Published on October 7th, 2020 |
by Michael Barnard
October 7th, 2020 by Michael Barnard
Saskatchewan isn’t just a hard-to-spell Canadian province, but also an interesting and unfortunate outlier in the country.
As this shows, it’s one of the few provinces with substantially increasing CO2 emissions as opposed to recent declines. But that’s not the entire story. While it’s a huge land area covering 651,036 square kilometers, making it larger than 80% of the countries in the world, it only has 1.17 million inhabitants, so its emissions per capita are among the worst in the world. As a province, instead of cutting coal and gas, it had decided to accept the lobbying efforts of the fossil fuel industry and try carbon capture and sequestration, along with the usual enhanced oil recovery that makes it a bait-and-switch. Their Boundary Bay coal plant CCS and EOR plant has failed miserably, and they wasted the usual billions before admitting that carbon capture is too expensive because physics. Unsurprisingly, they are also one of the provinces without an electric vehicle rebate.
A year ago I spent some time assessing putting a carbon neutral 100,000 square foot (about 0.9 hectare) high-tech greenhouse in Saskatchewan for a client for a lucrative cash crop. The carbon neutrality would have required a substantial amount of renewable energy to power the heat pumps and LEDs, but the pipeline for approving even moderate-sized industrial or grid solar was virtually non-existent. They were far behind their next door neighbor, Alberta, which had experimented briefly with a government that accepted climate change and the need to transform the grid to renewable electricity, and as a result had a pipeline that was humming, if threatened by the election of yet-another oil & gas party. Saskatchewan had made a commitment to 50% renewable electricity by 2030 back in 2015, but there was zero evidence four years later of movement. As a result, I recommended to my client that they not consider Saskatchewan for the project as the regulatory conditions were too unfavorable (similarly, I recommended avoiding Ontario, where the new conservative government had cancelled 758 renewables contracts with a stroke of the legislative pen).
But recently, someone asked if it were even possible to transform Saskatchewan from its massive reliance on fossil fuels to one powered by wind and solar, and what it might cost. Its electrical supply, after all, is 83% from coal and gas. I had some spare time on a lazy Sunday morning, so decided to work up a model.
The answer is yes. The costs depend a bit on the mix, so that will come at the end.
First off, it’s kind of silly for any geographic region to insist on meeting its own energy needs solely from within its borders unless it’s geographically or politically isolated, e.g. Japan or Israel. And hydroelectric and some lesser technologies should be in the renewables toolkit too. But the question was about wind and solar, so I decided to color within those lines.
Second, let’s look at solar and wind resources.
Saskatchewan has the best solar resources in the country, and solar panels work better when they are cooler, so Saskatchewan’s winters may have shorter days, but they have excellent generation opportunities.
Similarly, Saskatchewan has excellent wind energy resources, yet again among the best in Canada. They are blessed with free energy, yet still dig up oil and gas for the majority of their energy needs. And it already has a lot of transmission running around the place to tap into.
Third, how much energy does Saskatchewan use?
“End-use demand in Saskatchewan was 682 petajoules (PJ) in 2017. The largest sector for energy demand was industrial at 59% of total demand, followed by transportation at 20%, commercial at 14%, and residential at 8% (Figure 6). Saskatchewan’s total energy demand was the 5th largest in Canada, and the 2nd largest on a per capita basis.”
End-use energy demand is only the final consumption of energy. I’ve chosen to include all energy demand in Saskatchewan, not just electricity, because electrifying everything is the primary answer to climate change action related to energy use. Efficiency is much higher for a fully electrified economy, so instead of 2/3rds rejected energy it’s about 20%, so much less primary energy is required.
A petajoule is 0.277778 terawatt-hours (TWh), so that’s about 190 TWh of energy demand annually in Saskatchewan. Bumping that up to account for the 20% efficiency losses sees that we need about 237 TWh of generated electricity annually. That’s overstating it, because one of the biggest consumers of energy is the oil and gas industry, and it’s obviously gone in this scenario. The oil and gas industry is also the biggest source of greenhouse gases and pollution in the province too, so there’s that.
But let’s leave the numbers alone for the sake of being conservative.
Fourth, let’s assume 50:50 wind and solar for convenience.
Wind energy in the Great Plains of the US is running up to 50% capacity factors right now for modern, well-managed wind farms. The median is about 37%, so let’s use that. Solar is running at 20% capacity factor.
Capacity factor, by the way, is the percentage of the theoretical maximum generation potential of a form of generation that is actually generated in a year. Nothing averages 100% year after year.
We need about 118 TWh of solar and 118 TWh of wind generation. At 37% capacity factor, that means we need about 37 gigawatts (GW) of wind generation capacity and 68 GW of solar capacity.
Fifth, we need to store the electricity to be used when it’s needed. For convenience once again, let’s assume pumped hydro storage.
And look at that. Saskatchewan isn’t an amazing place for close-loop pumped storage hydro, but it has enough capacity for the needs. The data is from a global study on pumped hydro storage by the Australian National University. I published a bunch on closed-loop pumped storage hydro over a few months at the end of 2019 and beginning of 2020 and talked to the lead researcher and several global developers. To be really clear, transmission connections to the east, west, and south enable energy demand balancing across large geographic regions, so you don’t need as much storage as most people think, but once again we’re playing a game of building solely within the boundaries of the province.
