Good afternoon.
Thank you, members of the committee, for the opportunity to appear before you today.
My name is Alex Simakov. I'm the director of external affairs for Energy Storage Canada. We are the national voice of the energy storage and smart grid technology sectors, representing 97 members from across the country, a number that has roughly doubled in the past four years.
I want to make the case today that energy storage technologies have made tremendous progress over the past generation.
First, we're really good at making friends with other technologies. With nuclear generators, we're being co-located to reduce nuclear manoeuvring and optimize their output. With gas plants, we're optimizing response times, where batteries take a millisecond. It allows gas plants to fire up at a more gradual pace to respond to needs.
Our biggest customers are large industrials, who put us behind the meter to manage their peak demands and reduce costs for both themselves and the system overall.
We're also, of course, strongly paired with intermittent renewables so that when the sun doesn't shine or the wind doesn't blow, we have firm capacity that we can provide for our system.
I want to take a second to focus on Ontario to describe some of the key progress that we made very recently.
Last month, the Independent Electricity System Operator announced the results of the LT1 RFP, which is about two gigawatts—aiming for two-and-a-half gigawatts—of capacity. Clean energy storage secured 10 of those projects, and I want to leave you with three figures here.
The first is 24. Our costs dropped by 24% year-on-year decrease.
Two is 40%. That is the cost at which energy storage projects came in compared with the natural gas projects, on average a megawatt per business day.
And three is 90%. Nine of the 10 clean energy projects had first nations equity participation of 50% or greater.
All that means collectively is that today energy storage represents the cheapest form of new capacity in the system, period. It also means that Ontario, having completed its procurement, is on track to be the third-largest jurisdiction for clean energy storage in North America.
I want to reiterate Mr. Bennett's points, that our focus overall is on the doubling of Canada's national energy grid. That is the most consequential economic development opportunity of our lifetime, and one that our sector is committed to fully.
While it's led absolutely provincially, and great progress is being made there, there are major roles for the federal government to undertake in this regard as well. The first is ensuring sufficient transmission capacity. That is the existential choke point that is affecting all decarbonizing and electrifying economies. In the U.K., they're spending about a billion pounds per year on wasted wind electricity because they cannot get that power from Scotland to England. In the U.S., in some markets you're taking about a decade to get a new connection because of the constraints.
If we're looking for an investment case, it's certainly that. The choke point we are going to see on continued economic growth in Canada will be our ability to distribute and consume electricity because of a distribution and transmission system that cannot keep pace with an electrification and renewables build-out.
Two steps can be taken here.
The first is tax incentives for municipalities that welcome development. We've had, as energy storage, a [Technical difficulty—Editor] community welcoming us, and they are both eager and partly reticent, and we respect that reticence, and are happy to work with those who are eager to work with us.
That said, as we move forward and as the intensity and the frequency of clean grid asset connections continue, we are going to need to make sure that we are providing appropriate incentives for those communities that do step up and want to do the work. I don't mean just one-off cash transfers. We need to have systematic tax incentives for the municipalities that are keen to do that work and make sure that we have incentives for those that are reticent or reluctant to invest in new clean energy technologies.
Likewise, to echo Mr. Bennett's points, interprovincial interties are going to be critical. Historically, our provincial energy regulators and planners have looked southwards to export power to the States. We now have a great opportunity to incentivize them to build interties between provinces, not just to balance out the diversity of our demand profiles, but, more consequentially, the diversity of our supply profiles.
The third point is on ambitions and aspirations to phase out natural gas generation by 2035. Speaking as the representative of the sector that will be the foremost beneficiary of that change, I urge extreme caution on moving with prejudice on achieving a goal that is fairly arbitrarily set and is not aligned with system needs. To quote the ISO ,“the CER as drafted is unachievable in Ontario by 2035 without putting at risk the reliability of the electricity system, electrification of the broader economy and economic growth.”
We're on a rapid track to exceed decarbonization, and we want to make sure those gas plants are being used as little as possible, shrinking them to only the extreme days. But we absolutely need them for emergency and standby resources at a time when we're anticipating extremely hot weather events and other challenges coming forward.
Thank you.