Can the Grid Handle EVs?
This week on the podcast our guest is Blake Shaffer, Assistant Professor in the Department of Economics and School of Public Policy at the University of Calgary.
We cover a range of topics about Alberta and Canada’s electricity markets. Including revisiting the tight power market that Alberta experienced during the December 2022 cold spell, the issues and opportunities that come from the ramp-up of Electric Vehicles (EV), and finally the prospects for achieving net-zero electricity by 2035 in Canada.
Here are some of the questions Peter and Jackie asked Blake: Does Alberta’s Electricity Systems Operator (AESO) need a better system for asking residential consumers to reduce their demand in times that the power system is in short supply? How are electrical system distributors preparing for the coming influx of EVs? Will people adjust their charging behavior to help the electrical system accommodate more EVs? Do you think Canada can achieve net-zero electricity by 2035? Will large transmission lines between provinces be required to achieve net-zero? How could net-zero impact consumer’s utility bills in 2035?
Content referenced in this podcast:
- Follow Blake on Twitter @bcshaffer https://twitter.com/bcshaffer
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Episode 186 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast with Peter Tertzakian and Jackie Forrest. Exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Welcome back. I can’t help but think, Jackie, that this whole renewable energy thing is going to the birds.
Jackie Forrest:
Why would you say that?
Peter Tertzakian:
Well, I understand that a lot of people with solar panels have pigeon problems. Is that right?
Jackie Forrest:
Yeah, I learned about that in the last bit.
Peter Tertzakian:
Including you.
Jackie Forrest:
Yeah. We had our solar panels for a good, well, over a year and then suddenly the pigeons decided to make a home underneath them, which I guess is a pretty common thing. It’s warm under there, they’re protected from predators, and they make a lot of noise. They do that cooing noise.
Peter Tertzakian:
They’re smart. They’re smart.
Jackie Forrest:
Yeah, I guess so. We had to get a cost estimate to solve the problem, and it looks like it’s going to cost about a year extra payback on my solar panel project because it’s going to be about $2,500 to build cages around each of these panels.
Peter Tertzakian:
Like a mesh, like a chicken wire mesh or something?
Jackie Forrest:
Yeah, and it’s got spikes coming out of it too to make it really-
Peter Tertzakian:
Well, that’ll be attractive.
Jackie Forrest:
… not attractive. Yeah, not attractive and not attractive for the pigeon. These are the micro things you don’t think about.
Peter Tertzakian:
Yeah, the unintended consequences of renewable energy in your house. But nevertheless, electrical power continues to be generated. I don’t know, I’m generating power. I don’t know if you’re-
Jackie Forrest:
Oh yeah. It hasn’t affected our power generation. Of course, in the winter it’s a lot less, but you get the odd sunny day here where we get about half of what we get in the summer on a really good day.
Peter Tertzakian:
It’s sunny Alberta. This is the sunniest part of the country here in Southern Alberta, and that’s good, but that doesn’t mean we don’t have electrical issues in an era where electrification is the theme. We have a special guest to talk to us again about electricity, electricity in Alberta, and electrification. In fact, he’s a repeat guest, which we’re delighted to have back. Blake Shaffer, welcome back. Or shall I say Professor Blake Shaffer?
Blake Shaffer:
Well, thank you. You can just call me Blake, Peter.
Peter Tertzakian:
Okay.
Blake Shaffer:
Great to be here.
Jackie Forrest:
Great. Well Blake, you’re the Assistant Professor in the Department of Economics and School of Public Policy at the University of Calgary. Of course, we had you here with Joshua Rhodes after that Texas power crisis. That was, believe it or not, back in March of 2021, so a while ago. Maybe just update us on some of the work you’re doing at the University of Calgary.
Blake Shaffer:
Yeah, I guess since then I still look at supply side issues. Where are we headed? How is it going to all work out as we try to decarbonize supply, deal with pigeon issues and the like on solar panels? But increasingly I’ve been focused on the demand side. We are going to be electrifying a lot of things as we progress, especially focused on electric vehicles. That’s a big question in people’s mind when we see the grid as it is now. It’s getting tighter.
What’s it going to look like when everybody has an EV in their garage or EV at their home? That’s been a lot of my focus is how can we get more flexibility out of the demand side. That’s what I’ve been working on lately.
Peter Tertzakian:
For full disclosure, you have an EV too, right?
