Draft Canadian Clean Electricity Regulations - Implications for the Alberta Power System

The opinions expressed in this article are entirely my own, based on my experience with power system planning and operations, and do not represent those of my current or past employers. I offer these opinions with good intent as an engineer and Albertan concerned about the current and future health of the Alberta power system.

There is a lot of polarized political debate surrounding the transition to net zero in Alberta and the federal Clean Electricity Regulations (CER), but what's not being properly considered is the physical reality of Alberta's power system and Alberta's unique electricity industry policy framework. I will attempt to highlight some of the key aspects of our power system and policy framework in an effort to help inform the discussion. My intent here is to give physics a seat at the table of opinions.

Power Systems are Complex Systems

Complex systems are highly dynamic, interconnected, and non-linear, making it extremely difficult to predict their behavior or outcomes through models and forecasts. Complex systems are composed of multiple components that interact with each other in unpredictable ways, and changes to complex systems must be designed and tested carefully because the interaction of the components, and changes to those components, often results in surprising and unanticipated outcomes. Solving problems with complex systems, such as transitioning a power system to predominantly renewable and low emission energy, requires complex solutions - simple solutions applied to complex systems are insufficient and will have unintended consequences. Energy policy makers must recognize that power systems are complex systems when they design and implement energy policies.

While well-intended, the CER, and almost all clean energy policies, fail to recognize the complexity of power systems, and this is already leading to unintended adverse outcomes on power systems across the globe. The simple focus on incenting renewable generation and reducing conventional emitting generation ignores the other physical attributes power systems require to enable reliable operations. We are seeing the impacts of simplistic policy approaches in the operational challenges we're already experiencing in Alberta, Texas, California, the UK, etc. These operational challenges are physics sending us a message that we need to change course.

Energy policy makers must begin to recognize the inherent complexity of power systems and consult with power system operators and follow guidance from NERC to develop pragmatic energy policies that make power system reliability a complementary objective with decarbonization. Policy makers must also allow sufficient time for power system planners, infrastructure developers, and regulators to plan and implement power system changes safely and affordably. Power systems are essential to modern life and policy makers have a public interest duty to ensure policy driven power system changes prioritize reliability and do not have unintended adverse public safety consequences.

Key Aspects of the Alberta Industry Structure

All power systems are complex, and Alberta is not unique in this respect. However, there are several key aspects about the way the Alberta power system is planned and configured that make it unique, and I will explain some of these aspects here.

Transmission and generation are planned independently under Alberta’s industry structure, which differs from most other jurisdictions:

• The Alberta government does not own any distribution, transmission, or generation assets – all assets are owned and operated by investor-owned private entities.?
• In most other Canadian provinces, such BC, Saskatchewan, Manitoba, and Quebec, transmission and generation assets are owned and operated by provincial crown corporations and transmission and generation are planned together through an optimization process called integrated resource planning (IRP).? This is not the way transmission and generation infrastructure are planned in Alberta.
• Transmission infrastructure is centrally planned by the Independent System Operator, the Alberta Electric System Operator (AESO). ?The AESO’s transmission planning duties are specified in Sections 10(1) and 10(2) of the Electric Utilities Act?Transmission Regulation.? These duties are restricted to transmission planning and do not include planning new generation assets.
• In addition to its role as the transmission system planner, the AESO operates the transmission system, wholesale electricity market, and ancillary services market.
• Generation assets are owned and operated by investor-owned entities, and they are responsible for determining the size, location, timing and type of new generation assets that are built in Alberta.? These planning decisions are based entirely on economics and expectations of future profitability by individual generation owners and are not based on a coordinated integrated planning process.?
• Under Alberta’s electricity policy framework, generation owners are only obligated to offer their full capacity into the electricity market as per ISO Rule 203.1 (aka “must offer, must comply” rule).? They have no legal obligation to serve load and can choose to not operate if real-time power prices fall below their cost of operations.? In addition, if the long-term economics of operation are unfavourable, generators can simply choose to terminate operations and leave Alberta.
• Transmission assets are owned and operated by investor-owned utilities who recover their capital and operating costs through a regulated rate of return.? The AESO determines the size, location, and timing of new transmission assets through their planning process and directs the transmission utilities to build and operate them through a regulatory process overseen by the AUC.
• Distribution assets are owned and operated by investor-owned utilities who are responsible for their planning, development, and operation
• Transmission and distribution owners recover their capital and operating costs through regulated rates of return which are determined through regulatory processes overseen by the AUC.

