The Olympics of Petroleum Conferences Is Coming to Calgary
This episode marks the 200th ARC Energy Ideas podcast! Peter and Jackie start the podcast commemorating this milestone.
Next, Richard Masson, Chair of the World Petroleum Council Canada joins the podcast. Richard tells us about the 24th World Petroleum Congress that will be held in Calgary from September 17 to 21, 2023. The conference is held once every three years and has been described as the world’s leading assembly for the petroleum industry. The organizers are expecting 15,000 visitors and 5,000 delegates from over 100 countries.
Finally, we wrap up the podcast with an update on Jackie’s solar panels, and how the economic return looks now with the first full year of actual operating data.
Content referenced in this podcast:
- The World Petroleum Congress website: https://www.24wpc.com/
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Episode 200 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, and maybe I should say welcome back 200 times. Jackie, this is a special milestone event.
Jackie Forrest:
Yeah, our 200th episode. Can you believe it? Our very first podcast, believe it or not, when do you think that was, Peter?
Peter Tertzakian:
Oh, it’s probably about four years ago.
Jackie Forrest:
Yeah. October of 2018.
Peter Tertzakian:
2018.
Jackie Forrest:
Precisely four and a half years ago.
Peter Tertzakian:
Oh, almost five. Yeah.
Jackie Forrest:
Yeah.
Peter Tertzakian:
Wow.
Jackie Forrest:
It really feels like not that long ago, so it’s been great. Time’s gone very fast, and we’ve covered lots of events. I was thinking back. One of the periods that sticks with me is those dark days of COVID, in that April, March of 2020. We had podcasts each week, and at the same time, there was just so much uncertainty. Refinery demand was falling. At that time, oil demand was down about 30% globally and oil price later on fell to, as you know-
Peter Tertzakian:
Zero.
Jackie Forrest:
… Zero.
Peter Tertzakian:
Yeah, yeah, yeah. Those were dark days, and also difficult days for doing podcasts because of the lockdowns and so on, and big plastic shields in front of us and doing podcasts with masks and what have you. Yeah, it was crazy times, but then other things that jarred our podcast rhythm, I’ll call it, would be the war in Ukraine. When that broke out, that was big news. Scramble, drop everything. Okay, what does this mean? The price of oil goes the other way. It goes up to over a hundred dollars.
Jackie Forrest:
Right, right, but then came down again. So there’s been lots of things and lots of memories for sure. Another podcast fact is, do you remember what we talked about in our very first podcast episode?
Peter Tertzakian:
No. I have to wind my mind back to four and a half years ago. It was when we had differentials. We had LNG, we had… Was that-
Jackie Forrest:
Well, LNG, yeah. That was the announcement, the big news that LNG Canada would move forward with phase one. Here we are, four and a half years later. They’re still under construction. It’s scheduled to be around the middle of-
Peter Tertzakian:
Yeah, I heard this week.
Jackie Forrest:
… this decade.
Peter Tertzakian:
The Coastal GasLink Pipeline is getting close to being done as well. How many guests have we had?
Jackie Forrest:
Well, we counted 117 guests, so thank you. It hasn’t just been us. Thank you to all those guests we’ve had in the past. Who was our first guest?
Peter Tertzakian:
Oh, I know we had some CEOs. We had Alex Pourbaix early on from Cenovus. I remember that. Who-
Jackie Forrest:
Todd Hirsch, very first podcast guest.
Peter Tertzakian:
Todd from ATB.
Jackie Forrest:
Yeah. He was the chief economist. He’s moved on. It was great to have Todd. I remember that well. He was our first guest. We went for lunch after. That was a fun episode.
Peter Tertzakian:
Right. Right. We’ve had many guests over the course of the years, and thank you to all the guests and of course, thank you to all our followers. Our follower base has grown dramatically over the course of four and a half years, and we do have some numbers in terms of the split of where they come from.
Jackie Forrest:
So yes. I think that first episode, it was maybe like us and my mother that listened to that one.
