ThinkEnergy – Details, episodes & analysis

Canada's building sector accounts for 30-40% of the nation's energy use. Bryan Fannigan from the Building Decarbonization Alliance joins thinkenergy to share how the sector can align with Canada's emission reduction goals. From policies and grid impact studies to strategies helping steer towards a net-zero status by 2050. Listen in to learn about the practical challenges with decarbonizing existing infrastructures and innovative approaches to support the transition to more sustainable building practices.

Related links

• Bryan Flannigan on LinkedIn: https://www.linkedin.com/in/bryanflannigan/
• Building Decarbonization Alliance: https://buildingdecarbonization.ca/
• The Transition Accelerator: https://transitionaccelerator.ca/
• Concordia Plan/Net Zero: https://www.concordia.ca/sustainability/net-zero.html
• The Canada Green Building Strategy: https://natural-resources.canada.ca/transparency/reporting-and-accountability/plans-and-performance-reports/departmental-strategies/the-canada-green-buildings-strategy-transforming-canadas-buildings-sector-for-net-zer/26065
• ITER fusion energy project: https://www.iter.org/
• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

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Transcript

Trevor Freeman  00:07

Hi. Welcome to think energy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman as I explore the traditional, unconventional and even up and coming facets of the energy industry. If you've got thoughts, feedback or ideas for topics that we should cover, we'd love to hear from you. Please reach out to us at thinkenergy@hydrooottawa.com.

Hi everyone. Welcome back. You really can't overstate the importance of buildings in our lives. We eat, sleep, work, learn and socialize in buildings, among many, many other things, a huge percentage of our lives takes place inside buildings. In fact, most of us probably have to make a conscious effort to actually spend time outside of buildings. I know that I try to make a point of spending time outside every day, and I have to be conscious about it, because it might not otherwise happen, and as a result of that, centrality in our lives, buildings are major users of energy. Some estimates say that around 30 to 40% of energy use in Canada is associated with buildings, and they're also a major source of greenhouse gas emissions. So around maybe 18% or so in Canada, that means that the buildings themselves and the way we build them, the way we heat them, the way we use them, are an important part of our efforts to decarbonize and to further the ongoing energy transition. Supporting this effort is the main goal of the building decarbonization Alliance. Spun out of the transition accelerator, the building decarbonization Alliance is a nonpartisan coalition that works to inspire and inform industry and government leadership, accelerate market transformation and really get the building sector on track to meet Canada's emission reduction goals. They focus on convening conversations, conducting analysis and identifying some of the barriers to building decarbonization, and then working with partners to overcome them. And I think that's a really important part. Joining me today as my guest is Brian Flannagan, who's the executive director of the building decarbonization Alliance. Brian brings more than three decades of leadership and consulting experience all focused around reducing emissions and improving the energy efficiency of the built environment. Prior to joining the organization, he's played leadership roles across a number of different leading energy and environmental consulting firms. He spent time working with the Federation of Canadian municipalities and helped launch the Green Municipal Fund. Brian Flannagan, welcome to the show.

Brian Flannagan  02:47

Thanks for having me. Trevor, this is great.

Trevor Freeman  02:50

So why don't we start kind of right with the basics? Can you give us an overview of the building decarbonization Alliance and the work that you are doing alongside your members?

Brian Flannagan  03:00

Yeah, thanks. Well, you know, as you said at the top of the hour, without kind of repeating the background or there, we're a nonpartisan, not for profit organization whose goal it is to really advance sort of market transformation, thinking about it from the perspective of, you know, creating a prosperous economy for Canada, having buildings that are a place where people want to invest, and the long-term goal is that we got to get them. Get to net zero. Global factors dictate that if we don't act on that, we're going to get left behind. And so, for those purposes, we want to bring the market along and align it toward this goal. And so, this alliance that we have is just that we have partner organizations who support this vision to have the building sector decarbonize between now and 2050 to meet those objectives that are set nationally and internationally, for that matter, and we work with those partners to sort of align the narratives around this and to put in place in the long term, the tools and policies that we need to support that. So, our main approach is really to convene those stakeholders around the issues that we see, to tackle some of the sticky narratives that are there. You know, any market transformation involves incumbents that have lots of good reason to maintain the status quo. So that's a feature of a system that we have to acknowledge, and it's something that we recognize we have to adjust those narratives to really advance, advance the common objective, right? And so, we work with that kind of vision, with our stakeholders, to really try to overcome, identify and overcome the barriers to getting to that goal. We kind of focus on a couple of key areas given, you know, the ability decarbonization space, the ecosystem is vast. Lots of market actors already out there, lots of other not for profits, lots of other organizations that are working really, really hard to advance this as well. And so, we tend to focus on kind of four main areas, making sure that there's policy support at various levels of government, and understanding which policies might be effective and which ones might be less so, and trying to advance the ones that. High leverage looking at the grid impacts of electrifying buildings, because it's undeniable that if you switch from fossil combustion of fossil fuels to electricity, you require a clean electricity system that has to have the capacity and be robust enough to support that. So, we want to be clear about that. We want to really address that in a cogent sort of way, and then really mobilizing and activating the sector to implement these changes and to find the solutions, because many of the solutions are at the intersection of different subsets of the of the sector, whether it's banking and finance or whether it's development community or the utilities, every market actor has a role to play to find solutions. Is very rarely one sub sector that can really act to, you know, to overcome a barrier. And so, we try to work at the intersection of these different groups. And by convening the players, we can roll up our sleeves and kind of get to that. And then, last but not least, you know, this is a very complex sort of question in terms of, how do we get there? What are the pathways? It kind of reminds me of nutrition, medicine, things like that, where, you know, at one instance, it's great to eat eggs, and another instance, terrible to eat eggs, and then it's good. To eat eggs. And then it's good to eat eggs again, because the evidence is shifting right, and we have to follow the evidence. We have to understand that the systems are complex and that various investments in the grid will alter the landscape. And so, we're working really hard to increase the analytical capacity of the sector, to model and to be able to understand how this will really play out when you have exponential sort of technological advancement coming to play. And you know, different investments and different dynamics that are bearing out as the sector decarbonizes, which is, it's really complex, and so we need better tools to be able to grapple with that. So those are the four sort of main areas, and it's a heavy lift. We arrive on the scene with great humility, recognizing that we stand on the shoulder of many, many other organizations who've come into the space trying to take a slightly different approach by bringing all the players together and trying to find some common understanding of how we how we get this done. You know, we have to do something different. We've been doing energy efficiency for four decades, give or take with the programming that we've had, and it's been very effective. I don't think there's any more old T 12 light bulbs anywhere that worked. That's great, but we need to do something different now to get fossil fuels out of the buildings for heating purposes, right? That's the goal.

Trevor Freeman  07:18

I'm glad you brought up the complexity side of things. I think when we look at buildings and decarbonizing buildings at first blush, you can think, Okay, well, change out systems. And you know, there are carbon intensive systems and low carbon systems, and obviously we need the latter, but getting those systems in our buildings, and getting buildings that work well with those systems, and getting tenants that interact with those systems, well, is that complex kind of quagmire? And so really glad you brought that up, and we'll probably talk more about that as we go. I do want to also highlight you mentioned kind of working with other organizations and partners, and specifically, I know you guys are affiliated with but somewhat unique from the transition accelerator. So, talk a little bit about the transition accelerator and how your work with them. Sort of overlaps, but is unique.

Brian Flannagan  08:09

Yeah, absolutely. Well, so we're, we are housed within the transition accelerator. We are basically a branded initiative of the transition accelerator. You know, we could stand alone as our own, not for profit and be separately incorporated, but from an efficiency and a sort of effectiveness perspective, the decision kind of was made to stay within the transition accelerator as an organization and so I think it's very effective, because that allows us to leverage, you know, the communications, knowledge mobilization and broader infrastructure for HR and things Like that of the transition accelerator. So, the transition accelerator, is a Canadian not for profit as well, and its focus is very similar to the BDS focus. However, it's elevated to the to an economy wide level. And so, the transition accelerator is interested in finding pathways to net zero for all sectors of the economy. So, I think transportation, the electricity system itself, decarbonizing the grid, looking at low carbon and Net Zero fuels and how those might impact other sectors, heavy industry and aviation and transportation sectors, as well as looking broadly at the overall state of what is the future economy going to look like. The whole point of this is to position Canada internationally as a global leader in this transition, recognizing that other nations are acting, and we have a competitive position to play. And that has to happen by looking across all the different sectors. And so, the objective is really to set that 2050 vision, identify the pathways for the different sectors of the economy. Buildings are one of which and then to kind of advance the whole thing along recognizing as well. I guess what's really important in all of that is that there's a huge interaction between the different sub sectors, right? So, transportation and buildings are a great example. You know, if everybody electrifies EVs, there's an immediate impact on how we electrify the heating systems in the buildings, and then it has a huge impact on the grid immediately as well. And so. The intent with the transition accelerator as an umbrella organization housing all of these activities, is that we capture those dynamics. And when I talked about the analytical capacity, you know, the models that we're building, the end use models for each of the sub sectors, the ideas that they eventually connect, and they that they are able to have a whole of economy sort of flavor to them. And so, it's been a very, very effective relationship. I think it seems to work well, and that vision and idea seems to be materializing as we get going. It's been two years so far, and I can say that it's been just a fascinating journey to be exposed to those other sector dynamics as well.

Trevor Freeman  10:36

Yeah, I know on this show, we talk a lot about the different parts of, as you said, all of society that need to be decarbonized. Obviously, buildings kind of comes to the forefront often and so specifically around buildings talk us through this maybe kind of a basic question, but, you know, help our listeners understand. Why are buildings so important? Why is the decarbonization of our built environments so important when it comes to decarbonizing all of society?

Brian Flannagan  11:05

Yeah, I mean, that's, that's the, that's the crux of the question, right? Well, there's a bunch of reasons. I mean, if you think about it, the building, this is where we live, right? These are our homes. These are, this is where we go to work. This is our place as a business. From an economic perspective, organizations arrive in jurisdictions for the purposes of meeting their overall objectives, and if you require energy intensive sort of production, or if you want to have a big workforce, you want to house your workforce in buildings that align with your objectives. And increasingly, those objectives feature a low carbon kind of future, right? And so just from that perspective, it's important for us to kind of get aligned with the global trend toward this, to make sure that we have the investments that we need and that we want to attract, and we want to have places where people can live that are aligned with those kinds of values. But from an emissions perspective, it's hard to kind of overstate how important this sector actually winds up being the building sector emits about 90 megatons, give or take, of direct scope one emissions. And if you factor in the grid emissions, that result from being buildings being connected. So, the grids across Canada, it's about 120 megatons. There's digits there that we could go into. But to put it into context, that's about the same as all of the vehicles on the road. So, when we think about how important it is to electrify the fleet of vehicles that we're all driving, the building sector is the same. It's the same level of importance. And if we think about all of the work that we've done to decarbonize our electricity system over the years, eliminating coal plants and those kinds of initiatives that we that we hear, are in the news recently, the building sector emits about twice as much as all of that. And so, the context is that buildings are pretty vast in terms of the overall emissions, and when we think about where those emissions come from, ultimately, it's combustion of fossil fuels for heating our buildings. We're in a cold climate in Canada, case, a lot of energy to heat buildings, and because of the abundance of the resource and a bunch of policy decisions that have been made decades ago, you know, we're in a situation where we've got an abundant and relatively inexpensive source of fossil fuel to heat our buildings. It's about 1500 petajoules, I guess, give or take. And ultimately, we need to move to eliminate that over time, or to largely eliminate it. I mean, I think there's always going to be a bit left in the system. There's, you know, it's, it's a very complex and daunting task, because the building sector itself is very diverse. The buildings last a really long time. It's not like, you know, technology change, where you have, if you want to change a phone, you can upgrade it from one year to the next. It's small. It fits in your pocket. It's easy to manage, but buildings are constructed to last hundreds, 100 years. 50 years is the typical lifespan. But, you know, we have lots of buildings that are very, very old, and it's a slow kind of system to turn over. It's a slow inventory to turn over. So, it's a really big challenge, a lot of a lot of emissions from the sector. And so, it rises to the level of really needing close attention and a different approach than what we've been taking in the past.

Trevor Freeman  14:04

Yeah, and one of the things I like about focusing on the building sector is it's one of those areas where efforts to decarbonize, efforts to improve the way we use energy in our buildings, obviously have some carbon impact, but that's not the only benefit that they have. There are sort of other ancillary benefits that that building owners and tenants can realize as a building goes through a decarbonization process. Talk to us a little bit about some of those other benefits and why a decarbonized building is a better building to be in.

Brian Flannagan  14:39

Yeah. Well, I mean, I guess there's, there's a couple of things. I'll take a step back from it and talk about retrofits and deep retrofits versus regular retrofits, you know, and what it winds up looking like in terms of benefit streams. We've, I think, in the past 40 years or so. I think since the since the 80s, we've been doing retrofits that are ostensibly about reducing operating cost. Ostensibly about making sure that we don't have to build out our energy systems bigger than they need to be. It's always about the avoided cost of energy. That's the way our incentive programs have been set up. And so, we've had lots of projects over the years that make buildings more efficient at consuming the energy that they do consume, which is a really important objective. And so, you get, as I mentioned, all the lighting projects that we've done, and we've done three waves of lighting projects, different fluorescent technologies, and then CFL technologies, and then now led technologies. And those are kind of project-by-project retrofits that happen because the building owner says, well, wow, if I do that, I'm going to reduce my utility costs, and I'm also probably going to save maintenance costs, like LED lighting technology really reduces the maintenance costs associated with taking care of the light bulbs. It's a cost reduction exercise, right? What's different about decarbonization is that we don't really have those cost signals, those pricing signals, are just not the same. It's not the same dynamic anymore. And so, you have to bring into play long term energy and social and governance paradigms. You have to bring in long term pricing signals, long term risk. You have to bring in long term market decision making in terms of the global factors that we were talking about earlier, right? And so, you know, it requires a bit of a vision, and it requires acting on the policy environment that's in place. And in order to really make those projects work, you have to take a much longer-term view. You have to look at the overall state of the capital renewal of the building. You have to look at all of the different systems at the of the building at once. And that's where we get into the term a deep retrofit, right? And so those kinds of projects can yield tremendous benefits when they're undertaken correctly and over time, in an individual building or inner portfolio of buildings, and so we get this bundling effect of things happening all at once to really make the space more comfortable at the end of the day, though, what, what the whole objective needs to be, is just eliminating the fossil fuel combustion. And it happens that when you do that at the same time as doing some other things like envelope work or fenestration, or, you know, better, control systems or demand response kind of technologies, then you get this sort of convergence of factors. And so, you know, we to get to the part about the benefits there. We definitely see long term operating cost savings when, when people switch to heat pump technologies, the heat pump is an incredibly efficient it is an energy efficiency measure itself. It's three times, give or take, more efficient than other approaches. And so, you get that long, long term operating cost savings in most in most of the country. The prices vary across the country, but you do get those obviously, if you're taking that approach and you're managing your portfolio with that your portfolio or your home with that longer term vision, you're getting capital renewal, and you're having maintenance and reliability improvements, and we think that it really improves on the value of the asset over time. It's an area that requires further study, actually, because we don't really know how much more value is baked in. There just haven't been that much track record in Canada of having these kinds of retrofits take place, but the so-called green premium, we think, is there as a real benefit to taking this kind of an approach. And notwithstanding that you know, you're renewing all your mechanical systems, you're taking measures to update the envelope and things, you're going to have a more comfortable, better controlled environment. If you're if you're a commercial building owner that's tenanted, your tenants are going to feel more comfortable. The control of the facility can have less complaints and all this kind of thing. If you're a homeowner, you're going to be in a modern, comfortable home that has a heating system. I mean, fossil combustion systems tend to come on and blow really hot, whereas heat pumps tend to stay kind of fully loaded and steady and have this comfortable people report that it's just a much more comfortable kind of system. And I think, you know, over time, people are going to start to see that this is the way a house should be. We're kind of not there yet. The sex appeal of all of this, in terms of the mindset of especially homeowners, I just don't think is there yet. But we're trying really hard to get to a spot where people look at those, you know, retrofitted systems and those modern systems as being sort of the way that it's supposed to be, and this is how comfortable a home is supposed to feel, right? So those benefits are all there, but I think, as I mentioned, what's less clear is, you know, for a commercial building owner, what exactly is the real ROI to fully embrace this approach? I think those are still areas of further study, and the straight-line connection between those things. I wish it was more, a little bit more clear, but we're working on it. That's a part of a study that we're trying to do to really elucidate those types of benefits as well.