Blake Shaffer:
We do have an EV.
Peter Tertzakian:
Okay, so good. You’re part of the club and fully able to commentate from firsthand experience, so that’s good. But before we get into the EVs, let’s just talk about the word you used there, tight, tight electrical markets. We know that whether it’s now in the depths of winter or in the peaks of the heat of summer when the AC kicks in, there’s tightness in many jurisdictions including Alberta. Why don’t you tell us a little bit about the grid alerts that we had here over the course of this winter?
Blake Shaffer:
Yeah, we got very close there. It didn’t get to the point that brought me to your show the last time in Texas with rolling blackouts going around, but we just squeaked by with enough supply to meet what was a new record for demand. We broke records for demand in the province.
It really showcased some of the challenges we’re facing. We’ve been building a lot of renewables, but the issue in Alberta is in the peak of winter, it’s really, really cold. These tend to come with high pressure systems, which also tend to come with low wind in the region we have it. So we don’t rely on the wind in the peak of winter.
Peter Tertzakian:
That’s the thing: there’s no wind when it’s really cold. In the depths of winter, it’s dark for 16 hours of the day. So that’s a problem. And then where’s the demand coming from, I guess, is my question. Is it population growth?
Blake Shaffer:
There’s a little bit of that. We are growing. I mean, the latest population numbers are also some record flows in into the province. I think the real bulk of it is a return of our economic activity. Alberta, our heavy industry is pretty energy intensive and electricity intensive, and so we’re seeing a real resurgence of that. That’s probably the bulk of it what’s going on.
But yeah, new record growth, and the renewables we have are great for raw energy, but we don’t rely on them in the winter. And this sort of reinforced that point because that’s not what was keeping the lights on.
Jackie Forrest:
It’s pretty scary to think that we could have an outage when it was like minus 30 or even colder on some of those evenings and that’s when we were having an issue. My complaint with the whole thing was the warning system I think was totally ineffective. I mean, you’d have to follow the AESO on Twitter or watch the local news. I saw you, Blake, telling people to turn their lights off and I went out and looked at my street and nobody had their Christmas lights out. You were advising people to not use their oven. I don’t know that anyone was doing that.
I feel like we need a more effective warning system because I would ask people the next day at work, “did you know that we were supposed to be conserving electricity last night?” Nobody would know. Now I know in California, they had sent text messages directly to people’s phones and that actually did work and they avoided a similar issue in September partly because of that. Do we need to do something a bit more in people’s face?
Blake Shaffer:
Yeah, it’s a great question. I agree that that event, I don’t think many people knew how close we were in terms of tightness. Some of the differences between us here in Alberta and California is in Alberta, the residential load is maybe about 15% of overall demand, so that’s pretty small. California is closer to 40%, so the appeal to consumers is a much bigger thing, whereas here they tend to be a bit quieter publicly and just go to the large industrials saying, “we need you to turn off some of your demand right now.”
That would’ve been happening during that event. I think they consciously choose why bother the populace for such a small segment. That’s I think why the AESO probably goes that route, but I think going forward, the scope for change mean, especially I think we’re going to get into EVs today, especially as EVs are a bigger share and they’re a big load now.
Peter Tertzakian:
Yeah. I want to talk about the EVs in a second, but can you walk our audience through what happens in the event that we trip the wire that we don’t have enough, what starts happening?
Blake Shaffer:
Yeah, so they do a number of things. There are a bunch of things what we call operating reserves on the system. So power plants hold back some of their capacity. We don’t like to use that because that’s for emergencies, but clearly in this state we’re starting to dip into that. They do things like they call on their neighbors for imports, but we already were. We were pulling on full. We stop all exports.
Peter Tertzakian:
Like BC, you mean?
Blake Shaffer:
BC, Montana, Saskatchewan. We do have ties to all three. The final stage is what we call shedding firm load. This is demand that doesn’t want to be turned off, that we have to do that. What they would do is they go to the different distribution companies around the province. Here in Calgary, that’s ENMAX. They say to ENMAX, “we need you to reduce your overall consumption by, say, 10%.”
ENMAX in turn would go around its service territory and start shutting off power at different substations. And so it wouldn’t be a whole blackout of the city. It would be maybe it would be our area, Jackie, where we live. The lights would go off for, say, half an hour and then we would move over and stick with Peter for a few hours. No, it would rotate around, and that avoids what we really don’t want.
