on this important study.

Witnesses, you are released. Thank you once again.

Colleagues, I have just a few items to discuss with you before we conclude today's meeting.

The first one is the suggested witness lists for the study on the Trans Mountain pipeline expansion. Is the end of day on Thursday a deadline we can all accept so that we can move forward with the study and get witnesses? I don't see any objections. The end of day on Thursday it is. Thank you, colleagues.

Also, is it the will of the committee that for the study on the Trans Mountain pipeline expansion, the proposed budget in the amount of $32,100 be adopted? I see no objections.

(Motion agreed to)

Great. Thank you very much.

I wish everybody a great day. That concludes our meeting.

The meeting is adjourned.