Trevor Freeman  19:31

Yeah. Well, I think that's again, to go back to your first answer of the building the analytical capability of the sector to really understand these benefits that I think we intuitively feel are there, but we need the data to back that up, and we need to be able to quantify it, and I think that's really important to tell those stories to be able to help building owners, help homeowners, help the folks that are making decisions, build the case, to really be able to. Say, Yeah, this is the smart move. It's smart to move in this direction. So, it's great to see that you guys are working on that absolutely. So, you know, we've talked through in the last little bit here, some of the reasons why it is so important to decarbonize our building sector. We've talked through some of the benefits of decarbonizing that building sector. But to your earlier point, we're not there yet. We haven't seen massive steps in this direction. There are clearly barriers to this. There are sort of reasons why building owners might hold back or wait or sort of say, hey, not this time around. I'll do it next time. What are some of those barriers that you've come across in the building sector that kind of get in the way of folks making the decision to decarbonize?

Brian Flannagan  20:43

Yeah, well, that's interesting. You know, there's the framing of the question itself. Is, there's a lot of benefits. It really makes a lot of sense. But why isn't it really happening, right? And the reason for our existence, if this was easy or obvious or self-evident, we wouldn't need organizations like ourselves and you and I wouldn't have to, you know, ruminate and put this information out into the world, it is difficult, and what's promising and what's interesting, before I get into barriers, is that there's a lot of instances where this actually really does make sense, you know, and we don't, I don't know that we necessarily publicize or talk about it enough, but you know, if you're on fuel oil, if you're if you're on the East Coast, where there's a lot of fuel oil still in the system, and your home is heated with fuel oil, it absolutely makes sense to switch out to a heat pump. Now, you know there's a first cost consideration that needs to be born, but thankfully, there are programs that really support overcoming those first cost barriers, but your operating cost savings will be impactful from an affordability perspective. It makes total sense to do it today. And so, anybody that's currently heating with fuel oil should really look at that business case for them personally and their own personal economics. But in most places in the country, if you're on fuel oil, it makes sense to switch right now. You know another case that makes a lot of sense is if you're on electric resistance heating. Many of us are in Quebec. I'm located in Quebec, you reduce your electricity consumption by about two thirds, you're gonna save on your electricity bill. And you know, to boot, you're probably gonna wind up with cooling that you don't already have on. So, there's a real added benefit of having summer cooling, which increasingly a lot of us need, right? And so, there's a lot of times where it’s kind of really does make sense if a homeowner has an existing gas furnace that's aging, and they don't have air conditioning now, and they're finding that the summers are a little bit warm, and they need to replace their furnace. I mean, that's a lot of ifs if this, but I think a lot of people are actually in that situation. If you're in southern Ontario and you need to replace your aging gas furnace, switching to a heat pump for the air conditioning part of it in a hybrid system. It totally makes sense to do you're going to buy the air conditioning unit anyway. You're going to have couple of tons of cooling in your in your building, in your home. You may as well make that a heat pump and run it in the spring and in the fall to offset some of your gas bill. Right? And so, there are instances where it really does actually make sense, but you'll notice that my statements are sort of couched in a lot of if this, if that feels like which comes back to the complexity. That's a hard message to sell to homeowners. Contractors have to be on it. Contractors have to be making these recommendations. And the system is not quite there yet where everybody has this aligned narrative about where it makes sense to do it. So those are the things that I think are making up, making it hopeful. You know, we see, also see university campuses for altruistic sort of long-term vision reasons. We want to be a test bed. We want to be a leader. We want to be example. We want to have our students understand what this new global dynamic is going to be. So, we see, you know, universities like Concordia with a plan for Net Zero to be a net zero campus by 2040 you know, does that, is there an economic reason for that? Like, I think it'd be hard to make a financial case that those investments make sense on their own merit, but it's backed by this real vision to have leadership. And so, the budgets and the financial considerations, those constraints are loosened to allow for that vision to take place. And we see that with municipal governments too, you know, they have a long-term view about their assets, and about community energy planning and those kinds of things. And so, there's lots of reasons why, where it does make sense and where movement is happening, you know, but outside of those kinds of obvious cases, I would say that the primary barrier is ultimately still a financial one. If you look at the different considerations to go into replacing your heating, replacing fossil fuel combustion with heat pump technology, or electric all electric, non-emitting technologies. It's expensive. You know, the first cost is high. And if you, many of us now in the space have gone through the exercise of getting contractor quotes and understanding what the cost of doing it is, the upfront cost can be pretty high relative to just replacing with the status quo. And so that's a real barrier for a lot of Canadians, particularly in the current environment that we're in. You know, affordability, inflation, the pocketbook issues have been at the fore, and so overcoming that initial sort of wait now what? How much is it going to cost? It's a real. Concern. And that's one of the approaches at the BDA is really to try, like, we really can't sugar coat that. We have to actually just get to work out what it's going to take to bring that first cost down. So, things like getting to scale and, you know, having the technologies kind of advance, and having products come in that are less expensive in the marketplace to the scale is just really important.

Trevor Freeman  25:19

If I could jump in that that getting those costs down, is that just a matter of time, or is there something that you in your work, or we in sort of more broadly in society, can do to sort of push that faster, to get those costs down quicker?

Brian Flannagan  25:34

Well, I think accelerating the transformation is the idea. I mean, that's the global statement. So, there's a certain rate at which this might scale, and it's kind of going to be painfully slow. And getting the cost down will be painfully slow. The idea of accelerating it, by putting in place policies, and by aligning all of our kind of narratives, and having people moving toward this objective in a more everybody rowing in at the same time, I think, is the idea accelerating that and bringing it in faster will help us to get to that point. It's an extremely simplified thing to say, but ultimately, that's what we have to do, right? And there's certain things that just are kind of confounding. You know, we sell a lot of air conditioning units. I think it's about 400k by our last estimate. I'm not sure about that, that exact spec, but I think it's about 400,000 air conditioning units in Canada every year. The cost difference to make those heat pumps, from a technology perspective, is the reversing valve in that piece of equipment. It's a couple 100 bucks. We've talked to lots of our manufacturer partners about sort of what this would look like if we weren't buying air conditioners anymore, and instead, we're just putting in heat pumps. So, the incremental cost there's actually quite low. We could probably have a setup where everybody's buying heat pumps instead of air conditioning units for their summer cooling requirements. And then what happens when you do that? Suddenly, you've got 400,000 more heat pumps coming into the market, and you've got 400,000 more installations happening that are heat pumps instead of air conditioning so people are getting used to it, contractors are getting used to it. And those kinds of things can kind of ratchet it up and make a step change, you know. So, I think advancing and getting to scale involves kind of deploying those types of things where there's high leverage and where it's an easier case, and it's kind of some of what the BDA is trying to do is find those things that have this incremental leverage point that really gives us a step change to advance the market transformation in a way that was a little bit faster than it otherwise would be, right? So that's, that's the first cost barrier is, is one, and it's very real. I would hasten to add that in some instances, the buildings also require changes. You know, you have buildings that have a certain electrical configuration for the capacity that is required with the fossil fuel heating system if you're going to add electric capacity, that could necessitate panel upgrades and other service upgrades to the facility. So those costs are also really real, and there's lots of policies, and there's technical standards associated with that that need a close look so that practitioners in the space have clear guidance on when those things are required and not required. And I wouldn't, I wouldn't say the word there yet, in terms of that consistency of approach and consensus on how to do that. But those factors are very real. Those are some of the barriers on the first cost notwithstanding that on the operating cost side, it's, it's also complex, because across the country we have vastly different electricity and natural gas rates owing to the different configurations of the energy systems in each of the provinces, you know. So, we've got provinces like in Alberta, where natural gas costs are extremely low and electricity costs are relatively higher than, you know, next door in British Columbia, the rates are just closer in British closer together in British Columbia. And so, when you're contemplating a switch from one to the other, the gap just isn't as far to jump across. And so those dynamics play out across the country in very real ways. So as a homeowner or as a business owner, the economic drivers are just very different. And so, it's challenging because you can't just make a generalized statement to say, yes, it's less expensive to do this without also adding, if you happen to be in Quebec, it's not true in Alberta, right? So often what we get is confounding messages where people say, well, hang on a second. You said it was affordable, but I'm in Calgary, so it's affordable. Like, yeah, you're right. It's not yet affordable there, and we have to work to address, you know, those are all nuances in the statements that we make that that causes to have to really dig in and differentiate, sort of the different scenarios under which it's beneficial. But that barrier is, is a very real one, and maybe this is the last one that I would add, is that for building owner or portfolio buildings, or for just a homeowner, we just don't have the policy drivers that really align around this idea. You know, the urgency in the sense that this, that there's a movement toward getting this done by having policies at the municipal, provincial and federal level, kind of aligned toward this objective. So, if you look at the different the patchwork of sort of political leanings across the country, there just doesn't seem to be a strong alignment. And so, if you're if you're trying to manage the long-term sort of investments that you're making in a building portfolio, you'd kind of be forgiven for saying, well, wait a minute, this program was in place, or this policy was in place, and now it's not in place. And you know, the carbon tax is a great example of that recently, where you were just seeing the erosion of that idea as a long-term driver to investments. And now, with the current political environment that we're in, it's really just an open question, what is going to happen to the tax at all? And so, from a business perspective, I think that represents a real sort of that uncertainty and policy direction is also a big barrier that we need to we need to get to grip with.

Trevor Freeman  30:44

That's a great way to transition into this next question that I've got for you. So last year, it's 2025, when we're recording this. So, I can say last year now, you guys released a jurisdictional scan on I kind of think, like policy and drivers around building heating decarbonization. So, I want to dive into that a little bit. Let's start by having you talk through some of the key findings of that report. What did you find when you looked across sort of jurisdictions about what's happening with building heating decarbonization?

Brian Flannagan  31:15

Yeah. Well, what's interesting to stand back from for a second is that. So, this report is a jurisdictional scan, and the intent is really to provide a roundup of the various the ways that the various actors at different levels in the policy landscape implement conditions that ultimately reduce emissions in our buildings. Buildings, it's important to note, are largely a provincial jurisdiction. You know, the building codes, the development processes, a lot of the regulatory framework that they operate within the utility framework. So, all the utilities that the buildings are connected to are generally a provincial policy question. And so, when you when you look at what are the policies that are in place, you would expect that provincial policy would would have to lead the way, because buildings are primarily a provincial jurisdiction. Municipal governments have a big role to play when you think of all of the zoning and the bylaws that apply and the development requirements that apply at a municipal level. So, I mean, municipalities actually have quite a lot of power in with respect to buildings, but they are a subset of provincial governments and have to operate sort of at the best of the provincial requirements. And then when you think about the federal level, federal level really doesn't have a whole lot of jurisdictions on buildings. They can set equipment standards, and they can set environmental regulations through the environmental act, but so when you have to kind of stand back from it, and our goal with the report was to say, well, how does this all play it? What does it actually wind up looking like in terms of decarbonization policies? And what we can kind of look at is, how do you actually implement a policy that would reduce emissions? Well, you can focus on the energy source itself, and say, you’re not allowed to have gas in your building. So, this is like a gas band. This is a pretty heavy stick that you would wield, which, which is one way to do it. You can focus on the equipment and say, hey, you're not allowed to have an oil system anymore. So, you're not focusing on the energy source, but you're focusing on the piece of technology itself. You can focus on the energy performance and say, you're building, given the size of your building, or the shape of your building, or what the building is for your building shouldn't use this much energy, or should use less than this much energy. So, you can put a line in the sand there, or you can focus on the emissions and say, similarly, for that size and shape of building, or type of building, your building shouldn't emit more than a certain amount. And what, what our findings are is that it's sort of all of the above out there, you know. And at the municipal level, we see quite a lot of action of different municipalities trying on different sort of approaches for size, and there's no clear trend as to which of those particular mechanisms seems to have favor. It's sort of a bit of a bit of a mix in terms of all of that. But at the highest level, you know, we have the federal government sort of setting a context, or setting the stage with national model energy codes, there's a commitment for them to release an emission-based code. And that's a welcome sort of direction. It's been in the works for quite a while. We have policy in terms of investments for, you know, low-income retrofits, and we have loan programs and those kinds of things that continue to be on the scene with the green building strategy, which is also welcome and really necessary. Actually, when you think about the kind of context that we're in around affordability, we also see some commitment to look at the idea of the equipment and regulating. There's a commitment to put in place a framework to look at regulating some of the equipment. So, there's a little bit of distance in terms of the direct action there, but at least there's some acknowledgement that the federal order can begin influencing the scene I mentioned at the provincial level, that you know, there's a certain that's where the jurisdiction really is for buildings, and this is where we kind of see quite an absence of real progressive policy. What we see in British Columbia, quite a lot of activity, and Quebec, quite a lot of activity, and Ontario, a couple of measures, most notably, I guess, the requirement to report on building energy. So, this is the idea of looking at the energy performance of the buildings. But outside of those three jurisdictions, we don't really see a lot of progressive policy to really act on the idea of carbon emissions directly from buildings. And then at the municipal level, we see in Ontario, the City of Toronto is trying to, is proposing to look at building performance standards, which would be a sort of an energy and emission sort of threshold mechanism. But then in British Columbia and Quebec, we see just a lot more activity, many more municipalities within those jurisdictions trying on different mechanisms for size. We have, like in Quebec, we have Laval in Montreal and Prevost and regional governments as well. So, the Metropolitan Community of Montreal putting in place various tools to try to curb emissions. And in in British Columbia, there's just way more activity. There's a different sort of setup there in terms of what municipalities are and aren't allowed to do. And so, we see like there's Saanich in Vancouver and North Vancouver and Victoria Whistler, all of these municipalities are putting in place various tools to try to direct what the future should hold in terms of building emissions, whether for new construction or for existing buildings. And notably, we also see some interesting, just interesting kind of mechanisms, like in in British Columbia, flight adjustment on taxation, tax relief for heat pump technologies, which isn't it's not a regulatory sort of approach in the true sense of that. But it's an economic lever that I think can be, can be helpful and sort of send the right cumulative signals to allow market actors to kind of act.

Trevor Freeman  36:50

I think, I mean great answer. Thanks for that, Brian. It really does highlight kind of a theme, I guess, if you will, that comes up on the show often of there is no one solution, and you can take that statement and apply it to any part of the decarbonization ecosphere that you want. There's, there's no blueprint for how we're going to do this. It's going to be sort of a mix of a bunch of different policies and strategies and, you know, carrots and sticks and levers and whatever analogy you want to use that we're going to need. And it's interesting to see, as you highlighted different jurisdictions, different parts of the country, are at different spots, and some, you know, further down that journey than others, for different reasons. And again, coming back to your comment about building that analytical capability to really understand what is working and why, and is it, is it specific to this region or this, you know, whatever climate region or economic region, that that policy or that structure works, or is that something that can be applied across a broader swath of the economy or our society? So really interesting. I'm going to cherry pick something here and dive in and say, you know, we talked a little bit about heat pumps. So, heat pumps, obviously, are a super important technology for decarbonizing some aspects of building heating, specifically on the smaller scale. So residential homes are a great example. We really need to see more heat pumps that's going to be one of the main ways that we decarbonize home heating, looking at, sort of what's happening across the country at the various different levels of jurisdiction. Are there specific frameworks or strategies that you think are really essential to support heat pump adoption as an example that we can sort of look at?