Peter Tertzakian:
I have an auxiliary generator. FYI I’m energy secure.
Jackie Forrest:
We’ll all be over at Peter’s if that happens.
Blake Shaffer:
We will be. We will be. We’ll be cooking on his induction stove during the blackout. So it would rotate around to avoid what you really don’t want, which is a system wide blackout, which involves a whole other layer of restarting the system.
Jackie Forrest:
Okay, well, we’ll hope we don’t come to that, especially when it’s that cold. By the way, I did want to mention that Blake has got some great information on Twitter @BCShaffer. I’ll put a link to that in the show notes. But many people were kind of pointing out that wind and solar weren’t working. Do you think that’s a fair criticism?
Blake Shaffer:
It’s factual. I think the main thing on that is emphasizing what wind and solar provide, and that’s raw energy overall. Especially in solar, it’s predominantly in the summer obviously and not pretending that they provide something different, which is firm capacity.
Peter Tertzakian:
For our audience, define this term raw energy versus, I guess, the opposite is refined energy. What is raw energy to you?
Blake Shaffer:
Yeah, I guess I’m using a few terms there, but raw energy being the sense of it’s just energy, but it’s provided to us not necessarily when we want it. It’s just coming when it’s available. It doesn’t come with that component. I call it capacity in my jargon, but the idea of I want it right now, that on demand energy. You need a mix, you need a mix of these things.
The real issue is in the past we’ve only had the latter. Our system was a completely on demand energy, which is nice. But nowadays if we want to decarbonize and the fact that renewables have gotten cheap, we’re willing to accept this raw energy because it’s really cheap and it’s clean, but that doesn’t mean we can ignore the need for on-demand energy.
The events of December really highlighted that we can’t get away with a system that doesn’t have that. The really tough question is as we go forward and want to decarbonize further, what does that look like? What is on-demand energy in a decarbonized world for Alberta?
Jackie Forrest:
We’re going to probably get to that, that is going to be a big topic. By the way, in 2023, we’re expecting the federal government to release legislation around how we’re going to get to net zero electricity by 2035.
But let’s talk a little bit more about demand first and about EVs. Many of our listeners know the government of Canada has goals for 20% of new cars sales to be EVs by 2026, so not far away, 60% by 2030, and 100% by 2035. We’re going to see more and more EVs come into the mix. Maybe we could start now is let’s talk a little bit about Alberta. How many EVs are there, and are we actually seeing demand? Back to this December event, are EVs contributing in any way today to some of the demand issues that we have?
Blake Shaffer:
Right now, they’re really small, so I don’t think they would show up in a big sense in terms of overall demand. The latest numbers, the Alberta Department of Transportation just released the March 2022 numbers, at the table here we were three of 5,600 EVs in the province. That’s how many total are registered as of about a year ago. That compares to, I think we have about 3.6 million light duty vehicles in the province. It’s a really, really small share.
But that shouldn’t mean that it isn’t something that we’re focused on because as you just mentioned, the goals and some of the regulations are such that we know this is growing. And in fact, that 5,600 has been growing at a 60% annual growth rate. As we learned from COVID, exponential growth rates mean a very small level can become a very big level pretty quickly. It will be an issue or will be a more material part of the load in the future. Right now it’s just something to prepare for.
Peter Tertzakian:
Okay. So prepare for, let’s understand the scale for our audience. Around dinnertime, the average home consumes what?
Blake Shaffer:
Two or three would be the average home. We’re probably big users too.
Peter Tertzakian:
So you come home, it’s sort of the peak time, three, three to four kilowatts. You plug in the EV, what does that do?
Blake Shaffer:
Yeah. If you are on a level one charger, just a typical 110 volt socket, you’re going to be charging at about one, one and a half kilowatt. That really isn’t an issue. That’s no different than your oven.
Peter Tertzakian:
You up it 50% though, I mean, if the whole neighborhood does that.
Blake Shaffer:
For sure. But in terms of a surge, it’s like adding an air conditioner in effect, which neighborhoods have done and we’re managing that.
Peter Tertzakian:
So you probably like me have the big 48 amp.
Blake Shaffer:
Almost. I have 32 amp, but I have the level two, which is a dryer plug, which you have, which means we’re drawing at 240 volts, which means I’m drawing at about seven kilowatts.
Peter Tertzakian:
So you double it. Double the total household load.
