Wind and solar farms with battery backup are both cheaper to build than natural gas power plants in Ontario and Alberta, and the price of the renewable options is expected to fall another 40% by 2035, concludes a report released last week by Clean Energy Canada (CEC).
“Even without carbon pricing, wind power is set to be 40% cheaper than gas-fired power in both provinces by 2030,” the report states. “Solar power, meanwhile, is already cheaper than natural gas power in Alberta and is on track to be 16% less expensive by the end of the decade.”
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With storage added, wind and solar are “still highly cost-competitive with natural gas.”
The study, based on analysis by Dunsky Energy + Climate Advisors, comes at a time when both provinces are planning to add new gas plants to their electricity grids—and both will be using a lot more electricity, as vehicles and home heating switch from fuels to electricity. While the grid operators in Ontario and Alberta are both “investigating pathways to a net-zero power grid,” CEC points to a fatal flaw in their analysis—they rely too often on obsolete data that may go back as far as 2001, or draw from experience in other countries.
When Dunsky built a set of “bottom-up cost curves” for each province, said report co-author Evan Pivnick, CEC’s clean energy program manager, they showed that “in most cases renewables are cost-competitive or vastly cheaper, depending on how you treat the carbon tax,” while storage batteries “are competitive today, not theoretically down the road.”
With new federal regulations expected to mandate a net-zero grid by 2035, “we need to be doing everything possible to mitigate any new emitting electricity generation, which means preventing to the greatest extent possible any new natural gas building,” he added. So while the report doesn’t tell provinces not to build fossil gas plants, it does urge them to “properly examine the cost to get that same electricity and reliability through other means.”
Those decisions are happening right now, and they carry very high stakes.
“Because power plants typically operate for decades, the choices made today will have substantial ramifications for 2035 and beyond,” Clean Energy Canada writes. “Building new natural gas-fired power plants means locking in emissions—and costs—for many years to come. There is also the risk that fossil fuel infrastructure is retired before the end of its economic lifetime and becomes a stranded asset—a liability taxpayers would likely pay for.”
The report notes that Ontario is currently planning to install 4,000 megawatts of electricity capacity between 2025 and 2027, including 2,500 MW of storage and 1,500 MW of new gas plants, to fill the gap when the province’s aging nuclear plants go offline for refurbishment. The looming electricity shortage was made worse by the Ford government’s ideologically-driven decision to cancel 758 signed renewable energy contracts and rip a fully-built wind farm out of the ground after it took office in 2018.
As a result, carbon pollution from the Ontario grid is expected to increase 375% from 2017 levels by 2030, and 600% by 2040. The province added 7,152 MW of new renewable capacity, mostly solar and wind, between 2010 and 2017, but just 466 MW between 2017 and 2023.
The Alberta grid is coming off a surprisingly fast shift from coal to fossil gas, the report says. Provincial legislation calls for a 30% renewable grid by 2030, and renewables have grown from 9% to 22% of grid capacity in five years.
But while “Alberta has the potential to lead Canada in wind and solar deployment by 2025,” CEC writes, “increasing its share of renewables will ultimately require long-term energy storage and transmission solutions to meet the needs of Albertans year-round.”
While the report shows how tough it will be for new gas plants to compete with new utility-scale renewables, Pivnick acknowledged that the analysis was limited to onshore and offshore wind, solar photovoltaics, and four- and eight-hour batteries. That means it left out decentralized or “behind-the-meter” options like community solar, demand response, and energy efficiency that are already cutting into the demand for new generation.
Late last month, the Snowmass, Colorado-based Rocky Mountain Institute urged U.S. grid planners to include distributed solar and storage in their models, at a time when one major rooftop solar company says customers are “banging down our door” to get installations done.
With limited time to get the study done, Pivnick said the first priority for the Dunsky project was to gather current, local data. As result, “we may very well be understating the true benefits,” he acknowledged.
“What we’ve seen in other jurisdictions is that as renewable energy, as batteries, as hybrid systems get deployed, there’s a learning curve where utilities realize they can provide a better suite of services and benefits, not least of which is a more distributed grid mix that’s more resilient to weather events. There’s an inherent resilience in the [less centralized] grid that is never costed in at this point.”
As an initial point of reference, “the cost input is a key consideration, but just one,” he added. “Given significantly cheaper ability to produce energy, that’s something that even on its own should lead us to ask how we maximize deployment.”
But the report warns that a clean electricity system “is not inevitable”. It urges governments and grid authorities to:
• Invest in wind, solar, and a stronger, more flexible grid;
• Provide the policy certainty and incentives needed to attract investment, including the federal government’s upcoming Clean Electricity Regulations;
• Remove barriers to adoption by supporting storage alongside renewable supply;
• Use up-to-date data to drive their projections of future potential.
“Natural gas plants are incredibly expensive to build and operate, and this report shows that wind and solar, when combined with storage, can do the same job for far less,” Ontario Clean Air Alliance Chair Jack Gibbons told the Toronto Star. “It makes no climate or economic sense to build gas plants when we’ve got these cleaner and lower cost options to keep the lights on.”