Brian Flannagan  38:39

I mean, I think, I think your, your lead into the question is actually the answer that I would have given you know, there is, there just isn't one sort of tool or approach that will universally drive this thing, certainly not when you talk at a national level. A lot of the discourse that we have internally at the BDA is that this is a regional issue. You know, it really is a, I think, at the end of the day, municipal by municipal approach to things, given the local conditions. And when we, you know, we talked about some of the barriers earlier around pricing. So notionally, anybody that's in a jurisdiction with provincial level utility like British Columbia or Quebec has the same pricing, right? But in Ontario, that's not the case. Like local distribution companies have different pricing structures. Just depends on if you're in Ottawa or Kingston, Cornwall or Toronto, it's just the pricing is just different. Now we have gas utilities that are more uniform across Ontario, so that pricing is similar. So, it really winds up being a regional question. And if I said, you know, Trevor, I want to I want to call a contractor and I live in Hamilton, that's a different question than saying, I want to call a contractor and I live in Saskatoon. Is the HVAC industry the same in both of those places? It's just not like the. Capacity of the industry to influence your decision and the knowledge that they have. And by the way, Saskatoon is a heck of a lot colder, right? So, the question of, you know, will this, will this heat pump actually work for me in my climate up in Saskatoon, is a different question than if you're sitting in Windsor, where your cooling load is probably more of a concern these days, right? And so, we have to, I think we have to get away from the idea that nationally, there's going to be one sort of thing that will really wind up driving the change the electricity system and the gas system. The energy systems in each of the jurisdictions are so different, and the local constraints on labor force, the local affordability considerations with the economics of a given industry, if you're in Alberta or if you're in Newfoundland, the socioeconomics are just very different. The affordability questions are more or less pressing across the country, and so I think there isn't one sort of tool or policy that could rule them all. We need a sort of a wide range of different options to look at that recognize those local and regional kind of considerations. And interestingly enough, going back to the transition accelerator and the kind of approach that we take, we actually have a different vertical. We call them verticals. So, the building vertical is one, but we have a different vertical called regional pathways, where we have a whole other team that's just out meeting with jurisdictions at a regional level to try to understand what exactly are those local constraints that impact on the different economic sectors, buildings being one of them, and we tap into that kind of stream all the time. I mean, that said, I don't think you'll let me get away without providing some kind of answer. I do. I do. I do. Really think that the ways that the utility systems are regulated are a big deal. You know, right now, I think it's fairly safe to say that we live in a utility regulatory environment that was geared to accelerate the expansion of the gas system several decades ago, and the pricing and how connections are made, and how that's reflected on the rate base versus the developer. There's a lot of things that are kind of baked in that where it's not really a level playing field. I think equalizing some of those policies across the country would be extremely helpful. I mentioned earlier that our past sort of energy efficiency retrofit environment has been advanced mostly on the idea that we want to avoid the cost of adding new generation. Well, clearly, if we're talking about electrifying our buildings, adding new generation is a given. We have to do that. And so obviously that paradigm doesn't work when we're talking about fuel switching rather than energy efficiency. And so, we need to have that regulatory space around utilities take a different approach to just looking at the avoided costs. And we see this. This is happening, but it's just it's painfully slow, because those sectors are cautious by definition, and they need to be. But we have to have a new set of programs and a new sort of set of economic tests and tool boxes that allow incentives to start flowing for these kinds of retrofit projects based on a new sort of set of business-as-usual scenarios. You know, if we decarbonize only with air source heat pumps, it's going to lead to a certain set of costs and certain set of investments. If we decarbonize with more ground source heat pumps, it's a different set. And there's a difference there in terms of the price and impact on the energy system and rate payers. And so, capturing that dynamic, I think, is really will be, will play an important long-term function outside of that, you know, any mechanism. And this is why that sort of patchwork of municipal tools that are being deployed is interesting. Any mechanism that just sends a signal to the market that emitting carbon from your buildings is going to have a pricing consequence or a consequence in terms of what you can and can't develop. Any of those market signals are helpful, even signals that those things may eventually come into play, like what the federal government has done, that sort of we commit to putting in place a framework to look at the eventual change of the structure. Even those kinds of statements can help influence the narrative around decision making for what future risk looks like to building owners and so, you know, building performance standards, I think, are really interesting. I've seen the difference that it makes in the discourses that we have with players that are in Vancouver, and it the idea that eventually we're going to have to pay more to emit it's a powerful motivator. But I have to hasten to add, you have to make sure that the market can respond. You don't want to have those kinds of policies in place without also making sure that you've got the HVAC industry ready, you've got the labor force to get the job done, because then you have policies that fail, right? So, any of those kinds of policies, I think, are interesting to see implemented and tested and understand the degree to which they actually drive the market.

Trevor Freeman  44:58

Yeah, I think you've done a great job of, of really helping paint that picture of even a simple challenge, you know, simple in quotation marks, obviously, of getting more heat pumps into more buildings requires different roles at different levels. And so there's that sort of federal role to, you know, again, understand what, what are the levers that a federal government might have knowing that some of the specifics around buildings are not in their jurisdiction, but helping to support predictability when it comes to pricing signals, for example, like a price on carbon, or supporting sort of national workforce training to get more contractors out there to support installations, down to sort of the provincial energy policy level, down to the municipal level of how do municipalities support their citizens, their residents, and making these changes in their buildings and the levers that they have? And I think there's a role for all those levels to play. It's just understanding where are those sorts of sweet spots to put pressure on and to sort of push towards that, that action that ultimately is up to building owners and tenants to take. Great thanks for that. Brian. So, a couple last questions here. As we, as we near the end of our conversation, I do want to take a minute and just sort of put ourselves in the headspace of a building owner. So, someone that has a has a building, let's say, a commercial office building, and is looking to take steps towards phasing out fossil fuel use in their buildings. They want to decarbonize. What are some of the strategies that you've observed in your work that that really do work from that building owner perspective, what are some of those steps that they can take to move towards decarbonizing their building?

Brian Flannagan  46:47

Yeah, it's a good question. I think it depends on who the building owner is. You know, as an if we're talking about a residential kind of homeowner, the idea, I think, is just to start getting start making long term plans and budgeting what this is going to look like, and taking it into a consideration when you're, you know, planning the various renovations that you're going to have at your home. Most people renovate for specific reasons that are outside of just, hey, I want to do the right thing by the environment right lots of my friends, of lots of people in our circles do that. They're the thin edge of the wedge of sort of early adopters that do it for truly altruistic reasons, right? But most homeowners don't operate in that way. And so, the idea is to, you know, really begin looking at, well, how old is my furnace, and when do I think, I might need to replace it? And to start putting in place the decision making early so that you're not caught off guard with a surprise replacement. I think the biggest tragedy right now is that a lot of people are replacing their furnaces because they're in an emergency situation. You know, the heating season is upon us, and you know, a contractor comes and just says, hey, listen, there's no time to start entertaining alternatives. We got to get your system in place. And they replaced within with a like for light gas furnace, and that thing is going to be in place for 1520, years, right? So, we're now at 2045, and so, you know, the urgency of the idea of avoiding those emergency replacements as much as possible is really, really critical. So, for a homeowner, I would say the steps to take are, you know, look at it from a long-term perspective. Where is the industry going in 10 years, if you want to sell your home, is it going to be better or you're going to be better off or worse off if you've got the most modern and best technology in place for your building, can you demonstrate that you've made investments that are in line with this idea? I think those kinds of things are important considerations to make and to begin budgeting forward appropriately. You know, because it is a little bit more expensive on the first cost, programs are difficult to navigate, so it takes time and energy to kind of understand what those program environments are and what you're eligible for grants. But it's sort of that doing that work up front before you get caught off guard is important. And I would say if anybody wants to add an air conditioner, if anybody's contemplating getting cooling to deal with our summer heat situation that's present in many parts of the country. It's really, really beneficial to strongly consider adding a heat pump in that moment, I think, for commercial building owners, you know, it's a similar thing, but it's but it's elevated to a higher sort of long term capital planning exercise, the idea of what we call decarbonization plans, building and portfolio decarbonization plans, this is a field that's really growing among consultants and architect and engineering firms to offer a service to help building owners understand how all these pieces fit together, and to be able to decarbonize their building stock in a logical, sort of sensible way, based on the current state of the building in its overall capital replacement needs, and especially looking for synergies between the bigger projects, like envelope upgrades and the bigger projects having to do with the end of equipment life, making sure that that end of. Life moment is again captured in a similar way to what we just talked about with homeowners, so that you're not in a situation where your choices are limited. And I think, you know, ultimately, a lot of it for bigger portfolio owners, has to, has to come back to some of the ESG kind of impetus. And really trying to understand, in addition to that, what that dream premium would look like for them, you know, and kind of how it aligns with their corporate values and the financial criteria that get baked into the project. And we know that there are a lot of projects, for example, when geothermal systems are put into place, where you're freeing up mechanical space that can then deliver revenue additional revenue streams. And so, the direct sort of cost comparison of before and after isn't necessarily obvious, and that's why having decarbonization plans that try to bring in those value streams as aggressively as possible can really be helpful.

Trevor Freeman  50:57

Yeah, I think I mean, the main takeaway for me from that is, is plan. Think about this ahead of time, do your analysis. And it's something that I know in the work that that I'm involved in here at Hydro Ottawa. It's something we talk to our commercial customers, especially a lot about is spend the time to create the plan so you're not caught off guard. You know what you're going to do. You know what your strategy is, and you can implement it doesn't have to be done overnight, and the context will change, right? You know, new programs will come into play. Existing programs will leave. There will be different times where it makes sense to do different projects. But if you have that plan, if you know what the strategy is, then you're, you're well set up. So maybe one last quick question. You know, the idea of programs coming and going. It's not always a straight path when it comes to policy, and as much as there's been some exciting things happening in the last little while when it comes to policy and the regulatory framework around decarbonization, so we've had a price on carbon in Canada for a while. We know that things ebb and flow, and so we are likely looking at least a federal election this year here in Canada, likely a provincial election here in Ontario, where we're speaking from. And these things can change policy and policy can ebb and flow. How does the decarbonization effort handle changes in policy, changes in prioritization from the different levels of government that we talked about, you know what? What is the strategy when it comes to those changes as we move forward?

Brian Flannagan  52:36

Yeah, it's a great question. I mean, especially, especially in the times that we're in for the listeners. You know, this is the day after Prime Minister Trudeau announced his resignation, and there's a lot that's happening. I think the strategy overall is, it's quite simple, but it's to recognize that this has always been the case. You know, municipal and provincial and federal governments across the country are changing on different timetables all the time, the alignment of sort of ideological approaches to dealing with the climate crisis are in flux, and have been in flux the whole time, you know, and so I think it's incumbent on us, and this is, this is part of the approach that will be saved. The BDA, the building decarbonization Alliance, is trying to take a different approach. I don't know that we're there in terms of truly embodying that Spirit just yet. It's a work in progress. We're still very new, but the idea of really embracing that we have to be able to work with an incumbent of any political stripe or leaning, including gas utilities, who are powerful incumbents here, who have every reason to want to continue what they're doing, we have to find logic and rationale to drive us, commonly toward a net zero objective for all of the international, global competitiveness positioning issues that we talked about earlier. Right? It's not easy to do that, because climate ideology has traditionally sort of been a left leaning ideology, and I think it's difficult to overcome that and work with different ideologies. But you know, when you have a populist sort of idea saying, hey, people can't afford a house, or people can't afford their energy bills, those are statements that resonate with people, and we have to. We can't come along and say, oh no, this is totally affordable, this is easy, this is a slam dunk. You just electrify your building, like spend $20,000 on a heat pump. You should be able to do that like that is not in touch with the reality of what a lot of people feel. So, I think it's the strategy for us is to recognize that we have to be able to truly address those concerns with evidence and with science and with technologies that actually deliver the goods, we think that there's a strong case for many of those things, like cold climate heat pumps work that question. I think that question is largely resolved, and if you don't have exactly the technology that you need put in a hybrid system for now. That's fine in 15 years when you replace it, the cold climate heat pumps then, or even going to be better, you know? So, there are things that we can put to bed, but we have to be able to if that isn't the case, if it's not actually affordable in a given jurisdiction, we can't walk in and say, hey, well, why aren't you guys doing this? This is affordable. It's not and I think those political ideologies often tap into those different elements where we don't have the narrative fully baked as powerfully as we should to counter, you know, whether it's questions of energy system reliability or energy choice is another sort of theme that comes out. You can't tell me which heating system I'm going to use. Well, I don't need to convince you if you already believed that it's just fundamentally better, you know. And we see this with electric vehicles, actually, the transition there has been interesting where the strategy is to say, hey, this electric car is like, way better than an internal combustion car, you know. Credit to Elon Musk for bringing out a vehicle that was just faster than anything else. Any piston head would just look at that and say, oh, my God, the performance is crazy. And sort of having, having those ready answers to really diffuse with conviction and based on actual evidence, to diffuse those messages, I think, is really, really important. And we have a lot of areas of study that are still left. We talked about the green premium earlier, for investments in commercial buildings. We don't really know, you know. And to say, well, if you invest your property value is going to go up, or the asset value is going to increase. It's just, we just don't know that. And so, following the evidence and being able to acknowledge where we don't, where we don't have all of the answers, I think, is important, and then finding the answers and stating them with conviction when it when it does make sense, you know. And I think in the cases that I mentioned earlier, if you're, if you're heating with fuel oil, the affordability question is solved. You should get all fuel oil because that will help you to pay your energy bills, right? And so those kinds of messages, I think, land with any political stripe, if it's back based, and if it actually follows from a logical thread. You know, it's hard to do, but I think it's necessary work if we're really going to get to where we need to go.

Trevor Freeman  57:06

Yeah, and at the end of the day, I mean, the work doesn't stop just because the headwinds get a bit stronger. And you know, the like you said, we got to find those messages that resonate and that makes sense, and then are rooted in fact and rooted in things that really resonate with people. So, I think that's a great place to wrap up the conversation. Brian, I really appreciate your time today. Thanks for joining us. We do always end our chats here with a series of questions to our guests. So, I'm going to put you on the spot here with a few questions, starting with, what is a book that you've read that you think everybody should read.

Brian Flannagan  57:40

Oh, my God, there's so many. I would go with. Outlive. The byline is the science of longevity, and it's by an author called Peter Ottawa, and it's, I think it's just pretty important reading about, you know, the major causes of illness in North America, and strategies that you might deploy to try to live healthier, longer. Pretty cool reading, lots of lots of stuff in there for everybody to take away, I think.

Trevor Freeman  58:09

Yeah, and good time of year for it, the New Year. Everybody's on their health kick right now. So, grab that book and get some ideas. 100% so same question, but for a movie or a show, what's a movie or show that you have watched that you think everybody should take a look at.

Brian Flannagan  58:23

My favorite go to is the Shawshank Redemption. I just can't think of a movie that's represents better storytelling. The cast is incredible. The story is incredible. It moves me every time I watch it. That's just crazy good. So, that's usually at the top of my list. I mean, there's so many. I'm a bit of a movie. But of a movie buff. There's lots and lots. But that one usually, usually rises to the top.

Trevor Freeman  58:47

My kids are getting older, and I'm starting to think about, yeah, what are all those movies that are so good that I just need them to be a little bit older before I can watch with them? So that's definitely on the list.

Brian Flannagan  58:58

100% I've and I've had this. I've had the same ruminations with my kids, when, when is it appropriate? Because there's some very mature themes. But it's a great movie, for sure.

Trevor Freeman  59:08

If someone offered you a free round-trip flight, let's hope for a sort of electrified plane or some sort of carbon offset anywhere in the world, where would you go?

Brian Flannagan  59:17

It's going to be biofuels, by the way, for the airline industry. That's why we need to save all of the biofuels for those harder to decarbonize sectors. When people talk about decarbonizing buildings with biofuels and things like that, it's like, no, no, we have to save them. So that's why electricity, it's a whole that's a whole other aside to the conversation that we had. But yes, I'd, I'd go to New Zealand or in Australia. I think I haven't been, long flight. The great value, and thanks for the free tickets, Trevor, I'll look for them in the mail, but yeah, I haven't been and the idea there's just so many adventures to be had out there, hiking or mountain biking or just exploring the Outback and camping would just be fantastic. It's a lifelong dream. I'll get there eventually.

Trevor Freeman  59:58

Who's someone that you admire?  Well, it's just so many different role models. I mean, in in the news recently, I would say, a bit of a news junkie, and so following the war in Ukraine over the last several years has been, you know, heartbreaking, and in many ways, kind of, you know, Volodymyr Zelensky as their leader has been inspirational. And kind of, it's reemerging in the news given the election of Donald Trump again, and you know, the resolve and sort of his beginnings, and how he came into that role, and what he's having to contend with, and the kind of leadership that he's exhibiting. And I'm certain that there's lots of flaws and lots of things that I may not be aware of in the man, but looking at it from an outside observer, based on the news that I'm able to access, oh my goodness. What a leader. Very, very inspirational. Yeah, it is always cool to see examples of just phenomenal leadership in the face of adversity, and there are a few of those throughout history. But yeah, that's definitely a good example of it. Last question, what is something about the energy sector or its future coming up, you know, at the beginning of 2025 here something that you're really excited about.