Peter Tertzakian:
Yeah, that’s right. Yeah.
Jackie Forrest:
But it’s really grown. Now we have lots of people, and I do want to say, often, people come up to me, whether the elevator or crossing the street-
Peter Tertzakian:
Rlus 15.
Jackie Forrest:
Yeah. Say how much they enjoyed the podcast, and I always like to hear from you, and I also want to always ask you, what do you like about the podcast?
Peter Tertzakian:
Yeah, let us know.
Jackie Forrest:
Yeah. So in terms of where our listeners are, 50% are from Calgary.
Peter Tertzakian:
Not surprising.
Jackie Forrest:
Yeah. 87% from Canada, and it includes representation from across the country, Toronto, Ottawa, Vancouver, Victoria, even into the Maritimes.
Peter Tertzakian:
Well, I even know one listener in Newfoundland and Labrador.
Jackie Forrest:
Well, there you go. Coast to coast. 7% from the United States. That’s our next biggest place, and then we have small amounts from many other countries, Mexico, Saudi Arabia even, Italy, Africa. We have some pretty interesting cities that regularly tune in. Grand Prairie, my hometown. It’s a fun one.
Peter Tertzakian:
Oh, welcome.
Jackie Forrest:
Fort McMurray.
Peter Tertzakian:
Well, I know we’ve got Tulsa, the city state, Singapore, and we have a loyal listener out there. Hello. Shout out to Verendra.
Jackie Forrest:
Yeah, we always get great notes from you and we really appreciate that, and countries we wouldn’t think, places like Bangladesh, Brazil, Hong Kong, India.
Peter Tertzakian:
Perth.
Jackie Forrest:
So we’ve got people… Small numbers, but we do have people tuning in now and again from those locations too.
Peter Tertzakian:
Okay, wonderful. Well, we really appreciate our audience tuning in and listening. We enjoy the feedback and we enjoy having guests, and we’re going to have a guest today.
Jackie Forrest:
We are. The conversation continues on four and a half years later and the conversation’s in energy are important, so we’re delighted to introduce our special guest for today because he’s going to tell us about an exciting event happening that’s going to bring people from all over the world here to Calgary to talk about energy.
Peter Tertzakian:
Yeah. This fall, we’ve got the World Petroleum Council of Canada. It’s the big international congress that’s happening here, and we’re delighted to have our 118th guest with us, Richard Masson, who’s chair of the World Petroleum Council here in Canada. Welcome, Richard.
Richard Masson:
Great to be here.
Jackie Forrest:
So Richard, tell us about the World Petroleum Congress. Tell us about the conference, how many people are coming and where are they coming from?
Richard Masson:
Well, this is one of the biggest conferences in the world, and so it’s often thought of as the Olympics of the oil and gas conferences. It happens every three years. This is the 24th edition, so it’s been going on for around 70 years. We expect to have up to 5,000 delegates, 15,000 unique visitors, 200 exhibitors, 800 international media from 100 countries. So this is as big an event as Calgary can handle.
Peter Tertzakian:
It’s not going in the new Calgary Center that’s under construction. That new conference center will be just massive-
Richard Masson:
We won’t get to use it. The outside will be buttoned up, but the inside’s still going to be under construction, so we’ll have to work around it, but it’ll be fine.
Peter Tertzakian:
So much of this is going to occur in and around the Stampede grounds.
Richard Masson:
In the Stampede grounds is the home base.
Peter Tertzakian:
Right.
Jackie Forrest:
Okay. What are the dates?
Richard Masson:
So it’s September 17th to 21st. It starts with an opening ceremony on the Sunday night and then runs for four days, morning to night events, left, right and center, more things than you could possibly attend, but it’s meant to be a comprehensive congress. So it’s an exhibition, CEO panels, plenary speakers, luncheons, there are special events. All kinds of things happen over the course of the four days, so more than anybody could handle, but a real in-depth Congress.