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Unique Characteristics of the Alberta Power System??? ?

The Alberta power system has several unique characteristics that add additional complexity to power system planning and operations which must be considered when designing and implementing electricity policy changes:

• The Alberta power system is essentially an “electrical island”, with limited reliable interconnections to other jurisdictions.? We must therefore be self-sufficient with the generating resources available in Alberta until incremental dependable interconnection capacity is constructed.? The power provided from other jurisdictions cannot be considered "dependable" for power system planning purposes. This differs from many other jurisdictions with strong and dependable interconnections to neighbouring power systems.
• Alberta has one high capacity AC intertie to BC with low reliability because it was originally built as a low cost "opportunity" resource as opposed to a firm reliability resource. It was built without lightning protection (no "shield" wire) and trips offline many times each year due to lightning strikes. From a planning and operations perspective, this means this intertie cannot be considered dependable supply. In addition, BC does not plan for surplus power generation for Alberta, so any power that flows to Alberta is simply for economic gain.
• Alberta has one small AC intertie to Montana that cannot operate without the BC intertie in service because northern Montana cannot absorb the large power system variability from Alberta. It therefore must be taken out of service when the BC intertie is out of service to maintain reliability in northern Montana.
• Alberta has one small HVDC intertie to Saskatchewan.? Alberta is not synchronized with Saskatchewan as Alberta is in the Western Interconnection and Saskatchewan is in the Eastern Interconnection, which are not synchronized with each other.? Therefore, any new interties east of Alberta must be HVDC.
• Due to the significant volume of industrial electrical loads in Alberta, we have a very high load factor, which is the ratio of average load to peak load.? On average the load factor in Alberta is about 83%.? This means we require a significant capacity of baseload generators to ensure supply adequacy at all hours.
• Alberta relies on natural gas fired generation (combined cycle, simple cycle, and cogeneration) for its significant baseload power requirements, with gas representing 60% of installed capacity (11,813 MW).?
• Alberta has very limited economic hydro generation resources. Only 4.5% of generation currently comes from hydro (894 MW) and new hydro generation is not economically feasible
• Alberta has good wind resources in the south and central regions of the province, but ultimate development of these resources requires significant amounts of land and transmission investment and there is not sufficient capacity to serve all current and forecast demand??
• The Alberta power system has two 500 kV HVDC lines imbedded in its high voltage AC transmission system. This requires careful planning and study of new equipment added to the system, especially equipment using power electronics like inverter-based resources, to ensure proper coordination of protection and control to avoid issues like subsynchronous resonance.
• Alberta has drastically reduced coal fired generation and it now represents only 4% (820 MW) of installed capacity, which is less than the current solar capacity in Alberta, of 7% (1292 MW).

Challenging Aspects of the CER for Alberta

The first challenge with the CER is that it seems to implicitly assume that generation and transmission are planned using IRP in all regions in Canada. As explained above, this is not the situation in Alberta. This means that the mechanisms to drive new power system infrastructure investment in Alberta differ significantly from vertically integrated, centrally planned provinces, and energy policy must account for this to enable timely and economically feasible generation and transmission investment decisions.

Another challenge is the CER's heavy reliance on CCUS technology, which creates several challenges for the Alberta power system:

• While this technology has been proven in oil and gas, it has not been deployed and proven at scale on power systems, which creates significant technological and operational risks for our baseload power supply.
• Due to Alberta’s limited renewable resource availability, high load factor, and limited intertie capacity, we are dependent on gas-fired generation for both resource adequacy and for power system voltage and frequency stability.? The requirement for CCUS on all combined cycle gas turbines reduces their operational flexibility and exacerbates challenges with managing the variability of increasing renewable generation. The increasing levels of intermittent renewable generation will require more flexible synchronous generation (gas and steam turbines) in the future and this flexibility will be reduced with CCUS.
• In addition to the loss of combined cycle plant flexibility, the limited hours for peaking generator operation proposed in the CER will create additional operational challenge in managing the variability associated with increased renewable generation
• The CER, as currently proposed, requires full carbon sequestration on Alberta's baseload gas fired resources and the operational impacts and estimated cost of this approach make it technically and economically infeasible and unfinanceable, which creates significant reliability risks for the Alberta power system.

