On February 15, 2024, the BC Provincial government updated its energy objectives set out in the Clean Energy Act.
This article considers the possible changes to government energy policy signaled by the update. A previous article considered the impact the changes may have on BC Hydro’s rates.
In the CleanBC Roadmap to 2030, published December 20, 2021, the government described a broad range of methods to achieve its greenhouse gas emission reduction targets. In addition to increased electrification, the roadmap was supportive of other emission reduction methods such as the use of renewable natural gas and carbon capture and storage.
Now, the government appears to want to replace fossil fuels entirely. According to the press release issued February 15, 2024, the BC provincial government is working “to power B.C.’s growing economy with clean energy instead of fossil fuels” (emphasis added). This appears to be a shift in the government’s energy policy, or at the very least a significant change in emphasis and tone.
The government does not say categorically that it plans to replace all fossil fuel use in BC with electricity. But it has added a new energy objective to the Clean Energy Act “to ensure that [BC Hydro] holds rights to a sufficient amount of clean or renewable electricity” (emphasis added) to enable BC to meet its clean energy targets. This sounds an awful lot like the government is intending most, if not all the province’s energy needs will be met with electricity, and from BC Hydro.
This is going to be a challenge, to put it mildly. When BC Hydro recently announced it had delivered a record 11,300 MW of electricity on January 12, 2024, FortisBC Inc., the largest gas utility in the province, pointed out that it had delivered natural gas equivalent to 21,763 MW, almost twice as much As this recent peak demand demonstrates, the province is still very dependent on the use of fossil fuels. In fact, BC Hydro estimates that electricity provides only 19 percent of the energy used in the province.
BC Hydro has shared no plan for how it could replace the 81 percent of energy use in the province that’s currently not provided by electricity. In the long term resource plan it filed with the BCUC on December 21, 2021, BC Hydro anticipated growth in electricity demand from 58,526 GWh to 75,829 GWh by fiscal 2041 – that’s a 30 percent increase, which doesn’t come close to replacing the remaining energy needs of the province; given the anticipated population growth in the province, it’s barely standing still.
The government does not provide an estimate of the cost of electrifying the province, but we have a few pointers. On the generation side, Site C alone will cost at least $16 billion, and only provides 5,100 GWh of energy, around 10 percent of BC Hydro’s 2021 figure of 58,526 GWh per year. In a recent BCUC proceeding, FortisBC Inc. presented a study showing that completely electrifying just the City of Kelowna would cost between $2.6 and $3.4 billion in electric distribution and transmission upgrades.
If BC Hydro is to electrify the other 81 percent of the province’s energy needs it doesn’t currently serve, the cost is going to be astronomical.
In the government’s press release announcing the changes to the energy objectives, there is a heavy emphasis on affordability, and how BC Hydro’s rates should “not exceed cumulative inflation.” But as set out in a previous article, this is by no means a guarantee. Further, BC Hydro’s largest investments would likely happen between 2030 and 2050, when net zero is supposed to be achieved. There is nothing in the government’s announcement that provides any comfort that ratepayers will be protected from the cost of electrifying the province.
It should be in the public interest to seek to achieve net zero greenhouse gas emissions by encouraging the best and cheapest solutions available. By focusing solely on electrification, the government is forestalling the possibility that additional methods of reducing greenhouse gas emissions might be cheaper and easier.
An independent regulator could balance the long-term plans of BC Hydro and those of other utilities to achieve net zero greenhouse gas emissions in a way that serves the public interest. The BCUC was trying to do exactly that last year when it directed BC Hydro and FortisBC Energy Inc. to work together in developing their long-term resource plans (the results of which will be announced in the coming months).
It looks instead as though the government has settled on one solution – electrification.