If the BC government decides to aggressively electrify the economy, as envisioned by CleanBC, could British Columbia find itself short of electricity?
Is British Columbia ready to transition from fossil fuels to clean electricity? Frankly, no. This will come as a shock to British Columbians who have been told repeatedly that the province’s vaunted hydro-electric system positions it well for an electric future. It’s also why BC needs to have a public conversation about that future instead of entrusting BC Hydro to do the planning behind closed doors, which is what John Horgan’s NDP government has done.
Consider this: by 2050, BC may need double or triple its 18,286 megawatts (MW) of power generation as transportation, buildings, and industry are all or partially electrified. Current output is generated with 32 hydro dams. Can the province build another 32 or 64 hydro plants in under 30 years? Of course not, so where will all that power come from? How will it be moved to where it’s needed?
Horgan has tasked BC Hydro with answering these questions (and many more) in Phase 2 of a review that will be completed later this year or early in 2022. The utility, according to its website, was asked to undertake “[a] broad, transformational review that will consider some of the significant changes and shifts taking place in B.C. and continental energy sectors, in addition to evolving technologies and the changing needs of current and future BC Hydro customers.”
Obscured by BC Hydro’s cautious language is the revolution upending the global electricity sector. A combination of renewable energy (distributed and utility-scale), new grid technologies, aggressive climate policies, and changing customer demands (think electric cars, for example), has detonated a bomb under a staid and conservative industry that hasn’t changed much in 100 years. BC has mostly escaped the upheaval experienced by leading edge jurisdictions like California, but Horgan and BC Hydro can see it coming.
To the government’s credit, it knows it needs a plan. Where it has stepped wrong is asking BC Hydro to do an internal review.
Why a public, transparent review?
At the high end, that could mean the equivalent of
Around the world, new technologies and climate policies are upending the old vertically integrated, cost-of-service business model upon which BC Hydro is based. The word “revolutionary” is overused, but it accurately conveys the transformation of electricity systems across North America, Europe, and Asia. Here’s how a utility executive explained it to me.
Remember the 1980s when the telecommunications system consisted of landline phones and fax lines? Then along came fibre optics cable, cell phones, the Internet, and other new technologies that created a web-like network with many new ways to communicate. Today, data is essential to businesses and we take services like video conferencing for granted.
The same process is at work in electricity generation, transmission, and distribution. A decade or two from now, how we generate and consume electricity is going to be very different.
Some jurisdictions, like California, have had vigorous public debate about the electricity revolution, helping to provide direction for policymakers and utility executives grappling with rapid change.
There is no equivalent discussion in BC. British Columbians are sleepwalking into a new energy future, with potentially unpleasant economic consequences.
Why is British Columbia behind the curve? For the same reason as other Canadian provinces: the pressure is less acute than in the United States or Europe or Asia.
Clean hydropower already provides 60% of Canadian electricity. Include nuclear and the small but growing wind and solar industry and that rises to almost 80%. As Alberta and Nova Scotia ditch coal, there is a very good chance that over 90% of Canadian electricity will be low or no-carbon by 2030.
Very few countries can make this boast. Past success and complacency are, unfortunately, blinding Canadians to future challenges. And no province is as complacent and blind as British Columbia.
Here is the issue at its simplest: British Columbians want a low-emission, carbon-free economy. The provincial NDP government’s CleanBC climate plan promises to reduce greenhouse gas emissions from 64 mega-tonnes today to 16 mega-tonnes by 2050. “Meeting our targets beyond 2030 will require substantial additional volumes of new clean electricity to further electrify transportation, industry, and buildings,” the CleanBC plan says. BC cabinet ministers are on record saying the equivalent of five Site C dams will be needed by 2030.
Where will all that new electricity come from?
After Site C, BC Hydro has no plans to ever build a new hydropower project. The utility has no experience with wind and solar. Energy Minister Bruce Ralston makes vague promises about importing “cheap California solar” to make up the shortfall, but Energi Media interviews with American electricity experts suggest that is a dangerous and short-sighted strategy. The NDP caucus talks vaguely about 300 new First-Nation and community-owned wind and solar farms, but the logistical issues of such a plan are staggering.