Brian Flannagan  1:01:04

Yeah, I mean, it's, it's sort of way out there. And I know from an energy future perspective, in terms of generating abundant energy, we've got wind and we've got solar that are, you know, just declining in price and increasing in terms of their capacity to feed electricity systems like that, obviously, is really promising, but something that's had my attention for a really long time is the prospect of eventual nuclear fusion. I know that that's bonkers. It's super expensive. And there's lots of reasons to say, well, come on, Brian, that's never going to really be a solution like that's certainly not going to help us for 2050 and all those things are true. So, things are true. But there's a project that's taking place in France. It's an international collaboration called ITAF, which is building this really huge, the first at scale, sort of example of a nuclear fusion reactor. And the project is fascinating. It's got an amazing website that details and that illustrates in great detail how they're building this thing, and how various countries are bringing different components together, and the technical and engineering challenge of it. It's like a moonshot. And I don't know what it is about that that captures my imagination the way that it does, but seeing that kind of an engineering feat unfolding, and it's like a 30-year project to get the thing done, seems like it's probably going to work by the time they get it finished, computing technology will be sufficient. Will be sufficiently advanced to control the Plasma field, and all these things are kind of lining up. The idea of being able to turn something on and off that's nuclear, without the safety considerations, and having that kind of power emanate from it, basically free energy at the end of the day, quote, unquote, it just captures my imagination in a way that none of the other sort of technologies that we're plugging away with, the reliable things like wind and solar that that's for sure, that's the way it's going to going to go in terms of clean energy. But yeah, that project just there's something about it. Anybody who's listening should look it up. It's it er, that's super cool to see how they've put together the graphics and the story of the of the system, and who knows, maybe, maybe our grandchildren will see that kind of technology helping to power all of the advanced systems that we're going to need in 100 years.

Trevor Freeman  1:03:14

Yeah, I had this conversation with a friend not too long ago about, you know, what is the thing that's happening now that's it's on the periphery. We're not too familiar with it, but in 50 years, people will look back and be like, oh, I wonder what it was like to be aware of the infancy of that thing. And who knows, maybe nuclear fusion is that thing so great example. Well, Brian, I really appreciate your time today. Thanks for joining us and talking through decarbonization of buildings, this massive part of the decarbonization effort that certainly could use all the focus it can get. So, appreciate your time and good to chat.

Brian Flannagan  1:03:50

Yeah, thanks to you. It's been it's been a lot of fun. Keep doing what you're doing. It's been great.

Trevor Freeman  1:03:55

 Awesome. Take care. Thanks for tuning in to another episode of the think energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it feedback comments or an idea for a show or a guest, you can always reach us at thinkenergy@hydroottawa.com

The energy sector is always changing. Episode 149 of thinkenergy explores what to keep an eye on this year. Like political influence. How will the Trump administration's takeover reshape policies across the border? What are the potential impacts of federal and provincial elections here in Canada and Ontario? From energy strategies to affordability to decarbonization efforts. Listen in as host Trevor Freeman uncovers how politics influence the energy sector and what to expect from thinkenergy in 2025.

 

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• Hydro Ottawa: https://hydroottawa.com/en  

 

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Transcript:

Trevor Freeman  00:07

Welcome to thinkenergy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at thinkenergy@hydroottawa.com Hey everyone, and welcome back, and welcome to 2025. Happy New Year. I hope you all had a restful and relaxing break. I know I certainly enjoyed a little bit of time off with some friends and family, and it was nice to sort of recharge. But here we are at the start of a new year, at 2025 early January, the whole year is ahead of us, and there's lots of work to do, and being in the energy sector means there's lots of change ahead. On that note, today, we thought we'd dive into some of the areas that we think might shape or influence or be areas to watch for when it comes to energy in 2025. There's no such thing as a quiet or stand still year when it comes to the energy sector, 2025 will be no different. So, we thought we'd take a look at some of the things that we think might sort of hit the headlines or really drive change.  So, without further ado, let's dive into those areas. Area number one is politics. So, energy is political, and energy shapes politics, and politics shapes energy, and that's the same every year, but 2025 is shaping up to be a pretty significant year when it comes to political change that might impact energy policy. So, to start with, we are mere days away, a little over a week away as I record this from a new US administration. The Trump administration will take over on January 20, and like any change in administration and what is arguably the biggest economy in the world that will have an impact on climate change policy, energy policy, the flow of goods across borders. You know, there's talk of tariffs between Canada and the US. So just because it is in the United States, that doesn't mean it won't impact us here in Canada, so we'll be looking to see what change that does bring, what how that influences politics and energy policy and the flow of goods and all of those things that can impact what we do with energy. A little bit closer to home however, we also have some change potentially coming here in Ontario, at least, we are looking at potentially two elections this year. So, to start with, there's the federal election. It is very, very likely, almost a sure thing that we will see a federal election in the coming months. Justin Trudeau has recently announced his resignation, which will almost definitely trigger an election. So, we could be looking at a new government, or a new mandate for the existing government. So, what might that mean? Well, if the Liberal Party the current government, manages to get another mandate and remain in power, we kind of know what their priorities are. They've been going down a path for the last little while. They will probably continue to invest in clean energy infrastructure, they will continue to push for net zero goals and look for ways to support others to achieve net zero targets as well. If there's a change in governments, which the polling suggests is likely, and the Conservatives get into power, they are likely to look to prioritize affordability and resource sector competitiveness. They may also adjust timelines for emissions targets as a result of that. The one big thing that's worth mentioning, of course, is the price on carbon. This was brought in by the existing Liberal government, and they stand behind it. The Conservatives are very much campaigning on a platform of getting rid of the price on carbon, the Federal price on carbon that will have significant impact on energy policy and how things move. There are a few previous episodes that you can listen to that talk a little bit about that, and I'm sure we'll talk about it throughout the year as things play out. And finally, in this section, in Ontario, it's very likely that we might see a provincial election as well. All signs are kind of pointing towards a provincial election this year. So what could that mean? Well, similarly, our existing government has kind of made their energy policy known. We know what their focus is. So they are focused on expanding our traditional energy mix, so nuclear, some natural gas, as well as some investments in renewables in order to make sure that the grid can handle growth and electrification in that sort of rising demand that we're seeing. Should we see a change in government to one of the opposition parties? There may be more of a push for more renewable sources and lowering those carbon emissions faster than the current pace of change, at least based on what they are saying. So we'll keep an eye on that and how that comes into play. Obviously, energy is sort of primarily in the provincial jurisdiction here, so a change in government or a new mandate for the existing government would certainly have a big impact on energy policy. So area number one politics, area number two is energy affordability.  So Canadians have always cared about affordability when it comes to energy this has been sort of a driver in previous elections, but it is definitely top of mind now, as we are coming out of sort of a wave of inflation, supply chain issues, there's an affordability crisis, sort of across the economy in Canada, for many Canadians. So that definitely applies to energy as well. What does this mean? Well, it certainly will influence the way many people vote in the elections that I just mentioned. So look for Canadians to be wanting to know what those political parties stance is on energy and energy affordability. It may also impact the pace of adoption of decarbonization measures and electrification and some of those energy transition pieces that we're seeing. So if folks are struggling with the affordability of their bill. That means they are not likely to invest in large upfront capital cost items to change that. On the other hand, Canadians will be looking for ways to reduce their energy costs, and so maybe some of these items that might help reduce electricity costs will become more attractive to Canadians, they will also be looking for programs to help them with this, and the province just recently announced their new incentive structures, or the new iteration of save on energy incentive programs called the home renovation savings program here in Ontario, and Canadians will likely want to take advantage of that to help upgrade equipments, make their homes more efficient. There's a commercial stream for that as well, so businesses and institutions will also be looking to take advantage of that to address energy costs. So energy affordability will certainly be a driver, as it often is in 2025.  Area number three is decarbonization. So decarbonization is here to stay, and we expect that to ramp up this year, for sure, to continue being a point of importance for Canadians. So the climate crisis won't disappear from the news. As I record this, we're, you know, seeing these really terrible images and stories coming out of the Los Angeles area about wildfires, it seems like that's a perennial thing. We see that every year now, that will continue, and that really does drive people to think about their own decarbonization journeys. We are still in the early stages of adoption for some of this technology. You know, heat pumps, home generation and storage, real deep decarbonization measures were in those early stages. So I don't expect, you know, massive steps forward in the next 12 months, but I think more folks are going to start thinking about and planning for their actions on this, and that's at the both the residential and the commercial level. So here at Hydro Ottawa, we're seeing a lot of our commercial customers take advantage of our Enercan funded Ottawa Retrofit Accelerator program, which really supports that sort of carbon pathway planning, that plan to decarbonization. And I think a lot of folks will start thinking, you know, what's my next move when it comes to decarbonizing? You know, if my furnace is getting to be a little bit old, am I going to put that heat pump in? You know, even if I don't do it in the next 12 months, I want to start thinking about what that looks like. So we expect decarbonization to continue to be a point of focus. We expect it to be a point of topic, you know, in these elections that we talked about, because that climate crisis is in front of our faces, always in the news, and that won't be changing. Area number four is clean electricity, grid modernization and energy efficiency. So in keeping with the previous point, decarbonization, electrification is one of the main tools to decarbonize, and we are moving to changing some of those end uses, from fossil fuel combustion to electricity. So things like heating our homes, our spaces, our water and transportation. You know, how we get around, what we drive, what sort of public transportation we take. The solution to these things, when it comes to climate change, is primarily electricity. So in order to make sure that we have enough electricity and that the electricity we have is clean enough to support that, we will see more movement towards this in this year. So just in December before the end of the year, December 2024, the Federal clean electricity regulations were finalized. And these regulations kind of chart a path to decarbonizing electricity generation in Canada by 2050 you'll notice that that's a change in date. The previous target was going to be 2035 but over the course of the last little while, the federal government has come out and said, yeah, look, we think it's more realistic to set 2050 as a target, so that is the new target. And the federal government's investing significant money behind this. There's $60 billion to help this general move towards decarbonizing our electricity generation, and to make sure that that's done in a way that keeps energy affordable for Canadians. At the same time, utilities across the country will continue to invest in grid modernization. So as well as infrastructure expansion, not just modernization, we're also building and growing our grids to keep up with the pace of change, but we need to also be able to leverage more DER's on the grid, so more distributed energy resources, small scale solar generation, things like that. So we will continue to see utilities make steps in that direction. They will look to levels of government to support those initiatives through programs and funding and regulatory change. So we will continue to see that change in grid modernization. I know it's definitely a big topic for us here at Hydro Ottawa. And finally, in this section, energy efficiency. Energy efficiency is not new. It's been around for for quite a while. In fact, it was the primary focus, kind of before we shifted a little bit more towards thinking about carbon. But we cannot fully decarbonize. We cannot fully electrify without significant energy efficiency. We just won't be able to affordably build the infrastructure we need if we're not using energy in an efficient way. So that will continue to be a focus. And in fact, I mentioned the new incentive programs from the province of Ontario that is very much designed to support ongoing energy efficiency measures. So, we will continue to see that as a focus in 2025 and our final area, area number five, is technology.  So there is no year anymore, in fact, maybe there never was where technology doesn't continue to grow and expand and evolve in ways that we couldn't even imagine. And it does seem like the pace of change is picking up, but I think that's kind of normal. So we will see technology that supports or augments the energy transition continue to evolve in 2025 and the ways that technology influenced that really, you know, we have an idea on some of them, and it'll be interesting to look back in 12 months at what we know in December 2025, that we didn't even know here today in January. So a couple specific areas. You know, we're seeing EV technologies continuing to involve we will see continued EV adoption throughout the year. Year over year, over the last five years, you know, EV adoption in Canada has increased steadily. In July of 2024 you know, zero emission vehicles hit almost 14% of market share, we can expect that to continue increasing. As that happens, you know, more charger technology out there, more sort of, not just the physical charger, but the ways that those chargers interact with the grid more control over that to make sure that we're managing charging in an appropriate way. The role of AI is really going to be interesting to watch this year. So AI, of course, is all over the news across all sectors of the economy, but certainly in the energy sector, it has a role to play, and there's kind of two facets to that. The first is the role that AI might play in helping us manage our energy costs, our energy usage, and that's both at the consumer level. So, what will AI help me do in my home, to manage my energy costs, to manage the sort of cleanliness of my energy? Let's say I want to really focus on just, you know, green energy when the grid is at its cleanest and try and avoid it when it's maybe more carbon intensive. What's the role of AI in that this is likely a multi year stretch. I'm not saying that we're going to sort of have all those questions answered by the end of this year, but I think we will see movement in that direction over the course of this year, and then also at the utility level. What's the role of AI in helping utilities manage the grid? You know, understanding where there are feeders that are increasing or that are getting near capacity limits and needing to shift. Again, this is not a 12 month exercise. This is a multi year exercise, but I expect we will maybe see some movement in that direction. The other way that AI and the increasing role of AI will impact the energy sector is just purely from an energy needs perspective, so AI is an order of magnitude higher when it comes to the amount of computing power that is necessary. So that, you know, the kind of stat that gets thrown around is that a chat GPT search uses about 10 times more energy as a standard Google, you know, search, a search engine search. So with all of this stuff going through AI, we're seeing more computing power needed. So that means, you know, bigger, more dense data centers that have larger cooling needs, which means more energy requirements. And, as much as we're seeing electrification drive demand up for electricity AI usage and data center usage is also driving up demand. And, so we're seeing larger load requests. You know, utilities are having to figure out, how do we provide way more power than we've had to previously, to some of these new customers and customers that are wanting it kind of overnight, like, hey, we're ready to build a data center like tomorrow. Can you supply us with a significant amount of power? So that will certainly be a driver. The last little piece of technology that I want to mention there's, you know, we could go on for hours on this topic is when it comes to sort of home generation and storage, especially storage. Solar panels have kind of been around for a while now. We've seen that really precipitous drop in price when it comes to solar technology, and that continues, but home, or sort of behind the meter storage, is really becoming a thing that is more realistic than it has ever been before. So, the incentive programs that I've brought up a couple times here in the province of Ontario now provide an incentive to put in a behind the meter battery in your home, and the role that those will play, we're only just beginning to see, you know, helping customers manage their energy costs. You know, charge that with your solar panels and then use the battery during peak times, or charge it during off peak times and use it during peak times. You know, managing costs redundancy and resiliency, and, you know, helping you out with a bit of a bridge during times of outage will be really important. And you know, we're seeing that at the at the household level, but we're also going to see that on a much bigger scale, at the commercial level. So, commercial customers are also looking at what's the role of battery storage to help them manage costs, and then even one next level, up at the grid level. So, we are seeing large scale battery storage projects that will support sort of grid management, help manage peaks for utilities so that they can, you know, defer or delay or reduce the size of that infrastructure builds, you know, if they can manage to rely on batteries for those handful of times a year when we spike into those peaks, then that helps out with grid planning. So those are some of the technology pieces that we expect to see really kind of flourish or take it to the next level in 2025 again, all of these things are not short term projects, 2025 we'll see some change, but these are, like, multi year things that will go on beyond that. So those are the areas that we think will kind of drive change, or be areas to watch for this year. You can likely expect some conversations on the podcast about that over the course of the year, because certainly they will be making news, and there's some really interesting folks working on some really interesting things when it comes to those areas. But, was there anything that we didn't identify that you're kind of keeping your eye on? Is there anything that you think we should be keeping your eye on, or that you're keeping a look at? Feel free to let us know you can reach out to us at thinkenergy@hydroottawa.com As always, we love to hear your thoughts and feedback. We love to hear kind of your ideas for topics or episodes that we should do or guests that we should have on the show. We're going to continue to explore with format this year. So we'll definitely keep talking to some really smart folks, we will throw out a few more of those kind of explainer episodes where we try to demystify a complex or maybe unseen topic when it comes to the energy sector. But, whatever we do, we look forward to having ongoing conversations with you guys and hearing your feedback, and this is the kind of stuff that we just love talking about. So thanks for listening. Happy New Year, and we look forward to chatting to you next time.  Thanks for tuning in to another episode of the thinkenergy podcast. Don't forget to subscribe. Wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or a guest, you can always reach us at thinkenergy@hydroottawa.com

Summer rewind: If electrification is the future of energy, the grid must become more efficient and more reliable across Canada. Jenna Gillis, Manager of Distribution System Integration at Hydro Ottawa, joins thinkenergy to discuss the process. Listen to episode 136, as she shares how Ottawa’s electricity grid is being updated with an Advanced Distribution Management System (ADMS) and what this means for you, your family, and residents throughout the region.

