Nov. 2, 2016

Hon. Rachel Notley, Premier of Alberta

 

Hon. Margaret McCuaig-Boyd, Minister of Energy

 

Hon. Shannon Phillips, Minister of Environment and Parks

Honorable Premier and Ministers,

RE: Call to Reject any Legislated Targets for Renewable Power; Call for inquiry into False and Misleading Health Claims against Affordable, Reliable Coal-fired power by parties with apparent vested interests in renewables or foreign funding

Recently, Pembina Institute and several so-called “renewable” energy producers have called for a legislated target of 30% generation by renewables for Alberta by 2030, in an open letter to you dated Oct. 24, 2016.  It is ironic that they are effectively requesting their own ‘Enron clause’ but for renewables.  By contrast with the “Enron clause” for the Power Purchase Agreements for coal fired-power, those coal companies were financed by investor dollars – not the tax-paying public – and were not subsidized to produce power.  However, renewable producers must be subsidized, one estimate says at $35/MWh or about $900 million/year because the power prices in Alberta are too low to otherwise attract wind and solar, geothermal and hydro producers.

The power prices are TOO LOW.

In effect, this means that Pembina Institute and fellow signatories are calling for you to legislate higher prices for power in Alberta.  How is this in the public’s interest?  They are calling for you to institute a different kind of “Enron clause” that will guarantee decades of profit for outside developers of wind, solar, and hydro on the backs of Albertans who already benefit from low-priced, affordable coal-fired power.

We ask you to reject the proposal of Pembina Institute and associates.

  • While fronted by Pembina, this letter is, based on signatories, 92% from renewable energy companies and promoters with vested commercial interests in seeing Alberta expend vast sums on uneconomic and unreliable sources of electrical energy.  Looking beyond the authors, let’s examine the claims being made by this lemmings’ rush to renewable commitments.

 

  • The promoters claim that legislating a 30% firm target for renewable generation (important to note, not just capacity) is critical for five reasons, none of which hold water when examined more than superficially.

 

  • The claim of creating a “more stable energy market” must be false based on its foundation, which is variable, unreliable, expensive renewable energy. [See wind chart below]  Further, other jurisdictions provide current, real examples of the instability created by renewables, with various authors describing the enormous technical and economic challenges created by adding wind power in excess of say 10% of energy in a grid.

 

  • There is a vast difference between ‘capacity’ and ‘generation’ in terms of power. We do not know of any jurisdiction with 30% generation of power from renewables like wind and solar. (hydro yes).   Denmark has some 17% power generation from wind, but only because of its own massive offshore wind resources combined with the unique split grid connection to the hydro in Norway and the nuclear in Sweden, which can handle the ebb and flow and ‘spill’ when there is ‘too much wind.’  Iowa has 29.5% wind contracted to their power system – but only 5.5% wind is generated for Iowa.

 

  • The only increase in competition will be in the rush to contract for the massive subsidies needed to make renewables work.  It’s not like this isn’t fully understood by every government and market participant.  The Alberta government has acknowledged subsidies are part of the renewable “plan”.  Even the Sage of Omaha, Warren Buffet, states that subsidies and tax benefits are the only reason to invest in wind power.[1] [“For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.” Warren Buffet]

 

  • These promoters claim lower cost through greater competition.  First, this probably violates one basic law of economics: the more demand you place for a good or service, the greater its price.  It also is playing a form of shell game – getting the reader to focus on the competitive benefits while forgetting that all this renewable supply will still require high prices and subsidies!  It’s not like all this competition will drive the providers to become economic without subsidies.  It’s like the old line about selling each unit at a loss, “but making it up on volume”!