Blake Shaffer:
Yeah, double and in some cases, probably even more so.
Peter Tertzakian:
More so.
Blake Shaffer:
This is a really good point. The issue with EVs isn’t so much the total demand they’re going to add to the system. We can get into the numbers on that. That’s meaningful, but that’s manageable. The issue is the instantaneous draw they can apply, especially at residential areas.
Peter Tertzakian:
Right. It’s just like all of a sudden at between 5:00 and 7:00 PM in the evening, the entire neighborhood doubles its-
Jackie Forrest:
Or even triples.
Jackie Forrest:
By the way, I don’t think there’s too many people charging on a 110, so I think the more likely scenario, if you get an EV, you’re going to install the right electricity because it will take forever to charge. Homes are going from two to three to 10 or more when they plug in that EV, if it’s a dinner time, right?
Blake Shaffer:
Yeah. I do have data on this. We are seeing a bunch of people nowadays do 110, which is actually good for the grid. Some of my work is actually looking at what are the limitations of charging on a 110. Can people get by with doing that? Because that would be really helpful for the grid if we did. But you’re right, the early adopters are definitely veering towards level two. As it expands, as it gets into condos and whatnot where that infrastructure might not be possible, I think we will start seeing a bit more of the trickle charging.
But it is this issue which is kind of hitting two parts of the system. One is what you mentioned, people coming home at 5:00 to 7:00 PM and suddenly charging at a rate of 7 to 10 kilowatts. Can the system manage that on top of the current system peak? Think of that our generators. Can they handle that?
The other is more local issue. That’s if the three of us, if Peter moves into our neighborhood, Jackie, and the three of us are all charging at the same time, are the local distribution systems ready for that?
Peter Tertzakian:
Right, the substations and the sub sub.
Blake Shaffer:
Exactly.
Peter Tertzakian:
The box on the street at the corner.
Blake Shaffer:
The thing that looks like the Oscar the Grouch garbage can on top of a pole in our alley. Those aren’t really built for about six people charging at 10 kilowatts on one system. This is the real question. This is why I think this is such an exciting area to study is we got two options here. One is as that happens, we have to build more of those garbage can-like things. Those transformers build up the infrastructure which is costly and everybody will share in that cost. Or we find smart ways to accommodate the charging so that we don’t get into that bad outcome of everybody charging at the same time.
Peter Tertzakian:
Right. In the jargon, it’s the load to balancing, how to balance the draw on the electrical grid so that you don’t get these big surges at certain times of the day, notably first thing in the morning when everybody’s waking up and putting the coffee pot on. And then when everybody comes home and starts cooking on induction stoves or whatever, flipping lights on, et cetera.
Blake Shaffer:
Totally. I’ve got breakfast on my mind right now, so think of it as smearing that peanut butter onto toast. You don’t want it all on one side. Can we smooth it thinly right across the toast? That’s what we’re trying to do.
Jackie Forrest:
All right. Well, behavior is a big part of this because people tend to want to do the easy thing or what’s convenient for them. What are the distributors of electricity doing to better understand the behavior of people? Changing price might be one way to get people to change behavior, but will that really work?
Blake Shaffer:
Yeah, well, I’m very glad you asked that because I’m actually running pilots with two utilities here in Alberta as well as some outside the province. So been working with ENMAX and I’ve been working with FortisAlberta on this very question.
With ENMAX, we just ran a pilot, just completed actually, where we looked at the potential for getting people to shift their EV charging to the overnight period. We told some people the benefits, so we gave them, we call it moral dissuasion or a nudge, like an encouragement to charge in the off peak. And then for others we gave them that same message that this is really valuable for the grid, but we also paid them. We said, “If you do charge in the off peak, you’ll get a slight discount on your power rate.” And so there we were trying to find the power of just social feelings or education versus money.
Long story short, money really matters. What we found is the folks that got the encouragement, they’re not moving very much, but the folks that got the very small payment, they shifted almost three quarters of their charging to the off peak. So really powerful.
More recently we just started with FortisAlberta. If you’re in Fortis’s territory, which is pretty much everywhere outside the big cities, so outside of Calgary, Edmonton, Lethbridge, Medicine Hat, and kind of the southern half of the province here, new pilot you can sign up for. We’re kind of continuing this theme to see will people shift, but we’re trying to go one step further with that one to see can we go beyond just asking people to charge in the off peak running the risk that all of a sudden everybody charges at midnight, which recreates that problem of too many people at the same time.