Peter Tertzakian:
Tell us about some of the speakers. As you said, it’s the biggest, certainly, oil and gas conference in the world. It’s one of the biggest conferences in the world, so presumably we’re going to see people from producing countries from all around the world.
Richard Masson:
That’s exactly right. So we have a number of confirmed speakers. So Darren Woods from ExxonMobil. Amin Nasser, who’s the president and CEO of Saudi Aramco. Minister Wilkinson will be here from the Canadian government. Josu Jon Imaz from Repsol, who’s the CEO, and Dai Houliang who’s the chairman of CNPC. Those are just a few. We have-
Peter Tertzakian:
The Chinese National Petroleum Company.
Richard Masson:
Chinese National Petroleum Company. So we have dozens from many countries around the world. We always get a very good representation of national oil companies. Of energy ministers from countries around the world, we have 60 member countries, and also, independent oil companies, the Exxons and those kinds of things.
Peter Tertzakian:
Give us a sense of the agenda, the show flow. These people gather. What are they talking about?
Richard Masson:
Well, what they’re going to talk about is energy transition, the path to net-zero, which is our theme. We worked long and hard on consulting with countries and companies, talking about what should the theme be. We proposed that theme. It was accepted by the member countries, and so everything is oriented towards that theme. There’s different levels of the Congress. So one is the technical program, and in the technical program, there are 17 topics related to the theme. We did an international call for papers. We had 1300 abstracts submitted. From those, we selected 4 papers and 10 posters for each of the 17 topics, so that’s 268 different papers being presented right there. Then there’s a strategic program, a CEO program, a ministerial program, a Canadian program.
There’s just so many different elements of this, and all of the topics are related to the theme around transition and how do we improve the performance of the energy industry while still providing energy security and affordability? Because from a global perspective, energy poverty continues to be a real problem and a lot of folks aren’t at the stage of transition that we think about from a European or North American perspective, and we’ve got to have that dialogue in a comprehensive way if we’re going to make it work.
Jackie Forrest:
So the Petroleum Congress, you got petroleum in the name, but you have a theme of energy transition and going to net-zero. Is there any conflict in that or how are you going to balance all those themes?
Richard Masson:
It’s a great question. One of the things that’s happening is the World Petroleum Council is in the process of changing its name. So the word petroleum will be removed to reflect the transition of its members, the countries and the companies who are involved, and we expect a new brand will be officially announced during the Congress in Calgary.
Jackie Forrest:
Okay. So you’re going to learn about topics like blue hydrogen and ammonia and CCS, and it’s not just going to be focused on… Not the just, because that’s very interesting too. The oil and gas, we need it, but it’s going to have broad set of topics.
Richard Masson:
Absolutely. One of the things that we’re doing that… Each host can innovate, but one of the innovations we’re doing is called the Carbon Tech Expo. So it’s an area of the exhibition where we’re going to have four days of programming. We’re working with many different… Crim and Mila, all these different organizations within Canada that focus on different elements of decarbonization. So we’ll have a day on carbon capture and storage, a day on methane reduction, a day on hydrogen, a day in general, and we’re going to have pitch competitions. We’re going to have a separate stage in that area where people can get up and tell their stories. There’ll be smaller companies with smaller pavilions who are able to talk to each other and talk to the big companies who come to town about what’s going on in that space as well as many of the papers in the general program talk about the transition because of course, all the big oil companies are very much interested in how they do that effectively. So yeah, it’s a very comprehensive program.
Peter Tertzakian:
Well, I just want to pursue this word transition that you’ve used several times and is commonplace in the energy jargon. So transition can take two meanings from a Petroleum Congress context, and one is get off petroleum altogether, so basically retool a company to be… I don’t know… building solar farms or what have you, or it can also mean reducing upstream emissions down to net zero. So what’s the weighting between the two?
Richard Masson:
I think that’s one of the things that this Congress is really going to be about, is to try and give some context to all the different strategies that are being undertaken by companies and by countries. Especially some of the European countries are moving more towards your former-
Peter Tertzakian:
Right, yeah. Get off petroleum.
