Locally produced renewable energy is the right call

Opinion

At the start of Premier Wab Kinew’s government’s mandate, it signalled it would work to get Manitoba to a net-zero electricity grid by 2035. With 99 per cent of the province’s electricity already emissions-free, it is a small, but important gap to bridge.

It’s also strategic, especially as energy trade is increasingly disrupted by tariffs, conflicts and price spikes.

Unfortunately, Manitoba Hydro is entertaining a move in the opposite direction, with a proposal for two new fuel-combustion generating units estimated to cost upwards of $1.4 billion. This undermines Manitoba’s path to net zero and puts its affordable energy advantage at risk.

In Hydro’s recent application to the Public Utilities Board, it warns the province needs to generate more electricity on-demand to prevent winter peak capacity shortages that could arise as early as 2029.

The Crown corporation has asked the board for an expedited process that would allow for advanced planning to begin for two generating units, each capable of providing 250 MW. The application is clear that no decisions have been made on fuel source for the generating stations. However, the minister of finance has stated that natural gas, biomethane gas or hydrogen are all being explored as fuel options. No details are provided on how fuel choice would impact the overall project cost or timeline.

Manitoba’s Affordable Energy Plan has touted the development of an additional 600 MW of electricity through Indigenous-owned utility-scale wind projects, and another 200 MW through refurbishment of existing hydroelectric generating stations — two very positive commitments to bolster Manitoba’s clean energy capacity. But it’s not clear yet when these projects will get going.

As Manitobans anticipate the end of the federal consumer carbon tax, we shouldn’t become complacent about the need to curb the use of fossil fuel-based energy. There are not only environmental advantages to renewable energy solutions, but also advantages for efficiency, affordability and energy security.

Fossil fuel price volatility is expected to continue and worsen as climate-related disruptions impact infrastructure, supply and demand. Additionally, market disruptions (including tariffs) and potential imbalances in fossil fuel supply and demand could increase price volatility. Ongoing geopolitical tensions and lower levels of global co-operation also increase the risk of price shocks.

Expanding natural gas electricity generation increases the entire grid’s exposure to volatile energy sources and risks higher costs for electricity consumers in the long run.

Despite the hype, natural gas-fired power generation is losing its lustre. A 2021 study of electricity generation facilities in the EU, United Kingdom and United States found that due to the volatility of fuel prices and other factors, the economics of gas-fired power generation are growing more fragile. Roughly 31 per cent of U.S. and 22 per cent of European gas-fired power generation facilities are already estimated to be unprofitable, while others are facing increasing risk of becoming stranded assets. As renewables become cheaper and fossil fuels become riskier, Manitoba Hydro should take stock of its plans and assets for the future.

Globally, the levelized cost of electricity has dropped 89 per cent for solar and 69 per cent for onshore wind over the past decade. These costs are projected to continue trending downward and fall nearly 60 per cent below the cost of natural gas production by 2030.

In 2023, more than 95 per cent of new utility-scale solar installations and new onshore wind capacity had generation costs lower than new natural gas plants.

Once built and connected to the grid, renewable energy costs do not fluctuate based on global fuel markets. Long-term price stability can be locked in through power purchase agreements that guarantee a price for renewables decades into the future.

Renewables can also address peak demand issues through energy storage technologies that improve the flexibility of the grid. The costs of utility-scale lithium-ion batteries are falling rapidly alongside renewables, in part due to innovation in transportation applications. In Denmark, the security of supply is 99.997 per cent (the highest in Europe), with 50 per cent of all power coming from wind. And as to the question of capacity, modelling in Alberta, New Brunswick and Nova Scotia has shown that clean energy portfolios can provide the same electricity services as natural gas generation but at a lower cost.”

Manitoba Hydro, consumers, and policymakers need to be on the same page about the future of Manitoba’s energy system — paving the way for clean, locally sourced electricity that is affordable and secure. Rather than importing natural gas and sending our money elsewhere, the current call to “buy local” should extend to our energy resources.

Building and buying clean Manitoba-produced renewable energy can provide a path to a more secure and affordable energy future.

Jessica Kelly is senior policy adviser with the Canada Energy Transitions team, International Institute for Sustainable Development, focusing on fossil fuel phase-out and oil and gas policy.