Peter Tertzakian:
They actually type into the charger in the car 12, 0, 0.
Blake Shaffer:
Yeah, exactly. Which is something that especially with a Tesla, but many of the vehicles you have, if you’re given an off peak rate that starts at midnight, you’re very inclined to start your charging right at 12, 0, 0, which creates a bit of a problem. We call it a shadow peak where it’s okay for the generators, there’s lots of surplus capacity, but it’s a real problem for the distribution grid to have this big spike right at the same time.
With Fortis, we’re finding a way for the cars to effectively, you can think of this as sequence so that everybody’s charged by 7:00 AM, but they’re not all charging at the same time. This is out there. This is really cutting edge.
Peter Tertzakian:
Who does the control? Is the incentive of the financial one for the individual to go into their screen and their car and go 1, 0, 0 instead of 12, 0, 0? Or is the utility actually controlling when the power goes to your circuit to that charges your car? How do they do that?
Blake Shaffer:
Great question, because this is the fundamental challenge. It won’t work if again, I’ll use the three of us as the example, if we say, “Okay, Jackie, why don’t you go midnight tonight, I’ll go 1:00 AM. Peter, you go 2:00, we text each other before bedtime every night.”
Here we’re using a software program. It’s an app that talks to your car and it’s talking to other cars and it’s taking into account where everybody’s state of charge is. So how much do they need, what everybody’s preferences are, I want my car ready by 6:00 AM perhaps, and it’s sequencing that. You touched on the real important issue here. It is giving up some control to this other entity that’s going to determine how and when your car gets charged. That’s what we’re trying to see is how comfortable-
Peter Tertzakian:
Do you have that software now operational?
Blake Shaffer:
Yes.
Peter Tertzakian:
So you basically have EV driver volunteers who have sort of relinquished the code to their vehicle software.
Blake Shaffer:
Exactly.
Peter Tertzakian:
And this system centrally operates the charging time of your vehicle. But what if somebody says, “I want to charge it at 7:00 PM”?
Blake Shaffer:
You always have an override. For example, I don’t know, maybe you’re starting a road trip at 2:00 AM and you absolutely need it charged by then, you can override it any time in this system. You just give up your payment that day, if you will, for needing to override. But otherwise you basically get a payment for leaving yourself flexible, and the system will figure out how to best do it.
Now, when I describe this, and I’m sure some of the listeners will hear it, they get a bit cringey. That sounds like taking over control, and that’s really what we’re focused on here. It’s not a question of will this work once implemented? It’s going to be very effective. The big question is, will people be willing to do it? That’s what we’re trying to learn here is how comfortable are people with this?
Jackie Forrest:
Well, and I think another really interesting part is, I think a lot of times in the past when we’ve talked about demand pricing or changing the price at different times of the day, it’s involved a lot of need for technology. We need smart grids and new meters installed at people’s houses and it’s going to take years to do that.
But with these cars, they’re kind of smart cars already. They’re already internet connected. So we’re really short circuiting what people thought was necessary to pull off something like this. Just talk about that and just there’s a real disruptive technology here and that things can happen faster maybe than people forseed before.
Blake Shaffer:
That is a great point. And actually a nice little analogy of that is the first pilot that I ran in this research program, we were installing physical devices in people’s cars to track the time of their charging because people don’t have smart meters.
Now, that whole business line, that whole company that was doing that is now folded up because they realized there’s no need for this. We can talk to the car through our phone now, through an API. It’s progressing that quickly that we started this maybe a couple years ago and already it’s being disrupted. The real trick is we can talk to cars, we can talk to many devices, heat pumps, et cetera, through an API, so through software.
Peter Tertzakian:
Let’s just take the phone as an example. I have a late model iPhone here, and I’ve noticed it comes up and says optimally charging. What does that mean? What’s it doing?
Blake Shaffer:
Oh, for your iPhone? That’s a perfect analogy for what we’re trying to do on the EV is say, you probably want your phone ready by, I don’t know, Peter, when you wake up, but let’s just say 6:00 AM. So the iPhone says we will optimally charge.
There, I think it’s trying to optimize your battery life. It’s trying to smooth the charge in to save you privately. What we’re trying to do with the EVs is more look at the social aspects that we’re trying to coordinate, but the same concept where it’s just a device like your phone. It’s your EV battery, and we’re saying, say, your EV will be optimally charged and ready by 6:00 AM, don’t worry about when it’s charged. We’ll figure that out.
