HARI SUTHAN Published July 11, 2021
Hari Suthan is the chief strategic growth and policy officer at Opus One Solutions.
For those of us who have spent many years advocating for a cleaner energy future, the past few months and weeks have been intensely satisfying. The International Energy Agency has come out against new fossil-fuel development. As the pandemic raged, the federal government issued a budget calling climate change “the challenge of our times.” The Supreme Court has declared federal carbon pricing constitutional. Investors are pushing Big Oil to do better on emissions. Across the board, what used to be a “radical” position on clean energy is becoming mainstream.
Everyone is targeting net zero these days, which is great. But now that the question of “if” is decided, we must turn to the “how.” And here, we still have urgent work to do. We can’t reach our shiny new goals with Canada’s old top-down energy distribution model; we have to open up the business of energy distribution so the market can help us decarbonize.
Providing power at scale for home and business users has traditionally been the domain of utilities, which create power from renewable and non-renewable inputs, then transmit that power from a generating facility, across the grid, to users. The job of converting carbon-emitting sources to clean energy transmission will be massive – and extremely expensive. Politicians and regulators will be tempted to dictate preferred technologies, which will be politically fraught. Does anyone really believe one solution fits all?
We need to free Canadian utilities from the constraints that bind them to dirty energy, old technologies and fixed rates. They shouldn’t be mandated to spend billions doing it exactly as proscribed. They should be liberated to facilitate decarbonization through any clean energy source consumers want to pursue. Utilities should have the ability to augment their business models but continue to provide reliable, resilient and cost-effective service to consumers.
Instead of being compensated for generation and flowing electrons to the end user, utilities should be incentivized to provide a reliable grid that distributes clean energy from a variety of sources. Generation will still be part of it, realistically, but the important thing is to facilitate a dynamic system. We need to figure out how to make our grid function more like highway infrastructure – make sure it’s reliable, set the guidelines, but don’t dictate which vehicles we drive or how we use the roads.
If utilities can do that, we can use the market to help sort out which technologies help us decarbonize most efficiently. Does an EV make sense for you? The grid should be capable of charging your battery while power is cheapest, then buying back the excess when you want to sell it back. Want to cut your company’s bills with a wind turbine or solar array? The grid should allow for the same kind of two-way market.
This isn’t about doing away with oversight or regulation. It’s about rethinking the way utilities are regulated to account for the goals we want to accomplish.
Take solar generation. It’s a great example of how the constraints on our utilities have prevented us from leaning in on decarbonization – not just at the household level, but writ large.
Canada could be a world leader in solar implementation. The sun is a much more reliable energy source than wind. Storage has doubled in efficiency and prices have come down 90 per cent in the past five years. Unlike wind turbines, solar can go practically anywhere without controversy. We have plenty of space for it.
It’s great to see households installing solar, but roof by roof is the slow road to decarbonization, and it shows: In 2019, we were 19th in the world in installed solar capacity – at about 3,000 megawatts, roughly 5 per cent of what the United States had installed.
The problem here is that in some parts of Canada, local distribution utilities are prevented from facilitating the wider use of proven clean technology. We give these utilities fixed-rate monopolies, supposedly to protect them and consumers. But the regulatory bind this entails allows them little ability to innovate. Local utilities currently aren’t allowed to be in the business of solar generation, which makes them an underused asset in the effort to meet Canada’s climate goals.
The fastest way to ramp up solar would be to unleash local utilities to sign long-term power purchase agreements with big power-hogging customers such as Google and Amazon. That way, we could start tripling solar use every year, instead of boosting it 2.5 per cent over five years, as Ontario just has.
Lifting solar, storage and electric vehicle constraints on utilities is the kind of thinking we need to do, fast, to meet our climate goals. Now that we have the broadest consensus ever that something needs doing, it’s time to figure out how.
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