Teaming on energy could save millions9/11/2012
CHARLOTTETOWN – “Hundreds of millions of dollars” in savings could be found if the four Atlantic provinces worked together to deliver energy across the region, according to a series of new studies.
The findings by the Atlantic energy gateway initiative – now three years in the making – show that savings could be found if the province’s leaned on each other to supply their individual energy demand.
Generation costs alone over the course of a 25-year period could be cut by roughly $900 million for the four provinces combined under a collaborative approach.
The savings largely come through using the cheapest power available in the region at any given time.
To fill demand quickly during peak periods, the provinces are currently restricted to their own resources, which could prove to be a more expensive option. On a regional basis, a broader portfolio of energy options would mean supplying demand with less expensive power, according to the report.
An added $8 million in savings could also be found annually if the balancing of electricity demand and supply was done throughout Atlantic Canada as a whole.
Currently, New Brunswick, northern Maine and Prince Edward Island are balanced together, but Nova Scotia and Newfoundland and Labrador are each balanced on their own.
The results of the studies were released in Charlottetown on Monday as Canada’s energy and mining ministers gather for a series of meetings.
The proposed savings hinge primarily on the completion of the Muskrat Falls Generating Facility and the Maritime transmission link expected to be in place by the end of 2017.
The Lower Churchill project includes an underwater power connection from Newfoundland to Nova Scotia that will essentially complete the connection of the electricity systems of all four Atlantic provinces for the first time.
“As a result, we need to know what potential benefits that will create for our region,” said Interim Energy Minister Craig Leonard.
While the studies go so far as to look at a single system operator for Atlantic Canada’s electrical grid, the degree of collaboration that the provinces are willing to undertake remains unclear.
“Trying to get a regional system operation in place is certainly going to be a monumental task,” Leonard said. “A more realistic first step is to simply increase collaboration between system operators in the different areas.”
Prince Edward Island Finance and Energy Minister Wes Sheridan said the idea of a single system operator is worth pursuing if significant savings can be found.
“We’re talking about hundreds of millions of dollars in savings, so we’re going to fully investigate what that would look like,” Sheridan said. “The Atlantic region is going to seize every available opportunity to work together to access cleaner supplies of energy, and today’s announcement is a big step in making that a reality.”
The four provinces have given themselves 60 days to respond with what actions they will take to implement proposals identified in the reports.
“We have all agreed that we can’t lose the momentum,” Sheridan said.
The federal government announced a $4-million funding commitment in 2009 for a regional initiative – the Atlantic energy gateway – designed to develop energy supplies and markets.
It aimed to identify Atlantic Canada’s hydro, nuclear, wind, tidal and biomass energy potential as key to regional economic development, increasing energy exports and lowering the region’s carbon footprint.
A committee was then struck between the four provinces, the Atlantic Canada Opportunities Agency, Natural Resources Canada and the regional utilities.
Their task was multi-fold: to assess domestic and U.S. markets for energy, largely in the northeastern United States; develop an inventory of existing and proposed clean and green energy projects; identify international best practices in energy; and examine barriers to development and growth in the sector.
“The electricity systems in each of our provinces were designed to be self-sufficient, both in terms of generation and transmissions,” said Christopher Huskilson, president and CEO of Emera Inc., Nova Scotia’s energy utility. “While there are interconnections around the Maritimes, as a region we are generally isolated electrically, and this isolation has limited our options and choices.
“It has certainly meant some duplication and overlap of systems.”
Huskilson said greater collaboration will help to stabilize energy rates and decrease the region’s “susceptibility” to price fluctuation from factors outside the region.
The reports also identify infrastructure upgrades of more than $560 million needed between New Brunswick and Prince Edward Island and New Brunswick and Nova Scotia to fully realize the potential of a regional energy grid.
The report states that more than $310 million in savings will still be found with the upgrades in place.
John Herron, president of the Atlantic Centre for Energy, said the end result of regional collaboration appears to be the optimization of each province’s energy infrastructure.
“It’s very progressive initiative when you get four provinces and four utilities working together to see what the challenges and opportunities in the region with respect to energy might be,” he said. “The early findings would indicate that we are far better off having more co-operation, more energy interdependence, given the size and scale of our region.
“The object really is to optimize the existing energy assets we have and to optimize the new and potential energy assets that we might have at all.