Jackie Forrest:
Or what rate it’s going to charge at.
Blake Shaffer:
Or what rate. We talked about that. People want the flexibility of level twos for the speed, but it actually is a little bit better for your car and better for your system if we charge at lower amperage. We can control that in some of the vehicles. So perhaps that’s another lever we can pull.
What we’re trying to do is get all of that happening effectively behind the scenes. It’s going to take a little bit of a shift because people aren’t very comfortable or used to the idea. But as you noted, iPhone did that, and I don’t think Apple really publicized that this is changing. We probably clicked on something that agreed to it at some point, but I certainly didn’t notice.
Peter Tertzakian:
Go back to this notion of the financial incentive that you mentioned. You said that it was fairly powerful in getting people to sign up with some kind of discount. To be honest, I’m quite surprised by that. I mean, given that right now it’s typically affluent people who buy electric vehicles because they’re the ones that can afford them.
Honestly, when you’re paying 7, 10, I don’t know, whatever cents a kilowatt hour and you give me one say even a one cent a kilowatt hour, we’re not talking about a lot of money. Okay, here’s a 50 cent check because you signed up for this. Are you surprised that such a small incentive makes a difference to an affluent crowd?
Blake Shaffer:
Yeah, it is very interesting. Not just in that experiment, but ones that I’m doing in other parts of the country, I’m noticing that people’s behavior with EV charging is very different than other flexible demand. They’re willing to go to great lengths to adjust their EV. My hypothesis here is that people are associating the savings like they do with trying to save money on gasoline. I mean, people go wild to save money on gasoline. They will drive across to the Tsuut’ina Costco.
Peter Tertzakian:
Yeah, I never understood that, because I mean you spend more money in gasoline than the savings often. I don’t get it.
Blake Shaffer:
I’m going to allege that maybe you’re not the typical driver here.
Peter Tertzakian:
No, I’m not.
Blake Shaffer:
The average driver does do this as evidenced by those crazy lines. What I think is people haven’t fully internalized just how cheap filling up an EV really is. When we give them, in this case it was a three cent discount, three cent per kilowatt, and like you say, on a full car, that’s about $2. I think they’re thinking about it more as 25% off of my car’s fuel. That’s a lot of money.
Jackie Forrest:
And it’s not a lot of effort to do that.
Blake Shaffer:
That’s right.
Jackie Forrest:
Another example for me would be when I found out that it’s 14 cents or so for me to charge from the grid, but only seven from my solar panels. Well, if I happen to be home and the car’s there and we’ve got lots of solar production, why wouldn’t I do that? It’s like half price charging and it’s easy. It’s just like right from my phone, I can do that. I think that the barrier to taking advantage of the lower price is so small and it kind of makes you feel like you got a deal.
Blake Shaffer:
And you touched on something really important that it’s not very disruptive to our lives to press something on our phone to switch it versus the example. And for the record, I didn’t tell people to turn the ovens off, but that would be a good example where that is extremely disruptive to tell people, “Wait on your dinner right now while your kids are hungry.”
Jackie Forrest:
Maybe it was ENMAX that did.
Blake Shaffer:
I don’t know, but-
Jackie Forrest:
There was a message I got about using a toaster oven.
Blake Shaffer:
Yeah, there’s a lot of devices or electrical uses in our home that we’re certainly not flexible with. It’s about finding the ones where we really don’t notice.
Jackie Forrest:
Now, one last question on EV charging. We’ve really focused on EVs being a problem and creating all these issues of the distribution system, could they actually be a benefit? We’re talking about new models coming that allow bidirectional charging so that these batteries that could actually supply electricity to the grid during times like the cold spell in December. Do you think that that is going to happen seamlessly or is that going to take a lot of time for the systems to be able to allow cars to participate that way?
Blake Shaffer:
Yeah, well I guess first of all, I’m glad you flipped the framing because that is how I view it. EVs can be a problem for the grid: if everybody just comes home at 5:00 PM and plugs in, then it is a burden. But this flexibility they do have means that they can soak up periods of excess. So not just pushing back to the grid but charging at better times. I actually see them as an opportunity if we change things.