Related links

●     EV Everywhere Pilot Project: https://hydroottawa.com/en/save-energy/save-energy-homes/ev-everywhere

●     Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

●     Hydro Ottawa: https://hydroottawa.com/en 

 

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Transcript:

Trevor Freeman 

Hey everyone. Well, it's officially summer, and the think energy team is taking a break to recharge over the next two months, but also to plan our content for the fall. So stay tuned for some great episodes in the fall. Not to worry, though, we still have our summer rewind to keep you engaged. This is where we pick out some of the great past episodes that we've done and repost them. So whether you're lucky enough to be sitting on a dock or going on a road trip or if you're just keeping up with your commute through the summer, it's a great time to revisit our past content. You will hear past episodes from my predecessor and the host chair, Dan Sagan, as well as a couple of mine from the past few months, and you're welcome to check out your own favorite past episodes as well. Wherever you get your podcasts. We hope you have an amazing summer, and we'll be back with new content in September, and until then, happy listening.

 

Trevor Freeman  00:07

Hi, welcome to think energy, a podcast that dives into the fast-changing world of energy through conversations with industry leaders, innovators and people on the frontlines of the energy transition. Join me Trevor Freeman, as I explore the traditional, unconventional and even up and coming facets of the energy industry. If you've got thoughts, feedback or ideas for topics that we should cover, we'd love to hear from you. Please reach out to us, I think energy at hydro ottawa.com. Hi, everyone, welcome back. I'm pretty excited about today's topic, because we're going to be tackling something a little bit technical. And that's always fun. And today is going to be the first of what might end up being a few different episodes looking at this term called grid modernization. So today, we're going to do just a high-level overview. And then over the next few months, there'll be a couple of different episodes that will dive deeper into some of the specific aspects of grid modernization. So that term grid modernization can be a little bit daunting, but that's okay. Our goal here is to pull apart these topics to better understand what they are and how they impact all of us, you know, from those of us working in the energy sector, all the way to the end users of our product, if you will, our electricity customers. So let's start by a bit of a primer. And I think it'll be helpful to start by talking about what the grid is. So the electrical power grid has been called the world's largest machine, and the greatest engineering achievement of the 20th century. And for good reason, thinking of it as a machine is a great metaphor, because just like a car, or a sewing machine or a snow blower, there are a lot of parts. And if any one of those parts breaks or isn't working as it's supposed to be, that will impact the overall function of the machine. And the same is true for the grid. And the parts we're talking about here are the holes, the conductors or wires, the transformers, the switches, as well as the many different sensors and meters and communication devices that help the humans in the mix, monitor and control things. The difference though, is that you know, even for a complex machine, like a car, there are hundreds or maybe even a couple 1000 parts. But the electricity grid, even if we just look at let's say hydro Ottawa as territory, there are hundreds of 1000s of parts. And if we scale that up to Ontario's grid, we're talking about millions and millions of individual parts all working together, so that when you turn your lights on at home, electricity that was generated hundreds or 1000s of kilometers away, flows into your device and makes it work. That's pretty impressive. And if any one of those millions of parts breaks, there's an impact somewhere on the grid. If multiple things break, or if there's something really critical that isn't working. That's a major problem. And we've seen these major problems. We've seen large scale outages. And you know, we tend to focus on Ontario's grid on this show, because that's what we call home. But our grid is connected to our neighboring grids, who are connected to their neighbors to form really an interconnected North American grid across Canada and the United States. It really is a modern engineering marvel. And, you know, we didn't just get here by chance. This was kind of designed, you know, back at the early days of the 20th century in the early 1900s. Electrical pioneers met for the first time in what is now Kitchener, Ontario to discuss what it would look like to wire Ontario's customers together to form a provincial electricity grid. Our predecessor company, the Ottawa hydroelectric commission, connected to that provincial grid in 1916. So, what we know as the Ottawa grid and our service territory is over 100 years old today. Before that, across Ontario, reliable and continuous power in the region was kind of uncommon, and really dependent on whether someone in the area like a major business or a wealthy individual had invested in a localized electricity grid for their own needs. An interconnected provincial grid was designed and implemented with a goal of making electricity available to all Ontarians regardless of where they lived. And that kind of evolution of the grid in Ontario is similar to how it worked in other parts of North America and indeed the world. That's kind of how grids came about in the last century. Ontario's electricity grid, however, like all grids around the world, was really designed as a one-way street. So, the idea was to generate and then transmit, and then deliver that electricity to customers in that order. Back then, those pioneers really couldn't have imagined an electricity grid that would need to support two-way interactive things like small scale distributed renewable energy, you know, solar panels on roofs or electric vehicles, or energy storage, and a whole host of other things that, you know, want to do more than just draw power from the grid. As we've talked about the ongoing energy transition, and electrification, which is being driven by the pressures of climate change, is really driving a societal shift to bring the electricity system into the 21st century, and to make sure it's powered with clean, renewable electricity. So, our grid is starting to undergo this major transformation. And we won't be able to do that effectively or affordably by just using the same strategies and technologies and the same pace that we've been doing it at over the last 100 plus years. We need to take it to the next level; we need to rethink what we're doing to upgrade the grid and how we're doing it. And that's really what grid modernization is, it's not saying we don't have a modern grid, it's realizing that the grid of 10 years from now needs to be different in a much bigger way than it's different from how it was 10 years ago, that pace of change needs to happen quicker. And we need to bring on new functionality. It's not just you know, incremental change anymore. To help us make some sense of this. I'm really happy to have Jenna Gillis to chat with today. Jenna is the manager of distribution system integration at hydro Ottawa and is leading this major project that we're calling at a high-level grid modernization, or more specifically, our advanced distribution management system, or ADMS. Jenna has been with hydro Ottawa for 16 years and has held a number of different roles on the operations and systems side of our business and really knows how our grid operates, how it's been operating, how the humans in the mix control things. And what's necessary to get us to that next stage that we've been talking about. Jenna, welcome to the show.

 

Jenna Gillis  07:04

Great. Thanks, Trevor. excited to talk to about this today. 

 

Trevor Freeman  07:07

Yeah, I'm excited to. So let's start at kind of a high level here and help our listeners understand how we currently operate our grid today. So paint the picture for those of us who don't kind of get to see what happens behind the scenes. How do we control things today?

 

Jenna Gillis  07:23

Yeah, for sure. So what people might not realize that we actually have people sitting in a control room centralized control room that looks at our system 24/7 365. So we've got people monitoring the system all the time. And they look at the grid state, and they help direct field activities. They look at triaging outages as they become aware of them. And right now, we've got visibility to our control room to all of our substations, so all of our, you know, high level devices, but only down to about 8% of the feeders and not actually all the way out to our customer level. So what does that mean? That means that we still rely on customers calling us or reporting online when they experience an outage. And all of that information does make its way back into our control room operators. And it goes into a system we call the outage management system, which helps us track and identify where we might be seeing issues out on the grid. So the operators then use that information to help make decisions in terms of controlling the grid where they need to open up closed devices where they need to send field crews to restore power. So on top of that, most of these activities are done by field crews. So the system operators are in direct contact with our crews out in the field and providing direction on where to go, what devices to you know, have them physically open or close in the field. And we've got about 10% of our system right now that has remote capabilities. So that means that the operators can choose to open or close those devices, basically at a click of a button back in the office sitting at a computer. So most of what we do today really is human based and does take an expert control operator to be monitoring the systems and making the decisions.

 

Trevor Freeman  09:08

Yeah, so we've got this like really complex system. It's, you know, state of the art system, if you will, that requires, like you say experts to keep track of what's happening to identify problems and make decisions based on the information they're getting. I just want to pick apart a few things you said there. So when we're talking about our substations, just for our listeners, those are, you know, spots in our grid where we take higher voltage and step it down via transformers to a lower voltage, and then send that out on wires. That's what we call our feeders to our end customers. We know what's happening at that substation level, we can see whether the power is flowing or not whether switches are open or not. But once it gets past that we lose some of that visibility. That's kind of what I'm hearing from you

 

Jenna Gillis  09:57

Yeah, exactly. And so that's why I'm saying like we still rely on those notifications from our customers to let us know where they're seeing the problems. And, you know, it comes into a system that, that we can look at in conjunction with that visibility that we have on the substations to help us understand what's going on.

 

Trevor Freeman  10:12

Right. So obviously, it was such a, you know, an ordered and complex system, we're constantly in proving and renewing and upgrading. That's not new. That's not something that we're just starting. But as I've kind of hinted at in the opening there, we do need to change how we do things. So before we look into where we're going, how do we renew and upgrade today, what's our current process.

 

Jenna Gillis  10:36

So we do have a robust asset management framework. So that's basically a program that tells us and we look at all of our asset information. And that's whether that's poles, wires, transformers, switches, breakers, basically anything we have out on the distribution system, and we look at and prioritize where we need to invest and where we need to renew, replace, install, upgrade, all of that kind of stuff. So basically, as we do that, right now, we go through, and we'll incorporate new technologies, like these remote control switches, like these sensors to bring information back into the control room to help us continue to evolve, meet our customer or system needs. So this, this process has worked really well in the past in terms of keeping pace with technology and the requirements of the grid and our customers. But right now, we're seeing that it's we're falling behind, it's too slow to parallel installation of these new technological devices, with these asset renewals or installation. So I mean, if you think about it, you know, a pull out with wires on it can last over 50 years, we can't wait until we're replacing that 50 years from now to go in and add these new technological advancements. So what that means is now we're looking at a hybrid ap proach. So of course, we're going to continue to parallel activities where it makes sense with these asset renewals and upgrades and replacements. But we also need to strategically start placing these devices in areas that we're going to gain benefit from, and I'm talking about benefit from a control room operator perspective, benefit from a safety or field crew perspective, but also where we can provide value to our customers in terms of, you know, expediting restoration efforts, or, you know, providing more flexibility into the system to allow more customer connections, whether that be, you know, new residential developments, or whether that's, you know, the next solar panel or battery or something like that.

 

Trevor Freeman  12:25

Yeah, waiting for anybody who's familiar with kind of technological adoption curves and the pace of technological change, you talk about 50 years is the life of some of this equipment, the difference between technology and let's say, 1930, and 1980, wasn't a huge jump when it comes to poles and wires and transformers. But today, the difference of 50 years is night and day that we're not talking at all about the same technology. So we can't wait for that whole cycle to go through before we're getting some of the tech in today that we need today in order to upgrade the system. So that's helpful to understand what that looks like. So let's look forward then. And when we talk about where we want to go with grid modernization, how we want to change that, talk us through what we're trying to accomplish.

 

Jenna Gillis  13:14

Yeah, so I think I'm gonna paint a little bit of a picture here in terms of how I think about grid modernization, because that's really helped me contextualize the way that we need to do things differently. So I think of grid modernization, that program in entirety as like a stacked or a layer pyramid. At the bottom, you have field devices. So you have equipment that's remotely controlled, or providing data in the field. So you know, we're talking about sensors, or meters or switches, things like that. That's your foundation. On top of that, you then need a way to get that information back to back to systems back to people. So then you need a communication infrastructure. So you need to be able to take that data and funnel it where it needs to go, which is the third layer data management, you need to store, organize, create access to that field data. And then finally, the fourth triangle right at the very top is your applications and analytics later. So now you've got the data coming from the field, you're bringing it back, and you're managing it. So now what are you going to do with that information. So these are the applications and analytics. So really the tools that digest that data and ultimately help make decisions. So that is what I envisioned kind of as the grid modernization pyramid. And you need each one of those layers to unlock the value from the layer below it. So you can't really have one without the other all the way up to the top. So what we need to start doing is thinking about these layers in a programmatic fashion. What we've done historically is looked at the requirements on a project by project or program by program basis. So basically, you would unlock each one of those layers for that specific project or program requirements. What we need to start doing now is that grid moderization is going to be the foundation for everything we do. So basically, every project, every program is going to require some level of information, data management, analytics, communication. So the way we're looking at that is this is now becoming a foundation to everything we do. So we need to be programmatic, roll this out so that regardless of what we're doing in the future, we have this foundation to rely on. And we're not building it piece by piece as we work through, you know, project life cycles. So really, what's different when I talk about grid modernization assets, and I'm talking about meters, or sensors or remote control devices, is the integrated nature. So we talked about that pyramid, you can't use these devices without any one of those layers, whereas you think of a traditional asset like a pole, you can, you know, load it up at a truck, and somebody can go and put it in the ground. So it's really the the true convergence. Now we're seeing what we, you know, our information technology, our IT systems, our operational technology, or OT systems, and then operations and asset management. So we really need to be looking at these things together, as one, making sure we're all aligned to unlock each one of these layers.

 

Trevor Freeman  16:15

Yeah, it really highlights the, I guess, cascading impacts of projects and decisions and bringing on new technology across the entire distribution, business and how we do things and how we serve our customers. One is impacting the other in ways that hasn't really, truly been the case before. So that's that's a great way of of painting it. Thanks, Jenna. Let's talk about kind of the the why behind this, what are the benefits that we're going to see by taking this approach by taking this sort of accelerated upgraded process that we're doing? What are we going to gain from this.

 

Jenna Gillis  16:54

So our overall grid modernization strategy is guided by five key objectives. So I'll go through each one of those and give you kind of a high level blurb on on what it is that we're trying to achieve with grid modernization. So the first one is enhancing reliability. So the more monitoring devices you have in the field to understand the state of the grid, the more remote capabilities you have in order to operate. And you know, isolate and restore, the better reliability have the ultimate goal is moving towards an automated process, where you have all of the foundation of the equipment, the communication channels and the audit, the analytics to make decisions, you can get outages restored much more quickly. The next one is what we call flexibility. So adaptive grid flexibility. So we want to make sure that the grid is dynamic to all of these changing energy demands that we're seeing come online, so things like heat pumps, or electric vehicles, or solar generation or battery, we want to provide more options for the connections and be able to have the grid respond dynamically to these changing conditions. Next one we have is fortified resilience and robust security. So resilience is really about the ability to do to withstand disruptions. And I'm talking about that from, you know, a physical asset perspective, but maybe also a technology perspective, as well, we want to make sure that we have a good diversity, to be able to recover from disruptions. So we know there will always be disruptions, as we've seen, kind of with the weather and the little last little while. And then as we get more and more connected, we need to make sure we're safeguarding assets from cyber threats, core to everything we do, we want to make sure that we're thinking about the customer. And so we're looking towards strengthening customer engagement and empowerment. So we've talked about, you know, getting more data back from the field and being able to unlock new new ways of doing things, new tools, and providing some of this information back to the customers to help them be better informed about their energy uses, and their, their low profile and what they want to do with their equipment. And then finally, sustainable decarbonisation of renewable energy integration. So we really want to look at reducing our carbon footprint by optimizing our planning and operations processes. So we talked about it a little bit about automation, you know, that will reduce our need to roll trucks for crews to physically go out in the field and operate devices. And basically, everything above we talked about was, you know, being able to incorporate renewable energy sources. We want to make sure that we have the ability to bring these resources online and leverage them.

 

Trevor Freeman  19:34

Yeah, I mean, it really kind of, again, not to kind of reiterate the same things we're talking about, but it it's an all encompassing type of project like everything we're trying to do everything we talk about on this show, when it comes to the energy transition, whether that's having a more robust, sustainable, smart grid on the utility side of things, to enabling the kinds of things our customers want to do in terms of adding in more DER's, more self generation and storage, this project is kind of the foundation work. And that's going to support all of those efforts. And we're really only going to get so far without doing this kind of work, which stresses the importance of it. 

 

Jenna Gillis  20:19

Yeah, it really does unlock so much more by having this level of information and visibility into our system that we want to achieve.

 

Trevor Freeman  20:27

Yeah, that's great. Okay, so let's kind of dive in here you have this overall strategy that you and your team have outlined, which you're calling our grid modernization roadmap. Walk us through the main components of this and kind of the timelines that you've laid out? Is this a six months project? I say that kind of laughing, knowing is not a six month project? How long is this going to take? And what are the major components of this.