 

  • More jobs will be destroyed, not created, by this policy.  It has been demonstrated in other jurisdictions that the rush to renewables destroys jobs on a net basis, by making energy costs and taxes substantially higher. [refer to studies here] This group also claims long-term jobs will be created, which if they want their policy to succeed, means less than about 14 years to 2030.  This is a lousy definition of “long term”, more befitting politics and promotion than real economic investment.  We are talking about a province whose fossil fuel reserves, and of course associated investment and jobs, are measured by decades and generations, not a paltry few election cycles.  Besides, just ask Ontario how that jobs thing is going, along with the claim that the province will become a hub of renewable manufacturing.

 

  • If improved system operations and lower costs are truly your objective, this policy proposal is the opposite of what is needed.  Renewables require massive overbuilding of additional transmission, reliable back-up power to support renewables essentially 100%, as well as the ability to “dump” excess power at a loss when renewables happen to be online all at once.

 

  • To summarize, let’s all clearly understand this proposal by reading between the lines.  the only reason for these subsidy seekers and promoters to so blindly encourage a legislated target which will hamstring Alberta for generations, is to make it more difficult to unwind their grandiose, massively damaging schemes when it becomes clear that the rush to renewables is an enormous mistake, with hugely expensive consequences for all Albertans, particularly the poor.  The rush to renewables is socially regressive policy, demonstrated in multiple jurisdictions to increase “heat or eat” poverty.

Many thousands of jobs are at risk due to false and misleading statements by Pembina Institute about coal and health.  Affordable power will be destroyed for Albertans if you go along with the demands of these self-interested groups.

False and Misleading

The recent letter to you of Oct. 24, 2016, by Pembina Institute and signatories is false and misleading insofar as statements are made such as “…strong commitment to build renewables to reach 30 per cent of generation and replace coal generation…”   Unless one is referring strictly to hydropower, which they are not, there is no way that any renewables can replace coal.

Here is a screen shot from the AESO showing the ratios of generation at the time of this writing.

aeso-graph-12-52-oct-24-2016

aeso-oct-24-2016-12-54-wind-89-1

As you can see, coal and natural gas are putting out the power. Wind provides only 89MW (MegaWatts).  Even if we had thousands of wind turbines, when there’s no wind, this is what will happen. No power. Wind is not ‘dispatchable’ on-demand.

To add more wind or solar to the power system, you will have to add more conventional power – as noted by AESO back in 2005.

aeso-challenges-to-wind

And when there is wind (or solar – both of which are intermittent and unreliable)? Other serious problems occur.

The problem with wind is its randomness, wind is completely uncorrelated with demand.

alberta_wind_2012q3

This graph shows the absolutely unpredictable nature of wind energy and the extreme peaks and valleys that the main generation system must accommodate, Sweeping surges or dips risk a system-wide blackout – so, conventional power (from coal or natural gas) has to operate on standby with ‘spinning reserves’ ready to quickly connect conventional power from coal or natural gas when wind drops off.

If the Alberta government were to add another 5,000 MW of wind capacity to the grid, then the total would be 6,500 MW. Typically, this amount of wind would randomly experience 80% or higher ramps one or more times per week. This would be the equivalent of ramping 6.5 Shepard Energy (Natural Gas) Centre plants from off to full to off again. These plants are unable to do this over the long term. Thus, it is possible that replacement back-up facilities would have to be simple cycle natural gas units instead which, from a carbon dioxide (CO2) emissions perspective, would effectively defeat the stated purpose of adding wind.  These types of surges and dips – and corresponding ramping up and down of natural gas facilities – would be exacerbated with the addition of solar as well.

Frankly, if you want to replace coal-fired power generation, simply replace it with natural gas plants. This way you won’t have the additional integration costs (~$1 Million/MW), the additional transmission costs (Billions i.e. Calgary-Pincher Creek wind farm transmission line cost $2.2 billion)

Wind and solar cannot produce on-demand power. They cannot replace coal and it is false and misleading to suggest they can.