Richard Masson:
… transitioning from especially oil into natural gas or into wind and solar, those type of things, whereas some other companies are really focused on, “We’re going to go all in on oil because we see it being needed for a long time. How do we decarbonize how we produce it?”
Peter Tertzakian:
Right. So given the carbon emissions, which we’ve talked about on these 200 podcasts many times, 80 plus percent comes from the tailpipe or combustion, and 20% or less comes from extraction processing and distribution. Is there going to be talk at the conference about the consumption and combustion of petroleum products as well?
Richard Masson:
We are looking to make this as comprehensive as possible all the way through the value chain. Absolutely. Where we started as the hosting committee was the UN has set some goals for what we need to do around decarbonization. Let’s just accept that that’s where the world is going. Now, how do we contribute to getting there? Where we have the most influence is going to be on decarbonizing the production piece as opposed to trying to manage the consumption piece through electric vehicles and others, though we are interested in talking about those things because many of our member companies are, but our focus will really be around how do we decarbonize the production cycle and bring in new technologies like carbon capture and storage and hydrogen.
Jackie Forrest:
All right. Well, we might want to back up just a little bit. We didn’t talk about yourself, but also, how did Calgary get in the position to host this conference? I know that you were a big part of that.
Richard Masson:
Yeah, I’ve been involved in the organization for about 10 years. It’s a 70-year-old nonprofit society here in Canada. We were fortunate. We had hosted the Congress in 2000. Jim Gray led that event. It was very successful. It was one of the most successful that had ever occurred. We decided that we should try to bid again. We looked at how do we do that? We first bid against Houston, and we lost, but then we decided to persevere, and we bid a second time, and so in 2019 in St. Petersburg, we had to beat out four other countries and we won on the fourth ballot by a vote of 21 to 20. This Congress coming to Calgary is many years in the making by a volunteer board.
There were people from that original Congress like Dr. Randy Gossen who was at Nexen, Charlie Fisher used to be a big supporter of the Congress. He put a lot of resources into it. So, there are people who are still well-connected in the international organization. In fact, Randy was the president to the organization for two three-year terms. So, we wanted to make sure that we had that connection and levered off of the relationships that still existed. This brings an opportunity for so many people in Calgary, companies, people and their careers to make international connections that just don’t come around very often. I got to talk to people who had participated in the 2000 Congress. They said it was one of the best experiences in their lives because they got to see so much of the world-
Peter Tertzakian:
I remember that.
Richard Masson:
… right here in their backyard.
Peter Tertzakian:
Yeah, I remember that. So how has the Russian situation complicated this?
Richard Masson:
It has complicated things for sure, Peter, and it’s a challenging question. There’s a lot of risk for Russian people getting visas coming to Canada right now. Because we need to make sure we can deliver a good Congress, there is no official Russian involvement in the Congress. So, we can’t prevent somebody from coming if they get a visa, but we can’t count on them getting a visa, so we just said Russians aren’t going to be either speakers or moderators or any of those kinds of things because we just got to make sure that we deliver a good Congress.
Peter Tertzakian:
Right.
Jackie Forrest:
Right, but there’ll be lots of folks from other places in the world talking about energy. Now, I heard a rumor that some companies are spending as much as a million dollars on the event with the booths and everything that they’re doing. Is that true?
Richard Masson:
That’s true. So, the top-level sponsorship, which we call a diamond sponsorship, is $750,000 US. We have two announced already, Accenture and QatarEnergy. That’s what their sponsorship gets them, and that includes some benefits like floor space, but when they get the floor space on the exhibition, then they build a pavilion, and some of the pavilions you will see are going to be very, very impressive. From an international point of view, companies come here to show the world what they’re doing through their own production, through their carbonization plans, all those kinds of things, and countries do as well. So, countries come, they want to show the world, here’s investment opportunity, here’s the partnering opportunities. Yeah, some of these pavilions could cost more than a million dollars just in building the pavilion.