There is a fair argument to be made that British Columbia should re-engineer, rather than tweak, its electricity system.
Premier John Horgan has chosen a different path.
In 2018, his government launched a two-pronged review of BC Hydro. Phase I was an internal review focused primarily on “BC Hydro‘s costs and rates.” The 2019 report set out a plan to keep rates low and to restore regulatory oversight of the utility by the BC Utilities Commission. These issues, while important, are basic housekeeping.
The terms of reference for Phase II get to the heart of the matter: “The second part will focus on transformational aspects to changing energy markets, and respond to the expected Energy Road Map for BC and assist BC Hydro in developing its Integrated Resource Plan in 2019.”
The utility certainly understands what is being asked of it: “[a] broad, transformational review that will consider some of the significant changes and shifts taking place in B.C. and continental energy sectors, in addition to evolving technologies and the changing needs of current and future BC Hydro customers.”
But when the interim Phase II report was released a year ago, the consensus among groups commenting was that the report was so vague as to be meaningless. That doesn’t bode well for the final report.
The problem is that the review is an internal process. BC Hydro is consulting with an expert panel – very competent individuals like economists Mark Jaccard and Blake Shaffer – and a few stakeholders, but that’s it. The heavy lifting is going on behind closed doors.
That’s not good enough. The decisions made in the next few years will affect BC’s economic future and its ability to meet 2050 greenhouse gas targets. Nothing short of a full and vigorous public debate is needed.
Do British Columbians really want to leave such important decisions in the hands of the crown corporation responsible for the $16 billion (and counting) debacle that is Site C?
The BC public should be able to debate the role of BC Hydro in the provincial electricity system. Why can’t they contemplate a future without BC Hydro? Or, a future in which BC Hydro is radically restructured and plays a very different role in the provincial electricity system?
For example, can we imagine a future in which the power grid is administered by an independent system operator (ISO), as in California and Alberta, while BC Hydro’s role is to maintain its hydropower assets and manage distribution? An ISO would more efficiently integrate new electricity generation sources like wind, solar, tidal, and geothermal into the grid.
The fact that Site C electricity will cost around $140 per megawatt-hour to produce while Alberta’s last auction in 2018 secured wind-power at $37 per megawatt-hour illustrates why British Columbia should at least put new electricity system models on the table for discussion.
And it’s not like BC Hydro is well-positioned to tackle a brave new electricity future.
For example, at 82-to-18, it has the highest debt-to-equity ratio of any North American utility. BC Hydro also has the cautious, conservative corporate culture of all the old cost-of-service utilities, especially the government-owned vertically integrated model so popular in Canada. There are plenty of other issues that suggest BC Hydro may not be the best option to electrify the BC economy and achieve CleanBC emissions targets.
So, why is a public discussion needed now? Why not wait until the Phase II review is complete and released for public comment in early 2022?
It will be too late, that’s why.
Once that Phase II report hits Minister Bruce Ralston’s desk next year, the structure of the public discussion will be set in concrete more immoveable than the Site C foundation. There will be no possibility of the broader conversation that is so desperately needed. The options presented to the BC government, and by extension to all British Columbians, will be determined by BC Hydro, which is hardly a disinterested party in the conversation.
The best way to get this right is to have a thorough public discussion of all the options. Getting it wrong can have serious consequences, as Californians (2020 rolling blackouts) and Texans (2021 blizzard) have recently learned.
If the BC government decides to tweak rather than re-engineer the provincial electric system while still pursuing an aggressive electrification agenda, could British Columbia find itself short of electricity in the not too distant future?
Most British Columbians would probably discount that possibility – just like many Californians and Texans did. They shouldn’t. Considering all the options costs nothing, but ignoring them could be very costly if the Horgan government and BC Hydro choose poorly.