Alberta figures out how to keep the lights on

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This is a conversation series by Donna Kennedy-Glans, a writer and former Alberta cabinet minister, featuring newsmakers and intriguing personalities.

Albertans are in the dark about what’s going on.

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Early this month, Albertans were jolted by electricity grid alerts and rolling blackouts. In a province endowed with such vast energy resources, both renewable and non-renewable, grid failure seems inexplicable especially given the balmy, spring weather.

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“We’ve built the system completely backward,” was the blunt assessment of Alberta Premier Danielle Smith.

Alberta’s electrical system, with more intermittent electricity generation (wind and solar) than the rest of the country combined, gives priority to renewables. When the sun doesn’t shine and the wind fails to materialize, it takes a couple of hours to power up thermal, largely natural gas, generators and feed the grid (coal is completely off the books). The jigsaw of moving parts makes the system less affordable and less reliable — a politician’s worst nightmare.

Nathan Neudorf, Smith’s minister of affordability and utilities, is tasked with the gnarly job of restructuring Alberta’s electricity system. Before politics, Nathan was a commercial construction guy; he’s used to building and renovating.

We meet up in Calgary at my favourite coffee shop, Euphoria Cafe, on a warm Saturday afternoon, a pit stop for Nathan in his now familiar trek, between his Lethbridge constituency and Edmonton’s legislature. He shows up in jeans and a T-shirt, and after hours in his vehicle, is happy to sit outside in the sunshine, even if the available wire-mesh seats are brutally uncomfortable.

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First off, what just happened?

On one of the days of rolling blackouts in April, technical folks responsible to keep electricity flowing in the province — the Alberta Electricity System Operator (AESO) — forecast high winds and sunny skies, a signal for thermal electricity generators to deliberately hold back some of their supply. AESO’s forecast proved wrong; the wind stopped blowing and the skies grew cloudy. And natural gas generators called on as backup unexpectedly disconnected from the transmission network, triggering rolling blackouts. Prices paid by AESO to generators for electricity literally went from $0/MWh to $999/MWh, within two hours.

I am moving very strongly forward on a power authority, for lack of a better term

“I don’t have any grudge against renewables,” Nathan shrugs, “but the fact is that our priority of purchasing, based on the lowest bid, and they (renewables generators) bid into the market at zero dollars, means we have to buy all of that electricity when it’s there, and we can’t predict when it’s there, before we buy the thermals. So the thermals are doing a yo-yo, and then we’re blaming them for economic withholding, which is legal … they’re doing it to protect their business.”

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Grid failure is a big deal, and fingers of blame are pointing in all directions. How’s the minister sorting all this out? AESO doesn’t take kindly to politicians asking too many questions — that was my experience a decade ago when I was minister responsible for electricity and renewables.

“In one of my very first meetings with the AESO,” Nathan nods, knowingly, “they were very guarded.” But after 10 months in the role, this minister’s laying down clear mandates for transparency and accountability. “I am moving very strongly forward on a power authority, for lack of a better term,” he explains, to bring government, regulators and industry to the same table on electricity. And he’s embarking on an ambitious restructuring of Alberta’s power market — advancing policies to modernize Alberta’s grid and improve the ability of AESO and other regulators to keep the grid both reliable and affordable.

And in all this, Nathan’s keeping a close eye on how the province retains and attracts natural gas electricity generators. Demand for power is anticipated to grow significantly — Alberta’s population is booming, more EVs are expected on the roads, and artificial intelligence and server farms gobble up astounding volumes of power. The minister understands his conundrum; he needs low power prices for consumers and at the same time requires continued investment in natural gas generation.

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Alberta can’t just say to natural gas generators, “come and invest a billion dollars so we can give you the lowest possible return and you may not make money,” Nathan contends.

“Now the second problem that we’ve identified,” Nathan continues, “…we’re going to have a massive amount of surplus (electricity) on many days of the year. So what do we do with that?” With a flourish of hands, he posits, “Why don’t we export it?”

Getting energy to markets is a priority for Albertans, but as a former politician, I know how prickly the issue of importing and exporting electricity can be to voters. My eyes widen and I lean in, to hear more.

“B.C., Manitoba, Ontario and Quebec export a billion dollars (of electricity) a year. Why don’t we?” the minister asks, pointedly. Look at a demand map — not just California; Idaho’s population is also exploding with in-migration. We have a once-in-a-lifetime opportunity to stabilize our domestic market and allow for that export, the minister pitches, fully animated now. “If we do this well, we stabilize our domestic market and allow for exports,” Nathan contends, boosting our renewables too as intermittency matters less when it’s diffused across several foreign markets.

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And, he adds, long-term storage can help soften volatility. The province of B.C. knows how this can work, Nathan explains, “they’ll buy (electricity) from us when we have tons of surplus, for next to nothing and store it, and then when we’re in an emergency, of course they’ll sell it back to us at the peak. Can you really blame B.C.? Because that’s just the market and that’s what hydro storage does.”

Nathan’s impatient to get moving on all this; he isn’t waiting for regulators to fix the problem. “In my opinion, that’s the role of government, to be accountable and say, this is the best solution. It’s not (necessarily) the lowest cost, but it’s the best solution.” Exactly what you’d expect from a minister tasked with responsibility for affordability and utilities.

Electricity policy can be a lot like physics: inertia makes it difficult to put change into motion, but once there’s movement, it’s difficult to slow down.

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