Jackie Forrest:
Right. So, people have to go and see that. It’s here just outside of our downtown core. How can people get involved? Could they register now and what are the options?
Richard Masson:
Yeah, so there’s two parts to the program in a division, so the technical program, which is those 17 streams I talked about with all the technical papers as well as the exhibition floor, are going to be available for a visitor pass. Those aren’t available yet, but they’ll run at about $250 for the four days. So, we’ve tried to make those very affordable so that people from downtown Calgary, younger people factors, a discounted rate even from that for students, those are to come.
Right now, what’s available is the delegate pass, and that is all of that, the exhibition, the technical program, but also the strategic program, the CEO panels, the opening ceremonies, Canada Night, which is a big event that we’re going to hold on the Tuesday night closing ceremonies. All of those things come with the Delegate pass, which is $2,500 US, which seems like a lot to a lot of people who haven’t been to these congresses, but if you put it in the context of CERAWeek that just happened down in Houston, they had 8,000 people turn up at $8,000 a pop. So coming out of COVID, people are really wanting to be engaged in congresses. We’ve priced ours relatively competitively on an international basis, and that’s what’s available right now, is the delegate pass.
Peter Tertzakian:
People come buy tickets and attend events, functions, talks. Putting on a show like this just takes a ton of work-
Richard Masson:
Ton of work.
Peter Tertzakian:
… and a ton of people. So, are you also calling for volunteers?
Richard Masson:
We, as I said, we’re a volunteer organization. We’ve got a volunteer board. We have our leader is Denis Painchaud. He’s the president and CEO, and our chief operating officer is Dean Tucker. We’ve put together well over 20 committees, but I’m not going to get into them all. Many, many volunteers. More than 75 volunteers are working on this right now. That is continuing to grow. We’re hiring expertise where we need it, so a company to manage the event, layout, a company to manage the booth building, a company to manage communications, all those things. We’ve been very impressed with the quality of the companies that are existing here in Canada and Calgary. Yeah, we are going to be probably moving towards something on the order of a thousand volunteers by the time this Congress is done. We are partnering with many, many organizations, like I said, CEM, OTPP, MILA, so many of those, PTAC, with you in fact. So many organizations. We have 40 international media partners already. There’s just so many things where people can be involved.
Peter Tertzakian:
Sounds amazing. If you’re in the energy business, this is the place to be and 2,500 bucks, you got to net it out with all the swag you’re going to get, I imagine, at these booths, so you actually may do better.
Richard Masson:
Well, and in fact, because it’s in Calgary, it’s just this great opportunity to see all these international things at home. You just don’t find these opportunities. The last one was in Houston, this one is in Calgary. They won’t come back into North America for another generation. Next one will be in Riyadh. People will want to go there too, but it’s going to be expensive to go to that compared to what it is to be here in Calgary and find out about it, and so I’d really encourage Canadian companies and all the folks in the industry and interested in the industry, especially young people, to get involved.
Jackie Forrest:
Well, and I think it’s great that you’re offering that $250 level just to go see the exhibits and at least get some exposure. I think the average Calgarian should consider that as well. Maybe not just folks that are downtown working in the oil industry.
Richard Masson:
Absolutely. We’re going to have a media campaign coming out for people to get more involved in that coming out shortly.
Jackie Forrest:
Well, we’re excited. The ARC Energy Research Institute will have a presence at the show, and we plan to have some podcasts with some of your speakers in and around the show, and we’re really excited to be part of it. It really is a great opportunity for us as well to get involved.
Peter Tertzakian:
Yeah. Well, Richard Masson, chair of the World Petroleum Council of Canada, thanks for being our 118th guest and telling us all about this exciting event.
Richard Masson:
I appreciate all your support. Keep up the good work. I really enjoy your podcast.
Jackie Forrest:
All right. Well, our next topic for today is talking about how my investment in my solar panels is looking.
