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Greenwashing pots and kettles, Part III: how the bankers got it wrong

Mollifying Ecojustice and powering industry

We left off last time critiquing RBC’s foray into Alberta wind power, and speculated that the purpose of this move was to pre-empt the accusation that it (RBC) was greenwashing its underwriting of oilsands projects. RBC’s accuser is Ecojustice, an environmental non-governmental organization (ENGO) that used to be a Sierra Club chapter. Ecojustice says RBC’s greenwash amounts to false advertising, and complained to the Competition Bureau of Canada. In September 2022, the Bureau opened an investigation.

RBC is greenwashing, but that’s beside the point. The point is, the bank thought that buying into wind would mollify Ecojustice, who claim that wind will power the zero-carbon economy of the future. In effect, this was the bank saying “yes, we may invest in oil but we also invest in wind,” the implication being wind displaces oil. Unfortunately, no dataset in the world supports the claim that wind can power a grid, let alone displace oil. This is a fantasy, and RBC, by investing in wind, is simply colluding in perpetuating the fantasy by lending its credibility as a major financial institution. We said that that was a mistake. We’ll now explain why.

As we mentioned, not a single one of RBC’s oil sands clients has incorporated wind power into their own physical operations, any more than RBC itself incorporates wind into powering the data centres that enable its online trading platforms and credit/debit card networks. The latter require flat 24/7 output, 365 days a year, 366 in leap years. Wind does not provide that; see the “Alberta grid net demand” figure from the previous post, repeated here. (Solar is a “mode zero” producer, meaning its most common output value is zero, which in a critically thinking world would rule it out immediately.)

Moreover, the most dramatic role wind could conceivably play is by producing electricity for bulk process heat, the primary energy requirement in the oil sands. The only role wind could play in decarbonizing process heat is by replacing fossil-fired heat with electrical heat. But industrial heat for oil sands processing is, like electrical demand for data centres, also a 24/7 requirement. So wind is also unsuited for this kind of industrial operation.

In fact, RBC does not even attempt to portray its Alberta wind investment as a way to reduce carbon emissions at either its oil sands clients’ operations or its own core operations. Or anybody else’s.

In light of this, it’s reasonable to ask: what exactly is wind in Alberta for? The answer is, it is for sale into the provincial electricity grid and thence to buyers of renewable energy credits. At the grid level, inverter-based (i.e., non-synchronous) wind output mixes in with the output from the synchronous sources inside and outside of Alberta that make the grid viable. Because wind output, in addition to lacking the inertia that contributes to maintaining grid frequency at or very near 60 Hertz, shows only very weak correlation with demand (see the intertie figure), a subset of these synchronous sources (and sinks) performs the double duty of matching supply with demand while wind is off doing its own thing.

The most important by far of these sources and sinks are the interties that connect Alberta’s grid to neighboring grids in British Columbia and Montana (flows across the Saskatchewan intertie are much smaller). When renewable energy advocates call for energy storage, their implicit assumption is that storage—mostly chemical batteries—will do what these interties do: balance supply so that minute by minute it matches nearly exactly with demand.

The trouble is, batteries cannot perform that function. Look at the intertie figure. Note the “regularity” in export/import distributions at each of the three interties through the 40,320 minutes depicted. That regularity reflects the regularity in demand conditions in Alberta and its neighboring grids.

But wind output, we must continually emphasize, is not regular. For batteries to mimic the flows across interties, they would need to discharge, and be recharged, with the same regularity. Batteries either receive or discharge power. Under a 100-percent-RE scenario, there are guaranteed to be frequent periods where any of the following is true:

  1. Demand is high, and wind/solar are low, but batteries are depleted. Demand is met, but with sources and sinks other than wind, solar, and/or batteries.
  2. Demand is low, wind and/or solar output is high, but batteries are fully charged and therefore cannot receive wind or solar power. “Excess” wind and/or solar must be curtailed or sent to a sink of some sort, i.e., exported or wasted.
  3. Demand is low, wind and/or solar output is high, and batteries are not fully charged. However, batteries cannot receive wind or solar power at the rate at which it is being produced. “Excess” wind and/or solar must be curtailed or sent to a sink of some sort, i.e., exported or wasted.
  4. Demand is high, wind and/or solar output is high, but batteries are depleted. Wind/solar output goes to meet demand.

In each of these cases, batteries play no role in “balancing” the grid. They are temporarily “stranded” assets, the cost of which could run into multiples of billions of dollars. Meanwhile, the problem they are supposed to solve—excess or absent wind and solar power at inconvenient times—remains unaddressed. It falls to conventional—i.e., synchronous—sources and sinks inside and outside Alberta to ensure the grid doesn’t collapse.

With current levels of wind penetration into the grid, this is not a serious issue. Wind’s lack of inertia and its weak correlation with demand is smoothed over by sources that do contribute inertia, and that are engineered to correlate with demand. As mentioned, these are both inside and outside Alberta. The ones that are outside come with their own grids’ inertia, provided by millions of tons of rotating metal, synced to the same 60 Hz waveform as Alberta and neighboring grids.

Two facts emerge from this.

  1. Wind at current penetration levels in most jurisdictions is not an issue from a system stability point of view. However, because it requires “smoothing” resources that now must perform the double duty of balancing supply with not just demand but wind as well, it adds cost to grid operation.
  2. Wind cannot become a primary source of supply.

Two facts emerge from wind’s lack of inertia and weak correlation with demand. First, wind at its current penetration level is not an issue for system stability. However, because it requires “smoothing” resources that now must perform the double duty of balancing supply with not just demand but wind as well, it adds cost to grid operation. And second, Wind cannot become a primary source of supply.

Wind’s inability to be a primary source of supply means that wind actually requires sources that can predominate on the grid. If those sources are fossil-fired, as most are in Alberta, then the best that wind can do emissions-wise is to marginally lower air emissions relative to the emissions level if there were no wind in the system.

All’s not lost for RBC

These facts ought to have given RBC pause as it developed its response to Ecojustice’s pending complaint to the Competition Bureau. As it turned out, the bank opted for power purchase agreements (PPAs) with wind developers in in Alberta. This amounts to a strategy of mollifying a very narrow and very ill informed segment of public opinion.

This strategy may or may not “work”: supporting RE may or may not win RBC the approval of Ecojustice and fellow ENGOs. Either way, the kicker is—so long as they continue to push for “100 percent renewables” their approval is utterly immaterial to RBC’s health as a financial institution, or its reputation as an ethical company. On a non-nuclear grid, the push for 100-percent-RE is literally pro–fossil fuel. If RBC underwrites fossil projects in Alberta, then pushing for 100-percent-renewables could be construed as seeking to guarantee fossil projects’ long-term viability.

On a non-nuclear grid, the push for 100-percent-renewables is literally pro–fossil fuel. If RBC underwrites fossil projects in Alberta, then pushing for 100-percent-renewables could be construed as seeking to guarantee fossil projects’ long-term viability

The bank should revisit this strategy. This would not necessarily involve abandoning PPAs with non-emitting generators. There are non-emitting generators with whom RBC could productively pursue PPAs that offer totally legitimate and verifiable clean air bragging rights. We’ll explain why and how in the next post. Stay tuned.

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