In an impromptu exchange with an audience member at a conference in Calgary eight months ago, Alberta Premier Danielle Smith threw cold water over the idea of industrial-sized batteries on the province’s electricity grid, saying the technology was too expensive and it was “fantasy thinking” to believe it could be deployed at scale.
In prepared remarks at a conference in Calgary on Wednesday, her government’s utilities minister struck a different tone.
“These are exciting times and there is a lot going on in this space,” Nathan Neudorf told a gathering of more than 150 people in energy storage and related industries.
“With other provinces within Canada continuing to allow more storage onto their grids, it is important that we in Alberta remind investors why this is the place to be. Our market is continuing to evolve and we want people to know that this sector is open for business.”
Quite the about-face in less than a year’s time. But such is the nature of the energy-storage industry: Things happen quickly.
“I think the lesson here is it’s a relatively new technology, and we need to tell our story,” said Vittoria Bellissimo, president and CEO of the Canadian Renewable Energy Association, which hosted the energy-storage conference.
“We have been working hard to try to educate the government on the value it brings.”
Other jurisdictions have already made big bets on big batteries, she noted.
Ontario just announced plans to boost its energy-storage capacity to nearly 3,000 megawatts (MW). In the U.S., meanwhile, Texas is expected to add 6,500 MW this year alone, bringing its total capacity to roughly 10,000 MW — a milestone California has already surpassed.
Alberta’s energy storage, by contrast, is miniscule. But it, too, has been growing rapidly.
‘Imagine what we can accomplish’
Three new battery-storage facilities have been connected to Alberta’s grid since Smith made her comments last October, boosting the total storage capacity by 60 MW to a total of 190 MW.
Those batteries also helped keep the lights on during the grid alert that struck Alberta amid the brutal cold snap in January — something Neudorf acknowledged Wednesday.
“That made a huge, positive difference during that grid alert,” he told the crowd at the conference.
“Imagine what we can accomplish with even more energy storage at our disposal.”
Neudorf said an additional 168 MW of energy storage is under construction in Alberta, with 435 MW more that has regulatory approval. Beyond that, there are 5,688 MW in proposed projects from companies that “have expressed interest in coming to Alberta’s market.”
“This is a sector that is wanting to grow,” Neudorf said. “And we are having to make the changes to help facilitate that growth in a structured way.”
Those changes include legislation that specifically recognizes energy storage as a component of the province’s electricity market, and a looming redesign of the market, itself. While it will introduce uncertainty in the short term, Neudorf believes the revised market will modernize Alberta’s electricity system to reflect the needs of the future.
He’s given the Alberta Electric System Operator (AESO) until the fall to come up with proposed new market rules aimed at improving grid stability and electricity affordability, but the changes wouldn’t take effect until 2027.
An AESO representative told the conference Wednesday that the redesign should provide greater opportunities for energy storage facilities to make money, including a day-ahead market, a higher price cap on wholesale power coupled with the introduction of negative pricing during periods of energy surplus, and the opportunity to provide new types of ancillary services to the grid, which help maintain aspects like the voltage and frequency of electricity.
Not everyone is so sure the changes will help more than they hurt, however.
‘Slightly negative’
Elias Soto, an electricity-market analyst with Similan Consulting, told the conference that Alberta’s redesigned electricity market would likely have a “slightly negative” effect on the energy-storage industry.
In his estimation, any benefits of the new market mechanisms wouldn’t outweigh the years of uncertainty the redesign will create.
Even if the new rules are put in place on schedule in 2027, he said some investors will likely take “a wait-and-see approach” before pulling the trigger on major projects in Alberta.
“Investors need to see a couple of years of pricing outcomes to really calibrate what they can expect,” he said.
AESO has said it aims to leave it to the market to meet Alberta’s grid-stability and decarbonization goals but, if that fails, it hasn’t ruled out using power-purchasing contracts several years from now in order to procure the types of generation or storage resources required.
Contracts were a key part of developing energy storage in Australia, which now has roughly 2,000 MW of capacity, said Benoit Pinot de Villechenon, a director with Neoen, an international producer of renewable energy and energy storage.
He told the conference that Australia’s day-ahead market with negative pricing is similar to what Alberta is proposing to create and, even then, it’s hard for energy-storage projects to be viable through energy arbitrage and providing ancillary services alone. Australia helped get the industry going through long-term, power-purchasing contracts, he said.
For his part, Neudorf envisions a smaller role for energy-storage in Alberta than in some other jurisdictions — and one driven primarily by the industry, not the government.
“I would suggest that we’re not like California or Australia, neither in climate nor population density and size, so we probably won’t be pursuing storage to the degree they are, but it still plays an important role in our grid,” he said in an interview.
Neudorf said “good planning” between government and the industry can help foster investment in energy storage through Alberta’s market system. He hopes it won’t be necessary for the government or AESO to enter into purchase agreements in the future but wouldn’t rule it out.
“If it’s a tool in the toolbox, we want to make sure that it’s available,” he said. “Our preference would be to work with industry and have industry provide those answers.”