Peter Tertzakian:
We’ve talked about your solar panels, my solar panels over the course of the last 200 episodes. I can’t remember when we first talked about them. It’s probably at least…
Jackie Forrest:
I got mine in November of 2021, so a year and a half ago, and I know you had yours earlier.
Peter Tertzakian:
I had mine in the summer of 2021. Well, how’s it going for you?
Jackie Forrest:
Well, I had my first data for the full 2022 year, and I thought I would see how I was doing, like how were they performing, how were the economics looking relative to my underwriting assumptions, if we want to be formal in terms of what I thought my payback would be. The good news is it’s actually looking better than I thought, and I’ll explain some of that.
Peter Tertzakian:
Better in terms of being more economical.
Jackie Forrest:
Yeah, yeah. The economics are better than I thought.
Peter Tertzakian:
Okay. So, let’s get right down with the numbers. What did you pay for it?
Jackie Forrest:
Well, so I spent almost $30,000 after the federal rebate and including my pigeon guards. So initially, the price was lower, but remember we had the pigeon issue, so I had to count that in my cost.
Peter Tertzakian:
So 30K and how much did the government kick in.
Jackie Forrest:
5K.
Peter Tertzakian:
So, it would’ve been 35 without the assistance.
Jackie Forrest:
Right.
Peter Tertzakian:
What did you get? Did you get a check back? Is that how it works?
Jackie Forrest:
Yeah. Yes. Yeah. It’s quite a process. You have to get an inspector in your house before and after. Because they were backed up quite a bit at the time, I think it was a six-month process, but we did actually get a direct deposit into our bank account.
Peter Tertzakian:
Okay, good. So, you’ve got how many kilowatts on the roof?
Jackie Forrest:
Well, 14 kilowatts system, 41 panels. They’re 360 watts each. There are some better panels out there, like 380.
Peter Tertzakian:
Well, they’re getting better and better.
Jackie Forrest:
The other thing I did is I updated my assumption on payback based on the real data.
Peter Tertzakian:
Yeah, well, that’s a big thing because a lot of people say, “Oh, well, it costs you 30 grand. That’ll take you forever to pay back.”
Jackie Forrest:
Yeah, well, I think I’ll probably get a payback, if power prices stay in the range, they have been the last six months or so, in about seven years. So, I thought it was nine years when we installed the panels.
Peter Tertzakian:
Seven. So, if you are planning on living in your home for seven years or longer, it makes sense to install the panels. Can I ask you a side question? Because we’ve had guests on the show like Blake Schaffer and others talking about electricity markets and so on, and we’ve also had guests talking about achieving net zero, so let’s tie it together because we have a Clean Electricity Standard policy that’s coming and that can potentially serve to raise electricity prices. If that happens, then will that even shorten your payback further?
Jackie Forrest:
It could, yeah. So, the most influential thing on your payback is your assumption around power price. So, when I did my initial work, I had a 7 cents per kilowatt assumption.
Peter Tertzakian:
Oh, kilowatt-hour, yeah.
Jackie Forrest:
This year, it’s averaged more like 11 cents per kilowatt-hour. I know that the people that were on the floating rate, the Alberta government for the first three months of this year had a cap at 13 cents. If I assume 13 cents, my payback is under six years. If I assume the 7 cents that I did when I started this work, my payback is like eight years, so the price is really important in terms of your assumption of your payback. Now the other thing, you talk about the Clean Electricity Standard, is the ability to sell carbon credits. If the grid gets to be zero, then I can no longer sell carbon credits, so it hurts me a little bit there, but the price is by far the biggest indicator.
Peter Tertzakian:
But the grid’s not going to be zero in seven years.