The bidirectional is interesting. That has its own challenges. The distribution system has to be able to handle the flow outwards, but they’re familiar with that from, well, yours and my solar panels, for example, going back onto the grid. That won’t be used a lot because I don’t think people want to be flexing their expensive vehicle’s battery on a daily basis. But certainly in the case of a grid emergency, all of a sudden you could lean on this fleet of EV vehicles as backup power. I think in the future, that’s definitely something that will be part of the reliability of the electricity system is going the other way with EVs.
Peter Tertzakian:
Okay. Well, let’s talk net zero by 2050, because you’re in touch with a lot of utilities across the country. Talk about the viability of Canada achieving net zero by 2035, which is the target. Is that realistic now that we’re into 2023?
Blake Shaffer:
I do think this is a real challenge. I mean, you said the word “Canada” and I think it’s effectively a dangerous way to frame it. It’s one concern I have when the feds talk about net zero is because on a Canada-wide basis, we look pretty darn good. We’re 85% plus clean.
Peter Tertzakian:
Already.
Blake Shaffer:
But of course, electricity systems are not national in nature, they’re definitely provincial.
Blake Shaffer:
For places like Alberta, Saskatchewan, and to a lesser degree Nova Scotia, this is a really big lift. I’m not one to slow play transition, but I’m fully aware that I think 2035 net zero is fast. It’s fast approaching, and the options that we have, when you think about that on-demand energy we started this interview with, they’re coming, but they’re early stage in many respects. I’m concerned about whether or not that’s actually attainable.
That being said, I think we need a little bit of a jump in our stride as we move forward. We saw that with coal when we talked about phasing out coal. It was viewed as, no, that’s impossible by 2030. We’re not going to be able to do that. Well, it’s 2023 and the last coal plant’s going to go out at the end of this year.
Getting off coal turned out to be a lot easier than we expected, but of course, most of that went to natural gas. So for me, the really challenging thing is what to do with unabated natural gas. Can we have a system here in Alberta without that in only 12 years? That’s going to be hard.
Jackie Forrest:
It would require, I think, carbon capture storage on every natural gas plant. Not only the existing, but probably new ones we would have to build to meet this growing demand from EVs and the growing economy.
Blake Shaffer:
It’s a mix of things. Yeah, CCS plays a role in many of the modeling. I think what you see is most 2035 net zero models for Alberta, we see a big increase in renewables for energy production simply because they’re cheap. So you’re seeing a lot of growth in that. What you’re coupling that with is a big growth in batteries for short term storage.
But we’re leaning a lot on what we’ll call peaker plants, which are running infrequently. It might be natural gas plants running infrequently. In fact, we’re seeing a big role for hydrogen. Hydrogen peakers, that’s another thing.
The question in my mind is whether or not our market design, the players in the market, and the investors are willing to have natural gas plants that only run 5% to 10% of the time. Are they willing to pay the sustaining capital and maintenance and have gas contracts, et cetera for running that little of the time? Because that’s what sort of future grid is looking increasingly like, which is a lot of renewables and then a lot of idled capacity where you don’t have to pay the fuel cost, but you need to sustain that infrastructure to run infrequently. Coupled with the stuff we talked about today, flexible demand as well as increased connections with our neighboring regions so that we can move our excess renewables to them and then import from them during periods when the renewables aren’t there.
Jackie Forrest:
But we do know, we had the AESO on here, but we’ve heard it from other provincial electrical regulators, they don’t want to have these interconnects because they don’t think that that’s going to give them the reliability that they need. Do you think that that’s a necessary thing, or can you do it without these interconnects?
Blake Shaffer:
I wouldn’t say necessary, but I would say it’s going to be far more costly to do it without interconnects. Again, every modeling study shows mostly focused on the US but some in Canada, if you’re moving towards a system with higher and higher shares of renewables, big high voltage transmission lines connecting the regions, moving power from where it’s windy to where it’s not, moving across time zones to take advantage of the sun’s regular schedule is really important.
If you don’t have that, if we’re operating as electric islands, it’s a lot costlier because then the solutions are just what you talked about earlier, CCS, hydrogen, maybe it’s SMRs, but more costly solutions than moving power around with transmission. It’s something that we’ve been reluctant to grapple with as a province, which is connecting better with our neighbors, but it sure seems like that’s a necessary conversation.