 

Jenna Gillis  20:53

So hopefully, I've done some justification in terms of, you know, mapping out how complex this actually is to deploy. And so our grid modernization roadmap is set out, basically a set of initiatives over the next 10 plus years. So we've kind of, you know, got got a good handle on the objectives we want to unlock over the next 10 years. And so we've laid out, what do we need to do to unlock those, and what's the timing of that. So we also need to understand that this is going to be dynamic and constantly evolving with, you know, technology or market drivers. So you know, this roadmap is only as good as it is today until you know, something changes tomorrow. And we recognize that this is going to have to be dynamic and evolving. So due to the complexity of it, we decided to basically bucket the program into six different component layers so that we can really get a sense of how one feeds into the next as I kind of talked a little bit about the pyramid before. So the first one is physical infrastructure. Number two is sensing and measurement. The third is communication. Fourth is data management and analytics. Number five is control and optimization. And then finally, the last number six is business and regulatory. And so all of our initiatives fit underneath one of those six components.

 

Trevor Freeman  22:12

Okay, so let's dive in and pull them apart that I'd love to kind of talk more about each of those. And just for our listeners, we're going to keep this fairly high level, because we don't have time to get into super detail on all six. But the plan is actually to take future episodes and maybe pull apart some of these in more detail. So if you're super interested in what we're talking about today, don't worry, we'll we'll dive into more detail. So let's start at the top with physical infrastructure. What does that entail?

 

Jenna Gillis  22:40

So the physical infrastructure component really targets the challenges and opportunities posed by electric vehicles electrification, climate vulnerability on the grid itself. So we talked a little bit about the fact that we need to start adapting, or continue to adapt our asset management practices to address these factors. So you know, what does that mean that that's things like I talked about before about increasing the rate that we add new technology or remote switches and sensors and things like that into the system. And I talked before about resiliency and flexibility. And a corporate part of this is, you know, incorporating an increased level of climate risk consideration into our, you know, acid assessments and our plan for renewal or replacement of those devices.

 

Trevor Freeman  23:28

Yeah, so this part of the strategy is really about, you know, the actual devices in the field that are going to be installed the new technology that we want to get out into the field on our grid. Let's let's pick apart that last piece a little bit, the climate vulnerability, how are we also trying to, you know, for lack of a better word, harden our grid, or make it a little more resilient to some of the the weather events we're seeing?

 

Jenna Gillis  23:52

Yeah, so I think everybody's probably well aware that it's not about, you know, if we're going to see, you know, another large weather round, it's about, it's about when. We've always incorporated those types of things into our asset planning. But now, the frequency and severity of these things is becoming higher and higher. So what we started looking at is, you know, reliability has always been a priority. But now we're shifting gears a little bit to resilience. So I talked about that before. And that's more about withstanding and recovering quickly from the events, like I said, we know they're going to happen. So how are we going to make sure that we can recover as quickly as possible. So with looking at that, we're looking at things like reviewing our design elements, like strengthening the poles that we install or doing strategic undergrounding and sections of overhead lines that we know have a high exposure, and like subsequent consequence of failure. So we are building all of these strategies now as well into that asset management in the deployment of what we're putting out into the field.

 

Trevor Freeman  24:50

Great. And again, just for our listeners, you know, I want to talk more about what we're doing and what can be done on that climate resiliency piece. So there, you know, keep your eyes open for further episode on that down the road. Okay, so the next piece you talked about is sensing and measurement at a high level, talk us through what that what that means and how that contributes to overall grid effectiveness.

 

Jenna Gillis  25:13

Yeah, so sensing and measurement is more than just installing the physical devices that we kind of talked about in the previous component. And its devices like sensors to detect faults and report back and where there might be disturbances or outages on the system. And it's more than just meters on customer homes, it's about integrating that data back into our grid management systems. So you know, our ultimate goal is to have real time access to all of the data from our customer meters, you know, that's over 350,000 meters. But to achieve this, we need to have a robust strategy to transfer that information store that information, at the right frequency, meaning in terms of, you know, how often do we get the information from this devices? And how often do we receive that information back in the office for all of the different use cases, and there's, you know, there's hundreds of use cases for that information. So this does represent a significant shift in the way that we're using our meters right now. Right now, when I talk about our customer meters, we take a reading from those once every 24 hours, with hourly level of granular data. So it's basically once every 24 hours, we get 24 points of data. You know, and we're talking about what we want to do with grid modernization, we're looking at, you know, reading those meters, you know, once a minute with more information. So you can see there is a huge shift in the way that we've got kind of the infrastructure set up around those things.

 

Trevor Freeman  26:43

When you talk about those numbers, so 24 data points every or every day, changing to potentially reading every minute. Remember, we're multiplying that by 350,000. So that's a huge amount of data. And, you know, Jenna and I are working for hydro Ottawa here, one of the sort of medium size utilities in the province of Ontario, we've got other utilities in the sector that have millions of customers. So the importance of data and how we handle that, and we'll talk a little bit more about that in a minute is certainly really high on the priority list. You know, some of what you mentioned there sounds a lot like what we call advanced metering infrastructure 2.0 or AMI 2.0. So for those kind of in the industry that know what that is, that's maybe the next generation of meters, we might be talking about, how does that differ from the existing smart meters that exist all across Ontario? And that doesn't mean they exist everywhere in North America, but at least in Ontario, we've got kind of what we call AMI 1.0. What does AMI 2.0 look like? And how does that change things?

 

Jenna Gillis  27:50

Yeah, so there's kind of one key critical factor, AMI 1.0 was rolled out with, you know, one main purpose, that's billing. And so our meters are set and our communication infrastructure is set up to again, report back on a frequency that makes sense for monthly billing. So like I said, in other words, that's a once a day reading. And so that data is stored and available the next day, so not, not what we would call real time. So this information is incredibly valuable. And we do use it for planning and supporting operational processes. But it doesn't allow us to respond real time to the conditions on the system, right down to that customer level. So AMI 2.0, which is basically fate. You know, the next step from that first level of having, you know, meters that we can read remotely from the office is more just about than, like I mentioned before about installing sensors, it's not just changing those meters, we talked about the data requirement. And so it's also a substantial upgrade to our communication infrastructure to get that higher volume of data back from the field. And what are we going to use that information for? Like, why is it important to have it real time as opposed to you know, the next day, it's because these meters will be able to give us things like a power off notification. So we talked before about the fact that we do still rely right now on our customers calling in to let us know that they are out of power in the future with AMI 2.0. The intention will be that these meters will report right back into that outage management system. And we will know as soon as that meter sends a signal, say, Oh, I've lost power. The second piece of that is we'd want to know when your power comes back on. So we're going through we're doing our restoration efforts, we want to make sure that we're picking everybody up. So we'd also be able to get a signal coming back on and say like yep, I just turned back on. So having this visibility right down to the customer level gives us so much more flexibility in terms of how we can respond to the system in real time. The other one it also opens a whole bunch of other future use cases such as you know, we talked about unlocking benefits for our customers as well but real time data but their energy uses and you know, providing additional tools or software to help them look at their consumption and overall save money on their bill. So I'm then that's a future step. We're not there today, but the work is on the way to achieve that. And that, you know, those are some of our guiding principles around what we're doing for grid modernization. Yeah really highlights how powerful it can be to know what's happening in real time at every, you know, end use of our entire grid, every customer knowing exactly where the issues are exactly when they get resolved or don't get results. So that's pretty powerful information. So, as we've kind of talked about, there's a natural tie over from having that sensing and metering equipment out in the field, gathering that data, and then getting that data back to our system office where we can use it. And that's where communication comes in. So tell us about the critical role that our communication technology will play.  So today, hydro has a communication network that we've spent our entire service to territory, and it uses a bunch of different technologies or different channels like cellular networks, radio, fibre phone lines, so we've got a diverse communication network that sees across our service territory. So again, kind of parallel in the way that we've been deploying some of these smart technologies. This strategy is very effective and accommodating the sensing and measurement control devices that we've been doing today. But again, we are talking about an increase in data we're talking about an increase of physical devices means that we need faster higher capacity methods to get that data from the field back into our systems. So again, this is all part of the strategy that we're focused on is making sure that we have this backbone communication infrastructure ready to connect these devices into. We don't have all the answers on that yet. But we know roughly where we need to get to. And again, it's part of this roadmap to make sure that we achieve those objectives. 

 

Trevor Freeman  31:47

So when we talk about communication and sending data over communication networks, increasingly, we all know, the challenges with cybersecurity. And people may be wondering, how are we going to protect all this data that's now flowing, that's giving real time information about you know, power use on our grid? How does cybersecurity fit in within this plan.

 

Jenna Gillis  32:08

So we do have a robust cybersecurity standards that we follow, and a dedicated team who looks after these things for us. So as we know, as the grid becomes more and more connected, cybersecurity becomes an even more crucial part of this. And it's a critical factor. And we you know, we mentioned it as one of the core objectives of the program is to, you know, maintain our security. So if you think about it in the past, when we went and you know, just installed a device that, you know, somebody could go in and control from a bucket truck, you didn't have to incorporate cybersecurity standards, you didn't have to, you know, have a device, go through the multiple levels of checks and validation that we have to do things today. So it is another another shift in the way that we operate, right is that and again, we need to keep pace on the technology standpoint of things, not just the physical device.

 

Trevor Freeman  32:58

Totally. Okay. So there's definitely a bit of a flow here, because we talked about the data in the field, we talked about communication. Now we've got that data coming into hydronic, into our system office, we kind of move into that next piece, you talked about data management and analytics. How does all this data help us transform our grid? What do we do with this data once we get it?

 

Jenna Gillis  33:22

Yeah, so raw data coming from the field isn't overly valuable, what you need to do is you need to have an established framework for that information to allow the users to access that in real time. And so when I'm talking users right now, you know I'm talking about it could be a number of different meanings. But today, we're really talking about our hydro Ottawa control room operators, I'm talking about, you know, our planning teams, our operations teams, and our maintenance systems information. So you need to make sure that you have a framework to access that information in meaningful formats. So you know, eventually, once we get a sense of what this information is, and we have a robust strategy around it, we could be providing that information to customers for their energy management systems and use cases like we talked about before. So the other piece is as we collect more and more information on the condition and use of our assets, we can refine and enhance our decision making planning operations, asset management becomes more and more formed. So each one of these pieces of data is critical, but you need to make sure that you have a strong framework around it. So you are gleaning the value from that information.

 

Trevor Freeman  34:24

Yeah, I mean, you're kind of talking about analytics here. And, you know, analytics is essentially combing through that vast amount of raw data and pulling out insights to make smart evidence based decisions. I know I'm asking you to kind of look in a crystal ball here, but what kinds of insights are you expecting to get once we have access to all this data?

 

Jenna Gillis  34:45

Yeah, so really, the expectation is, the more information we have about how the grid operates and performs under a variety of different conditions. We'll be better able to plan and optimize that configuration when I talked before about you know that grid resiliency, so What is the best configuration of our of our network? Where do we have problems downstream that we maybe didn't see before. But now we see. So we can start setting things up differently. It will help us enhance our ability to appropriately size and prioritize our investments and make better use of the existing assets that we have. So in light of all these uncertainties we got about electric vehicles electrification and climate risks. The more information we have at our fingertips, the quicker we're going to be able to respond and adjust our strategies to keep up with those market drivers. 

 

Trevor Freeman  35:34

Yeah, you. So asset utilization is a really fascinating piece. And again, you know, this isn't the episode to dive into that. But just quickly, for our listeners, you know, you may be familiar that utility companies have to design to peak load. So we need to be able to provide the highest amount of power that people need, whether it's a hot, sunny summer afternoon, and everyone's got their air conditioning on. But while we're not using that peak load, assets are sitting underutilized, we're not using the capacity we need. And the more of that capacity we can use, the better. And by putting in some of this technology. By gaining those insights, if we can do appropriate, switching or better planning to utilize our assets better, everybody wins, our grid is more effective, it's more economical. And I think we're all in better shape. So great to see where we're going with that. The next component you talked about is control and optimization. So we talked about how we control the grid today and how it's kind of a manual process. We have, you know, really smart folks sitting in our system office who are making important decisions. How does that control evolve with this strategy?

 

Jenna Gillis  36:48

Yeah, so this layer, this control, and optimization is really about using all of that data to make informed decisions. So one, we're actually undergoing one big transformation, transformative project right now. And you You referenced it earlier, it's our advanced distribution management system, or ADMS. So what this is, is it's really a complete modernization of the software tools used by our control room operators. So the individuals sitting at the desk watching the state of the grid 24/7 365. So to give you a sense of what they're using today to see that picture is the operators have to interact with at least five separate systems right now that are not integrated to gain all that full picture. So the intent of this project, and the main driver is to paint one pane of glass for the operators, it's amalgamating those five separate systems into one view, to give them better insights into the status system. So we're going to be Malkin ating, these five systems, but also then incorporating more of this field data that we've talked about collecting as well. So some of the things that we kind of lock with the advanced distribution management system that we aren't capable of doing today is working towards implementing a fault location, isolation and service restoration scheme. So if you're in the industry, that's well known as FLISAR. So what this is

 

Trevor Freeman  38:06

a fantastic name, by the way. 

 

Jenna Gillis  38:08

Yeah, what this is really about is two way communication to and from these field devices and sensors to get a sense of where we might be seeing issues on on the distribution system. So where we have faults, or where we have outages occurring, this system will then it's an analytic platform that takes all the information back and it can propose to the operators switching to restore as many customers as we can and isolate that faulted section with line. This future step of that is once we get comfortable, and we know the system and the analytics are working effectively is to allow the system to do it automatically. So instead of proposing switching to an operator who can make the decision and then perform the switching or roll a field crew, eventually we'd be able to do this automatically. So once the system is configured, and we've got all those remotely operable devices in the field, we would allow the system to make automatic decisions and restore and isolate the faulted sections 

 

Trevor Freeman  39:03

So I mean, you're talking about analyzing data and making decisions automatically. It's kind of sounds like AI a little bit, which, of course, is a pretty, you know, buzzword these days in a lot of different sectors. Does, does AI come into play here in terms of making decisions and controlling things on the grid?

 

Jenna Gillis  39:22

Yeah, so I mean, we have a number of use cases that we're looking at right now with AI. And obviously, the more data we get, the more opportunities we have to leverage technology and AI. So some of the things we're looking at right now is things like predicting and forecasting demand levels or load levels that are on the distribution grid based on you know, a number of inputs, so like the grid status, what's the weather going to be? What did you know? What was the historical loading and things like that? And when you have multiple factors like that, that feed into, you know, what is your customers load going to be? You need something like AI to be able to digest all of that information and come up with recommendations another one This is just analyzing multiple sensors and control boards to help us predict failures. So the more more information we're getting back on the assets, we can use AI to help us explore build models to help us identify exceptions in those large amounts of data. And in order to be able to flag potential failures, and allow us to intervene and course correct before, you know, they potentially cause an outage or something like that.

 

Trevor Freeman  40:23

Yeah, so that would be and correct me if I'm, if I'm wrong here and interpreting this wrong. That's like, taking a bunch of data points on our existing equipment is running, maybe you know that the temperature that we're seeing, or the loading on that equipment and how that relates to its normal operating load, and be able to say, we think based on the operating conditions, this piece of equipment is likely to fail faster than otherwise it would, is that kind of what you're talking about? Yeah,

 

Jenna Gillis  40:49

Yeah, exactly. Or even in real time, this piece of equipment is going to overload. And so you need to take intervention and move load around door, something like that as well. Yeah, Yeah, exactly. 

 

Trevor Freeman  40:58

Yeah. And all of that data. I mean, that's all things that we know how to do. But no human can possibly do that in real time with the amount of data coming in. And so that's where some of this advanced technology and AI, artificial intelligence really comes into play to help us pull that out of the massive sea of data that we're going to be getting.  Okay. Okay, so the last component, you mentioned it, you know, on the surface, it might seem like a bit of an outlier business and regulatory, but I think it really ties it all together. And it's, again, one of those foundational pieces. So you know, that the electricity sector is highly regulated, as our listeners probably know, it's extremely complex to navigate. It has been accused, in the past of, you know, not being very conducive to innovation and change. What are some of the priority areas that you've identified, whether that's, you know, dialogue with our regulator, the Ontario Energy Board, or just, you know, regulations and policies, internal or external to our organization that that you think, need to come into play to make this modernization happen?