Jackie Forrest:
No, no, but in the future, that would take away from that. Why don’t we go through the four reasons why my payback was better? So, one was the higher energy price. 11 cents now versus that assumption of 7 cents per kilowatt-hour. The second thing was my production was actually 20% higher than the installer estimated, so they told me they were being conservative on the production, and they were, at least for last year. Maybe we had an especially sunny year last year, but that helped. Obviously, if I produce more power, then I’m going to have a faster payback than what I thought I was, so that was another really influential thing that helped my payback. The other thing that’s really made a difference is consuming my own power. So, we consumed about 40% of our solar generated power, and that is a lot cheaper than sending it back to the grid because when I consume it directly, all I do is avoid the electricity payment, so right now, 11 cents, but I avoid all of the… There’s about 7 cents of fees that you pay. They’re very-
Peter Tertzakian:
Right. It makes more sense to charge your electric car rather than sell it back to the grid.
Jackie Forrest:
Exactly. Put into your car. It’s about half price in general versus buying it from the grid.
Peter Tertzakian:
Unless it’s cloudy outside.
Jackie Forrest:
Exactly. Well, you only charge when you have the sun, but consuming 40% of our solar really reduced the amount of power we had to buy off the grid, and that helped contribute to a faster payback, and the last piece, which isn’t a huge piece, is we sold, as we just talked about, the carbon credits. With conservative assumptions, this reduces the payback between a half to one year. It’s very uncertain, and I’ll get into that, what that’s worth, because there’s lots of variables that are hard to predict, but there’s some value there. All of that together gets me the seven-year payback.
Peter Tertzakian:
Yeah. Yeah. Well, these are great calculations. I personally am more of a plug and play kind of guy. I just installed them and let them go. I will say though that if you installed them on a second home as I did, it makes a lot of sense because the electricity cost is effectively zero when you’re away. You produce way more than you use, especially on sunny days.
Jackie Forrest:
Yeah, exactly. So, you’re exporting everything, and so you’re getting more revenue than I would be because I’m consuming more now. Hey, I wanted to talk about these carbon credits because I did really think hard about getting the credits. It’s because when you’re a very, very small producer like myself, I can’t go to Suncor and say, “Hey, Suncor, do you want to buy my carbon credits off my roof?” So, you have to go to an intermediate who aggregates a whole bunch of tiny little-
Peter Tertzakian:
Houses.
Jackie Forrest:
… houses together to get something that would be enough scale for some buyer to care about. Unfortunately, the way the market works today, those groups do take a big cut of the revenue.
Peter Tertzakian:
A big commission.
Jackie Forrest:
Yeah.
Peter Tertzakian:
What do they take?
Jackie Forrest:
Well, the deal I got was first of all, 20% off the price of the carbon because they’re selling small volumes, so if the price of carbon is trading at $65, they take 20% off that right away.
Peter Tertzakian:
Put another way, if you generate a hundred dollars worth of credits, they take 20 bucks.
Jackie Forrest:
Yeah. Just off saying, “Well, it’s going to be harder to sell these.” Then they take a 40% commission on the revenue for selling the credits. So, if I assume that they don’t really get a 20% price discount, they get a 10 and they keep some of that as profit plus the commission, they get about 47% of the proceeds for my carbon credits, so I had a real issue with that. I’m like, that seems like not a fair deal, but then I thought about it some more-
Peter Tertzakian:
But it’s better than zero.
Jackie Forrest:
It’s better than zero, and I thought, well, better to get that than nothing. There isn’t really another alternative. I think there are some coming maybe that will be a bit better for consumers, but I decided to sign up because it knocks potentially… If I’m conservative, a half year and probably a year off my payback.
Peter Tertzakian:
So, there’s a number of these carbon credit aggregators out there, and you just contacted them and basically said, “Hey, I’ve got so many kilowatts capacity on the roof. This is my consumption.” How do they figure out the value of the credits?
Jackie Forrest:
Well, there is no guarantee, and that’s why there’s a big range. So you sign up, but then each year, you have to provide your production, then they will do the calculations, and it will depend on what the grid electricity is, the marginal electricity on the grid. In Alberta today, we use fossil fuels.
Peter Tertzakian:
Oh, I see.
Jackie Forrest:
This year, we’re shutting down the coal plants, so next year-
Peter Tertzakian:
You’ll get less.