Peter Tertzakian:
You already mentioned that we’re 85% carbon free because of our hydropower in provinces like British Columbia, Quebec, Manitoba, and so on. So when you get closer and closer to 100% in any type of economic modeling, it typically becomes more and more expensive. The first 10% is easy, the second 10% a little more difficult, but by the time you get into that 85% to 100%, it starts to get really expensive. What is the cost of abating this last 15% of carbon? Do you have a dollar per ton?
Blake Shaffer:
Actually, my colleague Sara Hastings-Simon and our joint student, Kristina Pearson, they have a modeling study right now on that very question. It looks like a hockey stick as you described, where getting to about their inflection point, you kind of nailed it. Their inflection point is around 80%. That’s here in Alberta where we don’t have much hydro.
In systems where you have flexible hydro, this is a bit easier to accommodate, but they get about to 80% at reasonable costs. It’s after 80 where you start to see that curve bend upwards because you start leaning on more expensive technology, you start leaning on hydrogen, you start leaning on batteries that need to go for longer and longer duration. You do start to get into the triple digit costs once you’re exceeding. I’m speaking out of turn because I don’t have study in front of me, but I think it’s after about 90% you start getting pretty expensive.
Peter Tertzakian:
Triple digit as $100 plus per time.
Blake Shaffer:
Per megawatt hour, yeah, exactly.
Peter Tertzakian:
Oh, per megawatt hour.
Blake Shaffer:
Yeah, per mega. I’m thinking of per megawatt hour, sort of where we’ve been recently. But it’s just for a fraction of the hours and the rest of the hours are much cheaper.
Peter Tertzakian:
Okay. But let’s get back to the question of what this is going to cost the average consumer, because again, I argue that’s what is on people’s minds. Fast forward, I mean, are my electricity bills going to double as a consequence of abating this last 15% of carbon?
Blake Shaffer:
Good question. I wish I could answer that precisely. I’d be a far richer man if I could. There’s no reason for it to double. There’s nothing that I’m looking at saying the prices need to double. We can look at ourselves right now, look at the Alberta market right now. Prices have more than doubled. Prices have tripled over the past three years, not for decarbonization reasons, but for other reasons related to competition.
Peter Tertzakian:
Sure. But I mean, electricity was almost free, honestly. It was a few cents of kilowatt hour. It’s almost among the cheapest electricity prices in the world. Now we’re getting into prices that are more consequential. And if you were to double it again, then people are going to feel it.
Blake Shaffer:
Absolutely. Where we are right now for prices, so the average wholesale price is around $150 a megawatt hour, there’s no need in terms of what the resource mix is going forward for that to double to 300. Of course things can change. So you’ll replay this at me in 2035.
Jackie Forrest:
This was just the tip of the iceberg, I think, in terms of the net-zero conversation in Canada, I this is going to be a big theme this year in 2023 as we’re going to see this legislation and understand a little bit more how it’s going to work. For sure it’s going to cost some provinces more than others. And I’m sure that’s going to be a big debate here in the west and some of the other places where it’s going to be more expensive. We’ll come back to that topic.
But Blake, before we leave, I wanted to ask you, I saw on your Twitter feed that you were advertising an annual electricity camp in the Rockies. What is that about? Obviously electricity’s going to be big, so people probably want to learn about this.
Blake Shaffer:
Well, maybe it’s not as fun as that sounds or maybe as boring as that sounds, depending on your perspective. I did get some folks tweet at me asking if their kids could attend. It’s not that type of camp. It’s a more fun name of a conference. Really it’s a small number of people. I limit it to about 60 people. We bring in leading scholars in this space who are thinking about these issues we’ve been talking today.
But I bring in government officials, policymakers, grid operators, and industry folks. Everything is done off the record, and we speak about these challenges. This is going to be the second one. We ran one last year, It was excellent. I’m really trying to get at what are the big issues, what are the challenges, what are the things we need to change. As a researcher, it’s helping us focus on what should we be looking at that’s most beneficial?
Peter Tertzakian:
Right. Well, that sounds like a lot of fun. How are you powering the camp?
Blake Shaffer:
How can I answer that? I’m using EV to push it back onto the grid.
Jackie Forrest:
Okay. Well, with that, I want to thank you, Blake, for coming on our podcast. It was a great discussion.
Peter Tertzakian:
Yeah, thanks very much, Blake Shaffer, Assistant Professor at the University of Calgary.
Blake Shaffer:
Thank you.
Jackie Forrest:
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