Affordable, Reliable Power Benefits the Health of Albertans and the Medical System

As shown in our report “Dire Consequences” it is COLD that kills and makes people ill – not coal. Likewise, our medical system already takes some ~42% of the Alberta government budget.  Increasing power costs will not reduce that burden or improve service – it will increase health problems.  Alberta’s air quality is excellent.

Likewise, the various health claims made in the past by Pembina Institute and its allies are not supported by the actual patient evidence from Alberta Health Services.  Pembina Institute and allies have relied on a computer simulation to make up numbers about health conditions affected by coal.  Geographically speaking, some of the highest rates of asthma, for instance, in Alberta, are in the Crowsnest Pass/Claresholm region – far from coal-fired power plants, and in the heart of wind farm country! (This statistic does not prove there is a correlation – but it is an unusual anomaly.)

Geothermal

Alberta is not a prime spot for geothermal as we are not sitting on a volcano, like Iceland.  There are relatively few locations with excellent potential for geothermal.  Despite the many drilled wells which are touted as offering a means to put oil workers back to work in similar jobs – there is no guarantee the proposed geothermal technology will work for Alberta.  Thus, we recommend that a pilot project be launched if anything, without unreasonably raising the hopes of the public that this will be a miracle power generation source.  There are very few places in the world that successfully generate power or substantial heat – and these are all in areas of active thermal activity from the earth’s core near the surface. (insert report link)

“Additional Considerations” a Road to Disaster

The Pembina Institute document suggests in the “Additional Considerations” section that the government institute some legislated form of government mandated Renewables Obligations (regarding changes to the Specified Emitter regulation).  In the UK, the former coal-fired power plants of DRAX switched to wood pellets, and soon were making more money from Renewables Obligations than from generating power.  This is not the kind of ‘additionality’ Albertans want for their power prices.

Conflict of Interest – Call for Investigation

We find it to be a serious conflict of interest for Pembina Institute, which was represented by long-term colleagues on the Alberta Climate Panel, which was a consultant to Dr. Leach, which has written numerous policy documents for various levels of government and which has been funded by at least one foreign foundation which has a stated mandate of instituting cap and trade systems (by funding and using local ENGOs) – we find it to be a serious conflict of interest that this organization is calling for a change in legislation to benefit renewable companies – especially when only hydro can affirmatively provide an alternative to coal-fired power generation – but at the cost of billions of dollars in construction.  [ An alternative, to hook up to British Columbia’s Site C dam would be a cheaper avenue, though there will not be enough power there to support all the wind proposed for Alberta.  Likewise, this is putting Alberta’s power switch in the hands of a province that is blocking pipeline development. We become reliant on others. Today we are quite self-sufficient.]

We ask that there be a full inquiry into the conflicted parties now pressuring Alberta to phase-out coal, including Pembina Institute and, also NEI Investments (which claim, in their online document, to have sought out your government to make the push for renewables).  What commercial ties are there?  Why is their will superseding that of the electorate?

In Summary

It should be clear that the Intergovernmental Panel on Climate Change itself has told us that it does not make any recommendations on any topic, and in their statements, about ‘decarbonizing’ by closing coal-fired power plants to replace them with wind and solar, they provide no supporting evidence to show that this claim is workable.

We recommend that people read Prof. MJ Kelly’s paper[2] wherein he demonstrates that going to wind and solar (which are made from tons of coal, natural gas, and oil products) is detrimental to society.  In fact, a basic society with nominal education could not function on wind and solar as Prof. Kelly points out because the energy return on energy invested (EROI) is so small.  Modern society can only function with dispatchable coal, natural gas, oil, nuclear, industrial biomass or hydro.  We have lots of high-quality coal in Alberta and existing, very modern or supercritical power plants. Let us use them to the end of their useful life and not be wasteful.

Sincerely

FRIENDS OF SCIENCE SOCIETY

 

[1] http://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/even-warren-buffet-admits-wind-energy-is-a-bad-investment

[2] http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=10333234&fulltextType=RV&fileId=S2329222916000039

 

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