Natural Resources Committee on June 13th, 2024

[Daniel Jurijew]

It's not economic today, but we are looking. We will need to look at other options in any event because CCS, small modular reactors, hydrogen and geothermal all have a role. They all provide that zero-emitting, dispatchable power that markets need.

We think there's still a pathway to CCS in the future, but we do need to advance other technologies as well.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to our second round of questioning. We will begin with Mr. Falk for five minutes.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair, and thank you to all of our witnesses who have provided testimony for us here today.

Ms. Hickson, I'd like to ask you some questions about geothermal.

I actually am a fan of geothermal. I have several buildings with geothermal in them. When it works, it works well. When it doesn't, it's expensive.

When it comes to electricity generation with geothermal, what does it cost per kilowatt hour compared to other forms of electrical generation?

[Catherine Hickson]

The cost for electrical generation depends on where you are. In Canada it is currently quite high, simply because of the development costs, but if we go globally and look at other resources, we see it can be very low, in the $40 to $50 per megawatt-hour range. In the United States, their stated goal for the investment they are making in engineered geothermal systems is to create power at $45 per megawatt-hour.

[Ted Falk, Conservative, Provencher, MB]

How does that compare to hydroelectricity or gas turbine electricity?

[Catherine Hickson]

This is higher, certainly, than gas, but what we bring to the table is the fact that....

I don't want to argue that geothermal is better than natural gas. What I want to point out is that if we're producing power from geothermal or using it for thermal energy, it can actually offset that natural gas. If that natural gas can be sold much more profitably offshore—hopefully, with the new pipelines that are going to get it there—it can help other countries actually reduce their carbon footprints.

As an Albertan, I think geothermal has a significant role to play as an offset in essentially liberating that natural gas to go to other markets, where it can be used to reduce their greenhouse gas production.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

Is it feasible, in today's environment, to actually construct a geothermal electricity generating plant in Canada? What are the roadblocks?

[Catherine Hickson]

We're talking about conventional geothermal. The roadblocks are financial: Convincing capital to be deployed within geothermal is a huge problem.

The federal government has been deploying capital into projects. There are three electrical generation projects supported by the emerging renewable energy program. Those are DEEP in Saskatchewan; Alberta No. 1 in Alberta—I happen to be the CEO of that one—and a project called Tu Deh-Kah in British Columbia.

However, on the question about the carbon tax, in Alberta No. 1, our financial model is built on three pillars: One of them is carbon taxes, one is the sale of thermal energy and the other is the sale of electricity. Currently we have to price that sale of thermal energy at a discount to natural gas. This makes geothermal very difficult in terms of competition with natural gas and other forms of electrical generation.

If we're talking about this new generation of advanced and engineered geothermal systems, these are, right now, very costly, but I want to focus on conventional geothermal, of which—

[Ted Falk, Conservative, Provencher, MB]

I have limited time here, Ms. Hickson, so I have to move on, because I want to ask Mr. Balaban a question as well.

Mr. Balaban, you're quite involved in setting up green energy solutions. Can you tell me your experience with connecting to the grid? Does it work? Are there any obstacles in doing that? Do we have capacity for the extra generation that you can provide?

[Dan Balaban]

That's a good question.

Connecting to the grid is a very complicated process. I can speak from my experience of developing projects in Alberta. It's a well-regulated process, but it takes several years to get through. It's very costly.

However, what we are starting to see now in Alberta—it's not just here; it's in many places across Canada and around the world, in fact—are grid constraints: The grid can't keep up with all of the new power generation that is requested. That is a challenge facing the growth of the industry.

[The Chair, Liberal, George Chahal]

Thank you.

We now go to Ms. Lapointe for five minutes.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Chair. My question is to Mr. Balaban.

Your organization developed several solar power projects. You had been working on the MidNite Solar project, but it's my understanding that you have since sold the project. I have some questions surrounding the technology.

We're talking about a project with a battery storage component that is capable of providing power to the grid at peak times and hours, even during periods of no sunlight. At times this committee has heard critics say that solar power is unreliable and is not well suited for Canada's cold climate. In your opinion, will battery storage projects of this magnitude help to make solar power better suited to our climate?

[Dan Balaban]

First, I'd respond that solar is very reliable and very well suited for our northern climate. The challenge with solar is that it only produces when the sun shines—but very reliably so during those conditions.

