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Greenwashing pots and kettles, Part IV: RBC should finance competent singers in the choir

Last time we mentioned the grid-scale problems inherent in RBC’s investment into “green energy.” RBC’s very own “green” investment in Alberta, which includes the Rattlesnake Ridge wind farm near Medicine Hat, is a power purchase agreement (PPA) with the farm’s owner, Berkshire Hathaway Energy.

RBC, Shopify, and Bullfrog Power each agreed to buy 30 million kWh of Rattlesnake’s output annually. At 130 megawatts capacity, the farm’s expected output over a year would come to about 376 million kWh (assuming 33 percent capacity factor), so the PPAs just mentioned would account for about a quarter of Rattlesnake’s total annual output. BHE had expected to fully contract the remaining 286 million kWh prior to the farm’s entry into service in May 2022.

Why did BHE need PPAs for all of the farm’s expected output? Why couldn’t it just sell into the Alberta power market? Likely that would have been too risky. In reality, nobody needs the farm’s output. And this isn’t the U.S., where federal power production tax credits guarantee wind farm revenue regardless of market prices or demand conditions.

ENGOs like Ecojustice—whose complaint to the Canadian Competition Bureau was the subject of this series of articles—will counter that that’s what batteries are for: to eliminate the renewable energy problems of no inertia and weak correlation with demand. They’d be right if there were infinite storage capacity available to capture every superfluous wind/solar megawatt, and if there were always enough stored wind/solar energy available to meet whatever demand happens to be. But these conditions don’t exist now, never have, and never will.

Batteries: science fiction meets the Bad Singer

As mentioned, transmission interties connecting grids perform today the role that renewables proponents imagine batteries will perform tomorrow in concert with renewables output: they balance supply and demand. Their performance is according to a schedule, with pronounced recurring patterns through hours of the day, across days of the year. Quebec for example exports power to Ontario across its main intertie typically beginning around 6 a.m. The flow tends to increase each hour thereafter to about 8 p.m., after which it decreases and becomes an import from Ontario from midnight to 5 a.m. As you can see, this has been the general pattern most days of the year, since 2018. See the “Distribution of hourly flows to/from Ontario” figure.

Like Quebec, New York and Michigan are also important trading partners for Ontario, and, like Quebec, are hugely important balancers in the Ontario system (and their home systems as well). Their flows show a pattern similar to Quebec, only with less variance in the hourly distributions, and shifted to the right, i.e., they mostly receive exports from Ontario. Most hours of most days, New York and Michigan are supply sinks for Ontario.

These flows are influenced overwhelmingly by demand conditions in the respective grids. That is reflected in the regularity of the hourly patterns shown across the three interties. The balancing of renewables that interties perform today is a far less important factor; today renewable energy is pretty much noise in the signal, and interties’ smoothing of the renewables component of net demand is analogous to a choirmaster using good strong singers, who are capable of hitting the right notes at the right time, to drown the bad ones out.

But if RE penetrates grids to the degree its proponents hope, the “choir” will begin to sound more discordant, and interties’ real time voice “correction” will be a major challenge. The “Ontario net electrical demand” figure shows the effect of RE penetration at progressively increasing levels on net demand on September 27 2023. As you can see, RE starts strongly influencing the shape of the curve at between 2 and 3 times its current level, i.e. at over 17,000 MW wind plus solar capacity.

In the music analogy, batteries would voice-modulate the bad singers into harmony and timing with the rest of the choir, in real time. You might wonder why any choirmaster would allow such a singer into his/her choir—now they have to hire a sound technician to artificially modulate and time the bad voice, then project it out to the audience, who hopefully won’t notice the robotic note and rhythm transitions.

This may sound ridiculous, but it’s pretty much what we’re doing by promoting RE and batteries. In the minds of those who support this approach, the combination of RE output with battery storage/discharge will take the “Actual-times-3” curve and turn it back into something resembling the “Actual” curve. For that to happen, RE output has to become regular. But it is not regular. Expecting this to work is like expecting to deal with your debts by putting them on a credit card. Except in this case, we’re also paying for the sound technicians and their real-time voice modulating equipment with a credit card. Batteries cannot solve the problem of intermittent RE output!

Inertia is not just another dimension of energy security on electricity grids. It is by far the most important dimension. Without inertia, the grid doesn’t work

Make no mistake: when net demand is fundamentally changed, the roles of the interties will be different. New York and Michigan function today as sinks of Ontario power; will they continue to be our sinks when our power is of lower quality?

Intertia, storage, and energy security

The trouble is, importers of electric power into RE-heavy systems will want inertia-rich power. Inertia is not just another dimension of energy security. It is by far the most important dimension. Without it, the grid doesn’t work. So electricity importers want inertia-rich power. If the exporting system is also RE-heavy, then importing inertia-poor power won’t solve the importer’s problem, it’ll exacerbate it.

