COURTESY OF TERNA, THE ITALIAN NATIONAL TRANSMISSION SYSTEM OPERATOR;/Supplied
In the convulsive policy debate over how to electrify as much of Canada’s energy system as possible, political and media attention tends to focus intensively on renewable generation — wind and solar farms, biogas plants, buzzy cleantech, modular nuclear reactors, and so on. What gets far less play is the admittedly boring network of wires and substations — high-voltage transmission lines and local distribution grids—that allow all those electrons to flow where they’re needed, when they’re needed.
However, to meet our net zero goals, and take steps like transitioning to EVs and heat pumps, Canada needs to significantly amp up investment in both clean electricity, as well as that far-flung transmission and distribution network. The cost is a bit of a black box. “We’re going to need two or three times the amount of generation of electricity in order to fulfill our goals,” says Guy Holburn, a professor of business and economics and founder of the Ivey Energy Policy and Management Centre at Western University. “We’ve got some reasonable estimates there of how much that’s going to cost. The transmission and distribution side is a little bit harder to accurately quantify the costs.”
Francis Bradley, president and CEO of Electricity Canada, says estimates for the price tag of electrification through to 2050 run from $400 billion to $1.7 trillion. An Ivey study reckons that 23,000 kilometres of new high-voltage transmission lines will be needed, including many that extend far into Canada’s North—a vast undertaking that involves negotiations with First Nations, complex environmental approvals and, increasingly, all the risks posed by raging wild fires. “Recent work by the RBC Climate Institute essentially says we’re probably investing roughly a third of what we need to be investing in this space,” Bradley says.
Here’s one recent example of how renewables and new transmission should be expanding in tandem: a new $6 billion transmission corridor being built by Hydro-Québec. That project pairs with new investments in wind farms as well as additional hydro-electric dams, which can store all that additional renewable power—that is, the electricity generated by the turbines running the pumps that fill up the reservoirs—and then dispatch it when the wind isn’t blowing. The wrinkle? This line runs into New York State, a long-time Hydro-Québec customer, instead of supplying renewables to other parts of Canada.
Yet, energy policy expert Pierre-Olivier Pineau, a professor of management at HEC Montréal, argues we need more, not less, of this kind of thing. According to a 2020 study he carried out for The Transition Accelerator, a think tank that teams with other research groups, a highly integrated approach to electricity markets in northeastern North America—one that involves extensive trade in power within a mega-region encompassing New York, New England, the Atlantic provinces, Ontario and Quebec—could yield billions in savings on new renewable generation, even if consumption grows rapidly.
“More transmission is needed between states and provinces, to allow more hourly and seasonal trade in both directions,” the report finds. “Global cost savings, in a 100% decarbonization context, are estimated around $10 billion per year under regional collaboration (and more transmission interconnections), compared to a system without new interconnections.”
The reason? Underutilized renewable power, from large wind and solar farms, or behind hydro-dams, can be used to help meet demand elsewhere within the region. But, as Pineau observes, this future turns on a critical precondition: that all these regions significantly expand the transmission “interties” across state, provincial and national borders in order to produce a single grid as opposed to the Balkanized ones that exist now. To get there, their electricity system operators would have to collaborate in ways that are, well, inconceivable at present.
At least in North America. Pineau points to Nord Pool, the 31-year-old renewable electricity wholesale market that began in Norway and is now the system operator for 20 countries, including Sweden, Finland, Denmark and the Baltic states. When there’s surplus electricity in one jurisdiction, it can be sold to another where there’s demand. The whole enterprise turns on the existence of a regional transmission grid in which the national systems are compatible with one another because policy makers saw it made sense.
Here’s the kicker of Pineau’s story: “It’s unlike Quebec and Ontario, which are entirely non-compatible in their planning,” he says. “There’s no harmonization of regulation, rules, systems planning. There’s no nothing there. They don’t even talk to each other when they plan.”
Indeed, there’s mounting evidence that unlike the Nord Pool countries, Canada’s transmission and distribution infrastructure isn’t growing nearly fast enough to handle the looming surge in electricity demand attributable to EVs, heat pumps, giant data centres, etc.
In fact, a 2022 survey of utility executives conducted by Ivey’s Energy Policy centre found they were least optimistic about the investment climate for transmission and distribution lines. In particular, Holburn and Bradley both point to gnarly systemic barriers that stand in the way of raising the capital required to upgrade and expand Canada’s local distribution networks in order to meet Canada’s ambitious electrification targets.
Exhibit A: every region has a different system. In Quebec and B.C., provincially owned utilities operate the whole show. Alberta’s network is market-based. Some regions use lots of natural gas for home heating and others do it all with electricity. In Ontario, electricity is shunted around by Hydro One, which owns the province’s transmission lines, as well as dozens of municipally owned local utilities—many of them sleepy monopolies regulated by the Ontario Energy Board, which limits how much they can invest in their grid infrastructure.
Those barriers may be preventing smaller-scale distributed renewable projects—some rooftop solar here, some battery storage there—from accessing local grids, where they would effectively reduce the need for new large-scale generation projects (such as nuclear plants), as well as the upgraded wires required to bring all that new power to the places where it’s needed.
“You’ve got this new conversation that’s starting to take place in Canada, but has taken place in a very serious way in other parts of the world, about how do you manage this increasingly distributed system,” says Evan Pivnick, a program manager at Clean Energy Canada. He says some local utilities are running pilot projects to look for potential solutions. “Is Canada as a whole moving anywhere nearly fast enough on that? Absolutely not. How far behind we’re lagging on the distributed energy resource conversation—that’s a detriment, and holds back the affordability gains we could be making for Canadians.”
Others are more skeptical: “We’ll need decentralized generation that’s feasible,” says Pineau. However, he adds, “it makes the grid more complex. Overall, we won’t be able to avoid large wind farms and large solar farms because especially in cities, the electricity intensity is so big that you cannot have enough rooftop solar panels. You will still need these transmission lines to balance generation and demand and load in different locations.”
Ultimately, he argues, Canada won’t reach its electrification targets without adopting a radically new approach to electricity planning—one that involves the federal government and all the provinces and territories, sitting around the same table and working out an alternative to the status quo, which is Balkanized and counter-productive.
“The real bottleneck,” Pineau says, “is that we don’t take energy management seriously, so we are not planning accordingly. The federation is itself a problem because the federal government doesn’t have jurisdiction over energy and electricity. They are seen as intruders in electricity policies, when ideally they should be seen as a facilitator and a coordinator because we need provinces to coordinate themselves.”
The Globe and Mail
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