What we need battery storage for is to extend the operating hours for renewables projects to produce stored energy when the sun doesn't shine, for example. There are different types of storage technologies that are vying to help solve the market issue that exists. Battery storage is one of them.

Batteries typically have a relatively short duration; they can store energy economically for two to four hours. There are other technologies that are not yet as mature that are trying to provide storage solutions for longer, for eight to 12 hours or possibly even longer.

However, I think it's really important to look at the energy system as a mix. There is a mix of solutions, a mix of power generation technologies that we require. There is no one solution that alone is going to meet all our needs, but certainly the combination of renewables—which are primarily solar and wind today—with battery storage is something that is looking very promising, assuming that the regulatory framework is in place to accommodate it.

[Viviane LaPointe, Liberal, Sudbury, ON]

In your opinion, what are the main challenges or obstacles that Greengate faces in scaling up wind and solar power capacity in Canada? What do you need to see from the different levels of government to overcome these challenges?

[Dan Balaban]

I'd say that, as of late, the biggest challenge our industry is facing is the extreme polarization around energy that I referred to in my opening comments. What that fight is doing is creating a lot of regulatory and market uncertainty at the moment in Alberta, and that has significantly slowed down investments.

This is because for investors to make a significant long-term investment in something like a renewables project, which typically has an operating life of 30 or more years, there needs to be long-term certainty around what the revenue stream will look like. While that is up in the air, it's difficult to make those long-term investment decisions.

I think it's really trying to move beyond the polarization on this issue to work on solutions. Solutions that are very important are some of the federal incentives that have been talked about, which I mentioned—the investment tax credits and some of the other programs—looking at collaboration around a national grid, and connecting more of our provinces. Alberta, for example, is relatively isolated compared to its neighbours, and I think that's a problem that exists across the country. There is no reason that we shouldn't be connecting the western provinces so that hydro in B.C. and Manitoba, for example, could be used to supply and clean up the grids in Alberta and Saskatchewan, which typically have relied on fossil fuels for generation. We just need certainty to the extent that we can have it, and we need to try to work together collaboratively.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

I have about one minute left, so I'm going to ask you a question very quickly.

Just so that we really understand what's on the line here when you talk about that polarization, can you speak to the socio-economic benefits of Greengate's renewable energy projects, such as job creation, community engagement and economic development?

[The Chair, Liberal, George Chahal]

Mr. Balaban, I'll ask you to be very quick, because we are out of time. You have 10 seconds, please.

[Dan Balaban]

There were over 1,000 local jobs created during construction for a project like Travers, with millions of dollars per year in municipal tax revenues and a clean source of energy for future generations.

[The Chair, Liberal, George Chahal]

Thank you.

Mr. Simard, you have two and a half minutes. The floor is yours.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Since I'm a gentleman, I let Mr. Angus ask a question in my stead earlier, out of the goodness of my own heart.

However, Ms. Wong and Mr. Jurijew from Capital Power, I still have questions about the fact that you abandoned the $2.4 billion carbon capture project. You talked earlier about the various power plants you operate. Are they mainly natural gas plants?

[May Wong]

In terms of the generation mix, we have natural gas and solar renewables as well in our portfolio.

In terms of the CCS project, while we have discontinued the Genesee CCS project due to economic reasons, we continue to look at other opportunities to deploy not just CCS but other decarbonization technologies in clean power, such as SMRs.

[Mario Simard, Bloc, Jonquière, QC]

Regarding your various facilities, do you have an idea of cost per kilowatt hour? To the extent possible, I would like you to provide the committee with the cost per kilowatt hour for a wind project compared to the cost per kilowatt hour for a natural gas project with a carbon capture strategy. Do you think you could provide that information to the committee?

[May Wong]

I can speak to that at a high level.

The cost of wind and solar renewables, on a energy basis before firming, is lower than the cost of natural gas generation. However, when factoring in the holistic costs of delivering that energy on a firm basis, in order to be dispatchable and provided at all hours, there's a significant increase in terms of firming up dispatchable resources like solar and natural gas.

[Mario Simard, Bloc, Jonquière, QC]

I completely understand that you can't reveal company secrets. However, it could be very helpful if you could provide the committee with a document showing a breakdown of the different costs. Thank you.