 

Jenna Gillis  42:06

Yeah, the whole objective of kind of the business and regulatory stream through good moderization is about building a holistic approach to build operational structures and processes to be able to address and respond to these dynamic market drivers. So one of our big priorities right now is to raise awareness of this of this approach. And the fact that we're broadening our investment categories beyond what you know, I'd consider to be those traditional asset condition or reliability or end of life types of drivers to know, include and layer into it these system observability, these control points and this resiliency, which is a shift in terms of you know, how how we we've justified or how a regulator has looked at the way that we do business in the past. But we also make sure we need to look internally. So it's not just about looking externally and making sure that we're aligned with our regulator, but it's about looking at our internal business process to make sure that we're aligned to deliver the value that we've set out for the grid modernization objectives. So we need to make sure that we have mechanisms to be able to measure our success, and feed that back into continuous improvement I talked about the roadmap is, is needing to be a dynamic, so we need to make sure that we're monitoring our progress towards the delivering of those chapters, and have ability to stop and pivot where we need to when we need to

 

Trevor Freeman  43:24

this kind of opened the door for new business models or new way of doing things? And are there like specific pilots that we're considering or specific initiatives? 

 

Jenna Gillis  43:35

Yeah, there's, there's a lot going on in the electricity sector right now, one of the big kind of hot topics right now is that there's indications that local distribution companies may need to in the future operate in a similar capacity to the way the Independent Electricity System Operator behaves. So, the ISO they control and dispatch the bulk systems. So they look at they do forecasting on you know, the Ontario energy needs, and they throttle on and off generation and those types of things, the thought is, this is going to be needed at the local level. So they look at you know, hydro, it was service territory level, we may need to look at dispatching generation and doing dynamic load management and things like that. And this is this is a holistic change to the way that we operate right now. And so we need to be able to future proof ourselves to move down that path if that's where things go and dispatching energies resources. I said it kind of as you know, it's just it's one thing, but it's really it's we talked about a little bit of a comprehensive analysis system to take in all of those inputs and understand forecasting and where things are going to be including an economic factors and all the different customer types, including, you know, the widespread adoption of electric vehicles or battery storage, so it can get to be quite a complex system.

 

Trevor Freeman  44:59

 Yeah. it kinda sounds here, like you're talking about the distribution system operator model or DSO. And, and again, you know, like I've said a couple of times, I think there's a future conversation or future episode about that. But it's like you say, having the distributors, the local distribution companies, able to make decisions on how energy is used within our grid, and then that feeds up into how I saw was running the kind of broader provincial grid. So I'll put a pin in that one. And we'll come back to that on a on a future episode.

 

Jenna Gillis  45:31

And, yeah, and so something that's important for us to understand too, is if we do go down the road of a DSO, we need to know where and what could impact our operations or where we could have those triggers or throttles on the distribution system. So right now, we're undertaking a pilot program as well, looking at evey charging, and we've called it EV everywhere. And I'm sure everybody's well aware that EVs are, you know, could be a huge dynamic load that show up on our system anywhere at any time whenever, whenever somebody wants to plug in their vehicle. And there's also talked about using EV batteries as an energy source to feed back into the system to help grid capacity constraints. While that still might be a long way off, there are still solutions that we want to manage to leverage the Chargers. And we've looked at, you know, instead of having everybody come in and come home from and you know, after work, plug in their their EV and start charging at 5pm. And causing, you know, a new peak in our demand, looking to be able to stagger that charging and whether that's staggered at local community level, whether that's needing to stagger at, we talked about a substation level or whether we need to stagger that at a whole hydro Ottawa service, territory capacity. So EV everywhere is really looking at the use of artificial intelligence to help us make those predictions about where and when and how long EV charging needs are required and being able to manage those devices. So that it reduces the impact on our distribution network. And we talked about increase our asset utilization. And we're hoping to be able to push that beyond just the pilot stage that we're in today.

 

Trevor Freeman  47:05

Yeah, and really, that's, you know, for, for the end user, for our customers, that's gonna help us remove barriers to you getting that EV and being able to charge at home or where you live or where you work. So that we're not having to modify the grid drastically in order to allow that, we want to make that process as easy as possible. And this is testing out a strategy to do that. So, Jenna, that's super fantastic to hear about this roadmap that you have. And I mean, look, the listeners out there who know me know that I'm pretty optimistic, and I'm pretty excited about this stuff. But I think it's important to highlight some of the risks. So it's a great roadmap, it's a great plan, what could trip us up what could get in the way of us being able to implement the strategy and rolling it out as you envisioned it? 

 

Jenna Gillis  47:56

I think the first one is that this is, this is large, this is transformative. This touches multiple business areas and, and is, is driven by multiple outside influences. So we need to make sure that we've got holistic change management strategies, we need to look at the pace of change that we're implementing, and not necessarily on the distribution grid, but also on our systems, our process our people. So we need time to make sure that when we introduce a large change that we have some settle in, we have some time to adjust and correct and, you know, keep that dynamic continuous improvement process, as we move from one, it's going to be moved from one change to the next set at pretty rapid pace over the next few years. And with all that change, we need to have the right people, we need the right people, we need the right skill set. And some of these skills are things that we haven't done before. So these are new responsibilities, new skill sets to the organization, and I'm going to put a little plug in here is that we're hiring right now. So take a look at our careers page. And if I've, if I've painted an exciting picture, and you want to be a part of this, take a look. We're hiring some of those skill sets today. And this stuff is going to span multiple years, right? So I feel like in the past, we kind of had you know, like, oh, well, that's a five year program. And then and then you're done no like this is this is going to be a continuous evolution. And these can span multi years. And I talked about it before, we need to be able to adapt and pivot to meet the requirements of technology and our customers. And we need to expect that and so we need to build the that ability to stay dynamic through these multi year programs. To make sure that, you know, we maybe we need to change what our grid modernization objectives are halfway through, and that's okay, we can do that. 

 

Trevor Freeman  49:36

Yeah, I think if there's one kind of common theme that comes up in these conversations that I get to have as part of, as part of the show is this is big change that we're talking about here. This is sort of fundamental change within not just one organization within an entire sector and we're all trying to figure out how we do it, we've all got different ideas, and we're working together. And I think your your point about, we need the right people to do that we need people that are really passionate about this and really smart, and see the opportunity to create that change and realize, hey, you know, the utility is not a bad spot to do that it's kind of at the epicenter of a lot of what we're doing here when it comes to energy. So great thoughts. So, I mean, that's kind of the end of the grid modernization question. So I don't know if if now we get into the the easier part of the conversation or the harder part. By we,

 

Jenna Gillis  50:35

you're talking, you're talking to an engineer. So when we talk personal, it's harder than the techniques of the technology.

 

Trevor Freeman  50:42

Awesome. Yeah, I can, I can definitely relate. So we we always end our show with with the same questions to our guests. And it just kind of helps us learn a little bit more about you. So as long as you're okay with it, we're gonna dive right in. 

 

Jenna Gillis  50:56

Yeah, let's do it. 

 

Trevor Freeman  50:58

So what's a book that you've read that you think everybody should read?

 

Jenna Gillis  51:01

So I mean, I think I kind of already touched on it. And the fact that these were the more uncomfortable questions for me. One book that I read that I really enjoyed is as quiet the power of introverts in a world that can't stop talking by Susan Cain. She has a TED talk, too. So if you want to kind of get a short snippet of what she's talking about, but really, it's about dynamics of how our world emphasizes extraversion, and basically everything that we set up and everything we do, and so we need to make sure that we're allowing space for our introverts.

 

Trevor Freeman  51:31

Great,I like that. What about a movie or a show?

 

Jenna Gillis  51:35

So I'm not a big movie person. But I've got a TV show. It's pretty niche. It's called the Curse of Oak Island, I'm sure probably not very many people know what I'm talking about. But I followed the story from the beginning. So the show started airing a long time ago. It's basically about a 200 year old treasure hunting mystery in Nova Scotia, touches on archaeology and some potential connections right back to the Knights Templar. So I've become pretty invested in it. It's one show

 

Trevor Freeman  52:04

is your next vacation to Halifax to go and check out the Oak Island and find this treasure?

 

Jenna Gillis  52:09

You know, I think it would be pretty cool maybe once like to go and see see what they're doing and like the the size and scale of what they're doing, but I wouldn't necessarily dedicate a whole trip to it.

 

Trevor Freeman  52:21

Good to know well on that note, what if somebody offered you a free round trip flight anywhere in the world? Where would you go? 

 

Jenna Gillis  52:29

Yeah, so not not Nova Scotia. I'd love to be able to be out and see the northern lights. So somewhere like Iceland or Greenland, I think, seeing seeing something totally different than what I'm used to here in here in Ottawa.

 

Trevor Freeman  52:44

 very cool. Who is someone that you admire?

 

Jenna Gillis  52:47

So I feel like this is gonna be really cliche given that Taylor Swift has recently released another another album. But Taylor Swift, I think she's incredibly powerful and positive female influence and think she's a great role model. She's got strong big business strategy and authenticity. So I think she's, she's a great role model for girls to be looking up to.

 

Trevor Freeman  53:12

Yeah, I'm, I'm currently I'm not ashamed to admit I'm currently going through her eras tour with my kids right now. We're watching it and kind of little bits and pieces here. And while we're watching, and I'm texting my nieces, because they're big. They're big Swifties. So that's a great example. And finally, and you're a great person to, to answer this question being kind of right out in the weeds of the energy change. What is something about the energy sector or its future that you're really excited about? 

 

Jenna Gillis  53:42

It's really about the pace of change. So I, you know, we talked about like, I've been with hydro water for about 16 years now. And I feel like we've always been saying it's coming. It's coming. It's right on the horizon, right. So it's here, we're seeing it, we've always been kind of forecasting and wondering when it was going to hit and it's here. So I love that we need to be innovative. I love that we need to rethink the way that we're doing things. And I'm super excited to start breaking down silos and building these cohesive strategies and working together to problem solve, because it's more important now than ever to, to build that integration with, you know, everybody on the team. So that's what I'm super excited about.

 

Trevor Freeman  54:18

Yeah, I can definitely relate to that. That's, that's what keeps me coming into work every day to I really like them. Jenna, this has been a really great conversation. Thanks for sharing your insights with us on what hydro Ottawa is doing when it comes to grid modernization and just kind of sharing your experience and your expertise on how we're changing and getting ready for the future. I really appreciate it. 

 

Jenna Gillis  54:39

Well, thanks,Trevor. Hopefully I did. I did some justice to what we're doing. And hopefully I've piqued some interest in diving deeper into some of these very specific initiatives that we've got underway.

 

Trevor Freeman  54:51

Absolutely. And don't be surprised if I reach back out to you to come and dive deeper on some of those as well. So we'll have you back on another time. 

 

Jenna Gillis  54:58

Perfect. Thanks a lot, Trevor. Appreciate it. 

 

Trevor Freeman  55:01

Thanks. Take care. Thanks for tuning in to another episode of The think energy podcast. Don't forget to subscribe wherever you listen to podcasts and it would be great if you could leave us a review and really helps us spread the word. As always, we would love to hear from you. Whether it's feedback, comments, or an idea for a show or our guests. You can always reach us at think energy at hydroottawa.com

 

Summer rewind: Ontario's electricity sector is evolving, as the province navigates the transition to cleaner energy amidst rising demand. In thinkenergy episode 135, we explore the grid's structure and key players, highlighting the crucial role of distributors (Local Distribution Companies or LDCs) in facilitating this transition. Guest Teresa Sarkesian, President and CEO of the Electricity Distributors Association (EDA), sheds light on LDCs' frontline efforts and contributions shaping the energy landscape.

Related links

 

• Teresa Sarkesian on LinkedIn: https://www.linkedin.com/in/teresa-sarkesian-53898613/  

• Electricity Distributors Association: https://www.eda-on.ca/ 

• Green Button information: https://www.oeb.ca/consumer-information-and-protection/green-button 

• Electrification and energy transition panel report: https://www.ontario.ca/document/ontarios-clean-energy-opportunity-report-electrification-and-energy-transition-panel 

• Ontario Electricity Support Program: https://ontarioelectricitysupport.ca/ 

• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

• Hydro Ottawa: https://hydroottawa.com/en  

 

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Trevor Freeman

Hey everyone. Well, it's officially summer, and the think energy team is taking a break to recharge over the next two months, but also to plan our content for the fall. So stay tuned for some great episodes in the fall. Not to worry, though, we still have our summer rewind to keep you engaged. This is where we pick out some of the great past episodes that we've done and repost them. So whether you're lucky enough to be sitting on a dock or going on a road trip or if you're just keeping up with your commute through the summer, it's a great time to revisit our past content. You will hear past episodes from my predecessor and the host chair, Dan Sagan, as well as a couple of mine from the past few months, and you're welcome to check out your own favorite past episodes as well. Wherever you get your podcasts. We hope you have an amazing summer, and we'll be back with new content in September, and until then, happy listening.

 

Trevor Freeman  0:07  

Hi, welcome to think energy, a podcast that dives into the fast-changing world of energy through conversations with industry leaders, innovators and people on the frontlines of the energy transition. Join me Trevor Freeman, as I explore the traditional, unconventional and even up and coming facets of the energy industry. If you've got thoughts, feedback or ideas for topics that we should cover, we'd love to hear from you. Please reach out to us, at think energy at hydro ottawa.com Hi, everyone, welcome back. Now it's no secret that Ontario's electricity sector is transforming rapidly as it moves to both decarbonize the grid itself, you know, we have a very clean grid in Ontario, but it's not totally carbon free. And to support the growing demand for electricity as our customers across the province, take steps to electrify and change how they use energy. The show is all about exploring those changes, among other things, and today is no different. But before we dive into our conversation today, I think it would be helpful for me to spend just a few quick minutes on some basics about how our electricity grid is structured in Ontario, and who some of the key players are. Now I know some of our listeners will know this already, but it can be hard to keep track of all those key players. And Ontario's structure is a little different than some of the neighboring jurisdictions no two jurisdictions are exactly alike. So, a refresher is never a bad thing. Now the most basic description is that electricity is largely generated at central generation facilities. So, think nuclear power plants are your electric generating stations, some gas fired generating stations and large-scale wind and solar installations. We call these entities generators simple as that. That electricity is then transmitted across the province in an interconnected grid of high voltage transmission lines, which also connect to other jurisdictions such as neighboring provinces and states, and Ontario, Hydro One runs the transmission network. Now you've probably seen this transmission network. These would be the large metal towers that you see out in the middle of a field when you're driving along the highway or in rural areas that have electricity wires strung way up high in the air. The last stage before it gets to the end user is called distribution. So, this is where electricity is taken from those high voltage lines stepped down to a usable voltage for residential and commercial customers via transformers and substations, and then distributed over a network of overhead and underground wires, then these would be the wires that you would see at the top of those wooden or composite poles that are along the side of the road in your neighborhood. The entities that run this distribution part are called distributors, again, simple as that. So, there's a few other key players that are worth mentioning here. Energy Policy is primarily the jurisdiction of the provincial government, who sets the general direction and associated rules and regulations accordingly. The Ontario Energy Board or OEB is the regulatory body who governs what all those other players do and enacts the government mandate. And finally, at least for today's purposes, we have the system operator. It's called The Independent Electricity System Operator in Ontario, or IESO, who runs the system. So, if you're in Windsor, Ontario, or Ottawa, or North Bay, and you want to turn on your air conditioner, or plug your EV in to charge, the IESO is responsible for making sure there's enough power on the grid to handle that load. So, I hope everyone is still with me and feel free to pause and do some jumping jacks if that was a lot to take in. Our conversation today is going to be focused on the role of the distributor. So, for full disclosure, as you know, I work for hydro Ottawa who is one of those distributors, we serve most electricity customers in the City of Ottawa, and the neighboring village of Casselman and in Ontario, you will often hear distributors referred to as local distribution companies or LDCs. So forgive me if I slip into that acronym throughout the conversation today, that's really just the sort of common name that we refer to those distributors as. But I'll try to mix it up and make sure that, that I'm explaining that acronym throughout as well. So the distributor is really the front line, the customer facing entity of the entire electricity system. If you are an electricity customer, and you think about the electricity system, you are probably thinking about your distributor. Chances are you get your bill from a distributor, even though for most customers, most of what you pay on that bill doesn't actually go to the LDC. Some of it stays with your local distribution company, but most of it goes to the transmitter to the generator, to the IESO etc. When the power goes out, it's probably your LDC that you call and it's your LDC that will give you a restoration time. Sometimes outages are caused by issues up the line, so to speak in the transmission portion of the grid. But often the issue is a localized one. And it's your LDC that is identifying the problem and fixing it, whether that means rolling a truck to string new cable, or performing switching to work around the problem. And finally, it's your LDC that is really on the frontlines of the energy transition. While all parts of the grid must then have started to change, the LDCs are really working hand in hand with our customers to identify where and how fast and new demand is needed to bridge that gap between customers and policymakers to enable more and more renewable generation. And also to determine what new technologies or programs we need to pilot and scale up. And it's really the LDCs that are driving change in the way that electricity is managed at the individual customer level moving forward. So to help us make some sense of this, I'm happy to have Teresa Sarkesian on the show today. Teresa is the president and CEO of the electricity Distributors Association, which is a role that she's held since 2016. This is actually Teresa second time on the show the first being back in December 2021. So we're happy to have Teresa back, Teresa, welcome back to the show.