The same applies to Alberta. RBC claims its PPA with Berkshire and Rattlesnake Ridge will help it achieve its goal to “source 100% of our electricity from renewable and non-emitting sources by 2025”; see RBC’s Climate Report 2022. It won’t.

Energy laundering

This might all sound like inside baseball. But whether we know it or not, we all are playing on the same field, with the same rules. That includes RBC, BHE, and the other PPA partners. “Laundering” low quality RE output with the output from the rest of the grid is okay, system stability wise, at current levels—there’s enough synchronous power, i.e., power with inertia, on most grids that they can absorb RE at current levels.

RBC’s “energy laundering,” via its involvement in Alberta wind power, cannot increase past a certain point. Alberta premier Smith on CBC’s Power & Politics in late November, alluded to episodes that have already occurred where there were grid stability issues. She didn’t say that was because of wind, but that was the reason. RBC claims that its PPA with Berkshire will serve to spur growth in renewables. As we’ve seen, there comes a point where that’s actually harmful.

Learn what really powers your grid

Ignorance of the grids in which they are financially involved is unfortunately typical for organizations that use RE to burnish their green bona fides. All of them participate, knowingly or not, in schemes involving wind energy sold into a grid where its lack of inertia and weak correlation with demand—characteristics that rule it out as a primary source of supply—are “laundered” out so as to make wind energy indistinguishable from the supply that does have inertia and that does correlate very strongly with demand, and without which the grid literally cannot work. In Alberta, those are the sources/sinks listed in green on the “Alberta grid net demand” figure, which we repeat from previous articles below.

And those sources turn in their minute-by-minute virtuoso performance atop 7,000 MW of bedrock baseload generation that, again unlike wind, collectively runs flat out, 24/7. This applies also to imports from other grids—their contribution also consists of electricity stabilized by the rotational inertia of hundreds or thousands of spinning machines.

Producing flat power output 24/7 is itself an amazing feat of virtuosity that most of us simply take for granted and don’t appreciate. In Alberta this feat is performed every minute by about 35 generators, all gas-fired, all generating at between 50 and 80 percent capacity.

Wind and solar depend utterly on a mix of baseload and fast-reacting synchronous supply. The grid can function perfectly well with no solar and wind. It cannot function at all with only solar and wind. RBC signed a PPA with the wrong source of “supply.”

PPA, the proper way

So what’s the right source of supply? Any source that can provide the inertia-rich baseload layer that simply outputs the power “assigned” to it by the grid operator, 24/7, for days (ideally hundreds of days) at a time. And since the whole idea of RBC’s PPA with Rattlesnake Ridge is that that farm is claimed to provide non-emitting power, the ideal baseload supplier outputs steady bulk non-emitting power 24/7.

There are only two sources on the planet capable of this. Those are large hydro, and nuclear. For all practical purposes, all large hydro in Canada is already being used. So to decarbonize fossil-fired baseload in Canada, nuclear is literally the only option.

It is clear what RBC should do. It should contract with nuclear power providers. In Canada, those are exactly three companies: Ontario Power Generation, Bruce Power, and New Brunswick Power.

If PPAs are not possible with these companies’ current generation, then RBC—Canada’s biggest private sector financial institution—should exercise financial creativity and figure out ways to purchase non-emitting bulk electrical output. Here is one off the top of our head:

“Buy down” Scope 3 emissions by purchasing baseload power at the municipal level, for processes fungible with fossil-fired equipment.

  1. An obvious example is electric domestic hot water (DHW). Power demand for residential and commercial DHW in Toronto alone amounts to an estimated 1,400 MW. Electrifying it, either through resistance or heat pump, would provably and demonstrably reduce carbon emissions by the amount electrified.
  2. Such a move would add to the system operator’s repertoire of “stored” energy for grid frequency recovery from deviations below or above 60 Hz. Because DHW can go for meaningful periods without recovery heat, the power for that heat could in the event of a deviation below 60 Hz be turned off to allow the grid to “speed up” to get back to 60. Similarly with an unexpected increase in frequency: participating DHW could be turned on to help slow the grid down to 60.
  3. Increasing the customers in such a program would require 1,400 MW of reliable baseload power; that’s 2 CANDU 6 units. Financing new construction would provide PPA opportunities, which, properly structured, could interest prospective major buyers like RBC. This would require an amendment to the Power Corporations Act in Ontario, which prohibits financing new generation from the current rate base. Given that that prohibition has been waived so many times for other types of generation, we see this as reasonable, and doable.

Asking RBC to abandon long- and fondly-held misconceptions about what constitutes clean energy, and to embrace nuclear energy, which is a pariah in the environmental movement, might sound a bit preposterous. But the last decade in Ontario provincial energy policy proves there’s actually very little risk associated with such a move. The bank could easily make the transition, with little meaningful blowback from the green movement. And it would actually help the environment, as opposed to pretend-helping (while stealth-perpetuating fossil predominance in non-nuclear grids like Alberta’s).

We’ll explain how and why in the next post. Stay tuned.

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