Jackie Forrest:
… I’ll get less because now the grid is cleaner. It’s still more carbon intense than what I’m producing when the fog comes down.
Peter Tertzakian:
So how often do they cut you a check? At the end of the year?
Jackie Forrest:
Yeah, it’s once a year. So once they get all the data, then they would go sell the credits on an annual basis. So the other thing that’s uncertain… Obviously my production is a little uncertain. There’ll be some variation and there’s a bit of degradation, but I think the other big piece is the carbon price. It’s uncertain what the carbon price will be. I could take the stated government carbon prices, getting to $170 by 2030, and I don’t know, staying flat after that, or I could say, “You know what? I don’t really think those carbon prices are going to get there. I think there’s going to be too much supply, not enough demand,” and maybe my average price is going to be something like $75 over that time period. So that assumption alone almost halves the value of these carbon credits. So you can understand why these large emitters who are doing the big projects are so concerned about the price of carbon. It really halves the value of this revenue stream if we stay with the government rate or we go with a more conservative rate.
Peter Tertzakian:
Well, it sounds like the whole exercise has been a good one for you and that the investment makes sense even without this carbon credit gymnastics. Is that-
Jackie Forrest:
Yeah, it would be eight years or seven and a half years. So yes, that’s something you don’t have to do, but it’s free money. I think over time, maybe more people will get into this market and hopefully, as there’s more volume, some of those discounts, commissions and stuff will come down. There’ll be more competition for that business, but today, with not a lot of people doing it, I understand why there’s a fairly big fee for doing these transactions.
Peter Tertzakian:
Right, right, right. Well, that’s great. I think in future, we talked about it. There’s going to be vehicles that will act as a battery. I installed a Power Wall, which makes no sense economically, I can tell you that. Nevertheless, it is nice to be able to have a battery backup that kicks in instantly, and it has a couple times, I know. So in future, we talked about, for example, the Ford Lightning pickup truck. You can plug it in and it acts as a battery, doesn’t it?
Jackie Forrest:
It does. So one thing that’s great about the car is it’s allowing me to get more value out of my solar panels right now because I’m able to use my own power more, which is cheaper, but the real value will come when there’s different prices during the day, and I don’t know if you saw-
Peter Tertzakian:
It becomes bidirectional. You can use your car battery as a way to trade electricity effectively.
Jackie Forrest:
Exactly. I can store during the day and sell at night, and I was just going to say, in Ontario, they’ve come up with ultra low pricing in the evening now. In Ontario, the ultra low price, I think it’s around 2 cents at night. You might-
Peter Tertzakian:
To buy. To buy.
Jackie Forrest:
To buy. You might want to use your Power Wall to-
Peter Tertzakian:
Buy at night.
Jackie Forrest:
… buy at night, sell in the day.
Peter Tertzakian:
Sell in the day.
Jackie Forrest:
Yeah. So when we get that type of pricing, and I think we’ve talked about it quite a bit on the show, I think that will happen. That would make a solar-panel-plus-electric-car combo even more profitable, because you could start to be smart about when you buy and sell your power.
Peter Tertzakian:
Wow. Everybody becomes an electricity trader and starts using ChatGPT to do it. Wow. What a world.
Jackie Forrest:
Yeah, things are changing, Peter.
Peter Tertzakian:
Okay, well, thanks for the deep analysis, Jackie. This is great. I think it really highlights the proposition of putting solar panels on the roof. A lot of it is because the panels have come down in price. There is a subsidy, but even in the absence of a subsidy, it would probably be 10 years. If you’re planning on owning your house for 10 years or longer, it makes a lot of sense. In fact, there’s now a lot of new houses that are being built with solar panels on them as well, so it is a changing world in the world of power generation for the home, and there’s a lot more opportunities for consumers to be able to manage their own energy.
Jackie Forrest:
Yeah, no, it’s been a lot of fun and it’s also been a lot of fun to be on this podcast for 200 episodes, so thank you so much to our listeners.
Peter Tertzakian:
Thanks again.
Jackie Forrest:
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