The proposed CER 11 year implementation timelines (to meet 2035) create significant challenges for the Alberta power system:

• The proposed timelines do not allow sufficient time under our existing transmission and generation planning and regulatory?processes for the design and approval of CCUS retrofits on all existing units, the development of other baseload technologies, such as small modular nuclear reactors (SMR) and hydrogen power, new interconnections to other jurisdictions, implementation of demand response programs, etc.
• The proposed timelines create significant stranded asset risks for existing conventional generation owners
• Retrofitting CCUS to existing generators will require a significant number of extended generation outages which must be very carefully staged and managed by the AESO to ensure resource adequacy during long and frequent periods of construction, combined with routine transmission and generation maintenance outage management during the long periods of construction.
• The availability of engineering and construction resources will be very challenging as there will be fierce competition from other jurisdiction across Canada and North America for the small number of firms with large scale CCUS engineering and construction capabilities
• New and retrofit construction on this scale is simply not feasible in Alberta in an 11 year time horizon.

And finally, as with many similar, well-intended clean energy policies, the CER also makes the error of technically equating renewable generation with synchronous (conventional) generation, which is already leading to power system operational reliability challenges around the world. Renewable generation is not operationally equivalent to synchronous generation in several key aspects:

• Renewable generators (inverter-based resources) do not provide inertia which is necessary for power system frequency control and reliable operations. Conventional generators (gas, steam, and hydro turbine generators) or other devices such as synchronous condensers or flywheels are required to maintain power system inertial strength. Energy policy must recognize the essential value of system inertia as grids transition to net zero.
• AC power systems rely on reactive power for voltage control and reliable operations. Synchronous generators provide reactive power and while renewable generators (IBR) can provide reactive power, they must be carefully designed and located to ensure sufficient levels of reactive power are available when and where it is needed as the power system evolves. Energy policy must recognize the need for sufficient reactive power as grids transition to net zero.
• The variability of renewable energy poses significant operational challenges for system operators as we increasingly electrify society, shift demand patterns, and increase public expectations on power system availability and reliability. While it is true that "the wind is always blowing and the sun is always shining somewhere", applying this assumption to the availability of renewable generation is incorrect and dangerous for power system operations because power systems are not perfectly interconnected to enable large scale resource sharing in this idealistic and utopian way. Energy policy must recognize that each power system is unique and provide flexibility for local adaptation using the resources and intertie capabilities available in each jurisdiction.
• To be blunt, a MW of renewable generation is not operationally equivalent to a MW of synchronous generation. Power systems require more than just energy for reliable operations. This is not a value judgment, or a political statement, it is simply physics. Period. Energy policy must begin to recognize this fact.

Concluding Thoughts

In summary, my opinion is that the CER, as proposed, is not implementable in Alberta. This is not a political statement, it is my engineering opinion based on my experience with power system planning and operations, the physical realities of the Alberta power system, and Alberta's electricity policy framework. While I generally support the intent and objectives of the CER, I believe they can only be achieved in Alberta on a longer time horizon with a more nuanced policy approach that is aligned with the physical and pragmatic realities of the Alberta power system. The AESO, regulators, and power generation developers (both renewable and conventional) require sufficient time to plan and implement changes to our complex power system at a pace that does not compromise reliability and energy affordability.

It is unfortunate that the CER and the net zero transition has become so politicized and polarized. The reliability of our power system is in jeopardy and I implore policy makers to give physics a seat at the table and listen to the power system engineers, planners, and operators to begin crafting reasonable energy policies to guide the net zero transition in Canada. These experts are on the front lines of our complex power system operations and can inform policy direction that is pragmatic, implementable, and reasonably affordable. The unintended consequences from not including the experts in policy direction are already apparent in Alberta and other jurisdictions, and the consequences will only increase over time unless there is a change in approach.

Alberta has the technical and engineering capability, the entrepreneurial spirit, and the ambition required to transition to a world class sustainable power system, and all we need is pragmatic and supportive policy to enable us.