For energy security, we’ll probably need two weeks of electricity storage solely within Saskatchewan under the rules of the game. That’s about 9 TWh of total capacity, with delivery of about 500 MW peak, which sizes the reservoirs and generators.
You’ll be surprised how little is required for that.
“PHES system with twin 100 hectares (ha), 1 gigalitre (GL) reservoirs separated by a height difference of 500 m is able to contribute 1 gigawatt-hour (GWh) of storage capacity (assuming an usable fraction of 85% and an efficiency of 90%), or 200 MW of power with 5 hours of storage to the electricity system – equivalent to a large gas-fired power plant.”
Geographic information system algorithms to locate prospective sites for pumped hydro energy storage by Lu, Stocks, et al., in the journal Applied Energy.
Basically, a couple of relatively small ponds gets us a long way with pumped hydro storage. But we do require about 9 TWh. Pumped storage hydro is 80%+ round trip efficient, by the way, so that’s part of the efficiency hit, albeit a small one.
Sixth, now we can figure out the costs. Both wind and solar are typically priced based on power purchase agreements for delivered power, not the capital costs of construction, but we can figure out both.
“Wind power purchase agreement prices are at historical lows. After topping out above $70 per MegaWatt-hour (MWh) for PPAs executed in 2009, the national average levelized price of wind PPAs within the Berkeley Lab sample has dropped to below $20/MWh—though this nationwide average is admittedly focused on a sample of projects that largely hail from the lowest-priced Interior region of the country, where most of the new capacity built in recent years is located. Focusing only on the Interior region, the PPA price decline has been more modest, from around $57/MWh among contracts executed in 2009 to below $20/MWh in 2017 and 2018.”
Note that wind prices benefited from a substantially reduced production tax credit which had been ramping down. Without the PTC, wind prices are in the $30/MWh range.
“Most recent PPAs in our sample—including many outside of California and the Southwest—are priced below $40/MWh levelized (in real 2018 dollars), with many priced below $30/MWh and a few even priced below $20/MWh. Despite these low PPA prices, solar continues to face stiff competition from both wind and natural gas. Excluding the benefit of the 30% ITC, the median LCOE among operational PV projects in our sample stood at $53.8/MWh in 2018, and has followed PPA prices lower over time, suggesting a relatively competitive market for PPAs.”
So $30 per megawatt-hour (MWh) delivered for wind and $54 per MWh for solar delivered are conservative numbers. Those are USD, so we have to uplift those costs by 30% to $39/MWh for wind and $70/MWh for solar. Obviously, that variance in economics suggests that we would build more wind than solar at least initially, but the trend is for both wind and solar to scale down to about $20/MWh USD at utility scale by around 2030.
That would turn into total wholesale costs per year for all energy generated in Saskatchewan of about $4.6 billion for wind and $8.3 billion for solar electricity, or around $13 billion. Saskatchewan’s GDP is around $80 billion and energy is a huge part of the economy, so that seems about right.
These are conservative numbers, of course, because wind and solar continue to decline in cost, but let’s go with them.
We still have to build the capacity, of course.
Wind and solar are running about $1,500 and $1,300 per kWh respectively in Canada right now for capital costs. Assuming those costs with no improvements puts the cost of the wind generation capacity at around $55 billion and solar at around $88 billion, for a total of around $144 billion. That would likely be spread over 20–30 years of installation, so assuming 20 years puts the annual capital expenditure in the range of $7 billion, or less than 10% of GDP. Nice way to displace the GDP reductions as oil and gas go away, in my opinion.
But we still have to do storage.
Pumped storage hydro is fairly cheap as storage goes, running about $100/MWh. That puts the annual cost of the storage at around $5 billion. That’s projected to fall given the US DOE’s FAST program for accelerating delivery of pumped storage hydro and making it cheaper, but it’s still boring big tunnels through rock.
“According to the Lazard’s Levelized Cost Of Storage report, capital costs for pumped storage projects around the world range from about $1.5 million to $2.5 million per MW installed. The report also reveals that the cost of installing a grid-scale battery solution ranges from about $3.5 million to $7.5 million.”
That would put the 500 MW of delivery at a conservative $1.5 billion capital expenditure. Making reservoirs bigger is cheap. It’s the tunnel diameter and length, and equipment for the generation that’s expensive. But let’s assume that the 9 TWh of capacity makes those costs a lot bigger, about 10 times. That’s another $15 billion, and it’s spread over about 20 years again, so about $750 million per year.
So there we go. Making Saskatchewan an actually clean energy province in Canada would cost about $8 billion per year over 20 years, or about 10% of the GDP. It would nicely balance the fading of oil and gas as an industry for the duration. And it would eliminate the greenhouse gas emissions and pollution of oil and gas in the province, with all of the related benefits for human health.
Of course, Saskatchewan would definitely be increasing transmission east, west, and south and sharing the burden of generation and storage. It probably wouldn’t cost that much in the end. Saskatchewan isn’t an island, after all. And this is a necessarily reductive analysis. Saskatchewan also has untapped new hydroelectric potential and has decent deep geothermal reserves that could see 100 MW of capacity from that high-capacity factor resource come on line over the coming years as well.
Saskatchewan, in other words, could go from a Canadian laggard, a regressive province that along with Alberta is causing other provinces’ efforts to meet national emissions standards to fail, to a progressive province which leads the country in transforming to a modern energy economy. But it probably won’t, and will become even more of an outlier in Canada than it already is.
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