There is a stark contradiction between the now-common assertion that wind and solar are far less costly than fossil fuels and the soaring prices and unreliability that are the real-life experience of jurisdictions, including Europe and several U.S. states, that rely heavily on them. In Canada, resolving that contradiction has crucial implications for our governments’ ambitious net-zero goals, for the resilience of the country’s electricity grid, for Ottawa’s Clean Electricity Regulations, for the future of natural gas in Canada, and for steeply rising electricity costs for ratepayers.

For these reasons (and this is public information) about four months ago, as then Chair of Ontario’s Independent Electricity System Operator (IESO), I requested an analysis of the cost of wind and solar, taking into account their intermittency and the resulting need for backup power. Pending publication of that detailed study, let me set out some basic principles that are widely understood in the sector but not much talked about in public discussions of energy and climate.

The cost and reliability of renewable energy depend on how much of overall energy generation it is responsible for. If a jurisdiction has adequate baseload power, ensuring minimum electrical power is available continuously, then wind and solar can be viable and cost-competitive in providing short-term additional capacity. When the wind is blowing and the sun shining, generation by natural gas or other non-renewables can be dialled back and replaced at low marginal cost.

But renewables’ cost advantage falls sharply if they have to be used at greater volume or for longer periods. The reason is that their intermittency requires substantial backup if baseline needs are to be covered. Furthermore, an even-handed analysis of the cost of renewables in achieving the policy goals of decarbonization and electrification should take into account the very generous federal tax credits and subsidies they benefit from, as well as the carbon taxes and restrictive regulations imposed on fossil fuels, including natural gas. (Because the newly appointed Canada Electricity Advisory Council is mandated to advance the feds’ pie-in-the-sky goal of a net-zero electricity grid by 2035, it may be reluctant to expose those hard truths.)

This balance between baseload and intermittent generation is a delicate one. Without massive excess capacity, the sun not shining or the wind not blowing can cause brownouts and blackouts that impose serious hardship on ordinary people, damage businesses’ competitiveness and tarnish a state or country’s reputation. When Russia cut off natural gas exports to Europe it precipitated a harsh regional energy crisis. California’s reliance on wind and solar for a quarter of its power has caused rolling power outages in recent years.

The IESO’s 2022 report, Pathways to Decarbonization, concluded that “Ontario’s natural gas fleet is capable of providing continuous, flexible energy year round and under all weather conditions, and there is currently no like-for-like replacement” (italics added). As a result, gas will have to be relied on at least until 2050, pending nuclear refurbishments and new builds and possible but by no means guaranteed technological breakthroughs in battery storage and hydrogen. As an example of how necessity can override virtue-signalling, in January Windsor City Council approved plans for two new gas turbines to assure reliable electricity, even though it and 33 other Ontario municipalities had previously voted to phase out gas power.

There are striking parallels between the role of renewables and a problem I confronted when I was appointed federal minister of natural resources in May 2011. The oilsands were being vilified as a supposedly major source of GHG emissions responsible for catastrophic global warming. Since that narrative created severe political, regulatory and public perception problems, both domestically and internationally, I needed to know what percentage of global emissions the oilsands were in fact responsible for.

The answer involved three surprises. First, no one had asked the question, even though it was central to whether condemnation of the oilsands was merited. Second, according to a Natural Resources Canada analysis, they generated a minuscule one thousandth of the world total, which put a lie to hyperbole about a big negative impact on the planet. Third — which should not have been a surprise — the media suppressed the number. The reason, which largely continues to this day, was that the facts contradicted alarmist portrayals of the oilsands. Reality that can’t be denied has to be buried.

In respect to the cost of wind and solar, no apples-to-apples comparison has been prepared, at least not for the general public, perhaps because an objective study risks undermining the green assertion that natural gas use can be rapidly and inexpensively eliminated. But that message carries its own risk. The limited number of gas proposals in the recent IESO capacity auction demonstrates that talk of eliminating gas can discourage investment in critically needed projects.

The important public debate about the role of renewables, nuclear energy and fossil fuels in a decarbonized future should be based on the overarching criteria of reliability and affordability. The responsibility of the IESO, like other grid operators, is to provide an independent, objective and expert analysis of the data and economics of our electricity system. Such a fact-based analysis will help frame policy discussions and guide governments in developing realistic policies that benefit ratepayers and taxpayers and advance the public interest.

Credits to Financial Post, Joe Oliver
financialpost.com