 

Teresa Sarkesian  6:23  

Thanks so much, Trevor. I'm really delighted to be back. 

 

Trevor Freeman  6:27  

Yeah, we're glad to have you. So, like I said, you were back on our show in 2021. I don't know if it's because of how COVID has changed our lives or if this is just the way things go. But sometimes, you know, weeks seem like years. So 2021 is a long time ago. Let's start by refreshing our listeners on the role and mandate of the electricity Distributors Association.

 

Teresa Sarkesian  6:49  

Sure thing so the electricity Distributors Association, or the EDA our little acronym represents Ontario's public and private electric utilities that distribute electricity to 5.4 million homes, businesses and institutional customers across the province. And I should note that those 5.4 million customers really refers to build accounts so you have families that are behind a build account. So effectively the millions and millions of Ontarians and businesses that operate and live here are customers of our utilities. And as you know our members are on the front lines of power, and have developed a strong trust with their customers by providing safe, reliable and affordable service for over 100 years. The EDA itself provides analysis and networking and advocacy for our members to ensure that the energy policy direction and framework in Ontario is fair and balanced, supporting the financial viability of utilities to deliver service and ensuring affordability for customers. And long term, we are looking to ensure that our local distribution company members can become the premier energy solution providers to their customers, and that they're able to provide the value-added services that customers are already expecting from them but are going to grow with the energy transformation and electrification in the future. 

 

Trevor Freeman  8:09  

Yeah, it's kind of like I said, when people think about the electricity sector, they're probably thinking about their distributor. And the EDA is kind of that common voice for those distribution companies. So, you first joined the EDA back in 2009, and have been the president and CEO since 2016. So, we'll look ahead and talk about the future in a minute. But before we do that, tell us about how things have changed so far during your tenure. How are things different from 2009 When you first joined the organization?

 

Teresa Sarkesian  8:40  

Yeah, and you know, this is almost like perfect timing, Trevor, because I've been at the association now for 15 years, I'm just marking my 15-year anniversary. So, feels really apropos to kind of reflect and look back. So, I want to break down my answer into two parts. So, I'm going to talk to you about some, I guess, just my own personal observations about the electricity system at large. And then I'm going to talk more about the changes in distribution. But some of the changes that I thought were really quite significant and profound, sort of when I joined the industry in 2009, I joined at a time when there was the Green Energy Act, and the province was looking to connect all kinds of renewable energy generation to the electricity grid. So that was fairly significant. Another thing that was happening with the province is that they closed down coal fired generation. That was pretty massive. In fact, I think, at the time, it was the largest kind of carbon reduction initiative in North America. And I think even to this date today, I think it still is something that Ontario really has to be proud of. Another thing that you know, at the time, I think that was you know, fairly significant in 2015 is just the expectation of what the demand would be. What was interesting, sort of like the past for 15 years, the demand from customers for electricity was actually flat or declining. And that's all changed. Now. 15 years later, we're, we're now forecasting, massive increases in in demand of energy, which could potentially be doubling in the future. And the other point I'd like to make is just the nuclear renaissance that we're having. I think when I joined the sector in 2009, I'll tell you, I think the public opinion of nuclear was actually quite low. And that's been completely turned around lots of geopolitical events around the world, I think, have driven that. And now that nuclear is having a huge Renaissance. And you're seeing, you know, lots of new investments in nuclear. And we're not talking about shutting down reactors anymore. We're talking about refurbishing and expanding. So those are some of the things that I've observed over the last 15 years that have really changed. And for local distribution companies, I think what I have seen is a growing expectation by both government and the regulators for electric utilities to do more to both support the grid reliability and meet growing expectation from customers. So, I started in the sector in 2009, it was right on the brink of implementation of smart meters, and time of use. And what was interesting is that was mandated, there were very few jurisdictions in the world that actually had mandated smart meters and time of use pricing. So again, Ontario is was one of the first. And so that was a big change for LDCs. To move from, you know, smart meters and having to bring in that technology and also support the technology of time of use. I did mention the Green Energy Act at the time, we suddenly had to connect 1000s and 1000s, of new solar and wind generation, as well. And that was all new. There were no protocols, there were no standards for that. So that was fairly significant as well. And when I kind of fast forward to I guess, more recently, there have been a lot of changes from government, I think they've really supported our industry, they understand the trust that we have, with our customers. And they've implemented, you know, a number of new changes in terms of rate structures, they've asked us to implement ultra low-rate pricing that can support overnight electric vehicle charging. And they've also asked us to introduce a green button digital platform that allows customers to download their energy data and share with third parties for you know, different assessments and tools for lowering energy costs. But it's all not, you know, unicorns and kittens, there's challenges to for our sector, grid resilience was, you know, not really, people talked about it in 2009, but not like they're talking about it now, because of climate change. And we are seeing more frequent storms, causing, you know, obviously, outages for the customer, and also significant damage to the distribution grid. And I know that hydro Ottawa has faced more than its fair share of very destructive storms over the past few years, we have Yes, I can't remember which Victoria Day weekend where we had, I didn't ever know how to say it the derecho or the derecho. So there, we weren't getting storms we've never even heard of before. And unfortunately, I think that is our new normal. So, grid resilience is something that we are very concerned about, and we need to make sure we've got the appropriate investments for that. So those are just a few of the highlights that, you know, when I came into the sector sort of things that were kind of ramping up, and then what's happening now, but I guess what I could say, the commonality is there's constant change in the sector. And what I'm seeing going forward is that change is going to be accelerated. 

 

Trevor Freeman  13:40  

Yeah, I mean, it's, it's fascinating to listen to you lay it all out like that. Thinking back to 15 years ago, it's hard to even remember, you know, not having smart meters, having meters that really just ticked forward and measured your consumption over the course of a month, and someone would come and read that. And, you know, having declining or even flat demand profiles that aren't increasing is so different from the world that we are in today. But I think what you said there at the end is really important. We are in our industry, an organization that knows about change, we're constantly changing, which helps us as we look forward into your point, we're going to see that level of change and the pace of change accelerate. So, I think that sets us up pretty well. So, let's start to look forward, then I know that the EDA is about to launch a new vision paper. So, we're going to dive into some of the details. But maybe let's start by kind of a high-level summary of what is the vision that you are trying to lay out with this paper?

 

Teresa Sarkesian  14:42  

Okay, and no problem. So, I think what I want to start just give a little bit of background as to why we did this. We've done a couple of vision papers and implementation plans in the past. But you know, they were like seven, eight years ago and things have changed a lot even in Seven or eight years. So, what we've been seeing, obviously, I think the big change over the last few years has been the big focus on meeting Net Zero targets in 2050, that we are going to get to net zero in terms of our greenhouse gas emissions. Not only in Canada, but this is actually a bit of a global commitment, you know, for countries that have signed on to that objective. So, what happens when you set up, you know, those big audacious goals? You have all kinds of organizations and entities looking at how are we going to get there, how much it's going to cost? What do we need to do to get there? And so when we started reviewing some of these publications, both in Ontario, Canada, and actually in other jurisdictions, they were very good. They talked about what supply mix that we need the investment in transmission, but almost 100% of the papers, Trevor, if you can believe this, just neglected distribution, no one talked about distribution, they didn't talk about how distribution is going to have to change what the investments would be. And then we'll so we said it's going to be critical for us to identify the electric utility role and the energy transition, and how the sector will need to be grid ready to support electrification, economic development, grid resilience, and customer preferences. So we view that LDCs are going to be pivotal in enabling Ontario's low carbon economy, navigating the challenges posed by climate policies, electrification trends, and these evolving customer demands. And with Ontario's growing economy and the demands for housing intensify, LDCs must innovate to effectively meet these accelerating electricity needs and changing preferences. And right now, we've seen the ISO is predicting significant consumption growth from 144 terawatt hours in 2023, to 240 terawatt hours and 2050 not quite double, but it's getting close. And so this rapid growth demands urgent attention to adopt new strategies and to ensure that the local distribution companies can make the necessary investments in grid enhancements to expand the capacity and capability of the distribution system. So while reliability and affordability remain Paramount customers do expect additional value from their utility service. And, you know, we are seeing all sorts of things that are happening, you know, such as the need for swift electric vehicle charging installation, and other upgrades that will increase the electrical load. We see that LDCs are more frequently interacting with businesses that seek utility partners to achieve their energy management, sustainability and ESG goals. And in parallel, the LDC must prepare to respond to increase climate change induced extreme weather events. So recognizing the essential role of LDCs in the energy transition, we've worked in collaboration with industry experts to outline a vision of the role of utilities, so they can enable economic development, housing growth and electrification. And the report identifies urgent and practical steps that LDCs in partnership with the government, and its agencies must take in the near term to achieve the benefits of this transition. So what you'll see in the paper is recommendations related to the need for clear policy direction on regulatory frameworks to support LDCs in becoming grid ready, and with a continued focus on affordability and enabling a customer choice and opportunity. And we also discuss issues like workforce needs. And we also emphasize the role of human capital in enabling technological advancements. So that's very high level what it is, and I will get into it a bit more as we have our discussion further.

 

Trevor Freeman  18:41  

Yeah, I think it's a good way to frame it of the entire sector is changing at all levels. But what you're really doing is laying out that vision that roadmap for the distributors, in particular, and I think that's great. Maybe like, Who is the audience for this paper? Who are you kind of directing this at?

 

Teresa Sarkesian  18:59  

Well, we're still putting the crossing the T's and dotting the I's., but I think it's about 80 pages. So, it's not going to be for everyone, obviously, you know, government decision makers, government, policymakers, people that work in their regulatory agencies and our energy board, the Independent Electricity System Operator, we did try to make it accessible. There is an executive summary that's about two or three pages, which I think will be of great interest to a lot of people to read. And I think it gives a very kind of a high-level overview of what's in the document. So that's something that we're trying to do. And, you know, obviously our LTC members are an audience as well. They've been working with us hand in glove the last few months we've had extensive member meetings we had a board committee that helped steer this paper. But you know, ultimately, the paper is really focused on our customers because its customers and businesses that are driving a lot of this change for the future, whether it's businesses that are on their own journey on environmental, social and governance ESG objectives, and they're looking for more low carbon communities to invest in its customers who are very interested in EV charging, and maybe what the opportunity for the batteries can be to sell that storage back to the grid. It's, it's really the customers that are driving this change. 

 

Trevor Freeman  20:31  

Right Yeah, and I mean, the nature of this medium is I don't know who's out there listening. But I'd encourage, you know, all of our listeners, when this comes out, take a look at it and get some insight into kind of how the distributors role is laid out there. So let's dive into some of the details. You know, you outline obviously, some of the traditional roles and functions of the LDCs. So from maintaining, owning and maintaining the infrastructure, the poles and wires, and doing customer metering and billing, that stuff's not going away, we're gonna keep doing those things. But you also highlight some of these emerging roles that have begun to appear, or that we'll see in the next couple of years, you know, a more of a focus on distributed energy resources, like solar on roofs, for example, that LDCs are going to have to work to both enable as well as integrate into our own systems. It's going to include things like more customer programs, and rate design, etc. I'm curious, you know, how are LDCs going to balance that traditional role that we've already been doing, along with this rapidly new expanding set of roles that we need to tackle? 

 

Teresa Sarkesian  21:38  

That's a great question, Trevor. So look, LDCs will continue, as we always have been to be responsible for safe, reliable and affordable delivery of electricity to customers, customers can count on us to do that 24/7. And even with all these anticipated grid expansions, we're not going to be shut down, if the critic dispatches so, you know, we're experts at multitasking in our sector, and we will continue to do so. And with the increases, as you mentioned, in distributed energy resources, and electrification, there are the pressures for us to adapt, modernize and change how we ensure the safety and reliability in the service to customers. And the emerging roles and responsibilities aren't something that's in the distant future. You know, as I mentioned before, changes the constant, we have been engaging in ongoing adaptation. And so when I think about the future, and I think about what we call grid modernization, it really is part of the ongoing continuous improvement, and the pursuit of the digital utility of the future, that every utility is on that journey. So you know, utilities have been bringing in new technologies, particularly related to information technology, communications, and digital solutions. And so while we're in early stages, we are expecting our members to become more digitally based in the future, they're going to be introducing advanced distribution management systems to monitor the grid. And they're also going to have distributed energy resource management systems to monitor all the connections that are behind the meter. So I think what is different now than in the past, is simply that the pace of change is being dramatically accelerated. So for example, it took us about 100 years to get the grid to its current size, yet, we need to almost double the current grid in 25 years. So we have to move four times as fast. And the grid is not going to be built with just simple poles and wires and one way energy flow like it has been for basically the last 100 years, it's going to be a lot more complex, we're going to see two way energy flows, so it's not just us sending power to the customer one way, they're potentially going to be selling back their energy generation or their energy storage back onto the grid. So we need to have that temerity, that two way, power flow. So that's going to be a big change. And we also expect there to be a lot more customer interaction. They want to leverage their own generation and storage behind the meter. And we as utilities, want to be able to leverage that to help us with you know, reliability, Storm outage, other emergency situations. So we see there's going to be a greater interactive relationship with customer than simply, you know, maybe sending a bill to them or offering them conservation programs, it's going to be much more dynamic than it has been in the past. And so, you know, over the last two decades, and we talked about this a bit already, the utility has been modernizing the system in response to government policy initiatives, regulatory requirements, and customer preferences. One other example, recently, utilities were required to implement something called green button. And we've been also engaging by bringing them more into the system through net metering. And a lot of our members are also involved in various pilot projects with the Independent Electricity System Operator and with Enercan to look at all kinds of new LTC models and functions. So and you're going to see a lot of this actually, in our vision paper is that to really be effective, cost effective. To make sure this happens at the accelerated pace, we do need for there to be proactive policy and regulatory changes, to remove barriers and empower LDCs to embrace these new evolving roles in shaping the future of the energy sector. And as I mentioned before, customers are demanding it. And I want to point out a research report that came out by the International Energy Agency just late last year. And they made it very clear that in quite a number of countries around the world, the lack of the regulatory permission to provide more investments in the distribution system is now becoming a significant barrier to new renewable energy projects connecting on the system. And while we don't have that situation here in Ontario, if we don't start moving quickly, in terms of reforming the regulatory context, then we might be like some of these other countries, and we don't want to be that a barrier, you want to be able to enable what our customers want on the grid. 

 

Trevor Freeman  26:07  

Yeah, so I'm going to ask you a question about that last point in a minute. But I think your framing of the ways that the sector is going to change, and the way our customers are going to interact with us is going to change is really great. And it's something that you know, often comes up in conversation. And I often say, there is no single strategy or tool here, we can't solve the coming challenges with just more poles and wires. We can't solve it with just new innovative solutions, we need all of those things, we need more poles and wires. But we also need more programming, more innovation, more technology, we need to utilize those distributed energy resources out there on the grid. So, I think that's a great way to frame it. Okay, so let's talk about grid planning a little bit. So LDCs play a really key role in helping forecast the needs of the future, both for our own distribution systems, but also feeding up into those broader provincial needs. So, the insight that we gain from our customers, we pass up to the IESO, for example, so that they can do planning at the provincial level. Traditionally, this is a pretty consistent process. You know, in the past, we get a sense from municipalities and developers, how cities are going to expand and grow. And we've generally been able to count on the typical home using roughly the same amount of electricity as homes that are out there today. So, we account for a certain expansion of commercial customers based on the Intel that we get from those customers. And we know roughly what they're going to use. The problem is that model's kind of being turned on its head a little bit. So, we now need to account for even our existing customers increasing their load because they are electrifying or they want to add EV chargers. And new developments today are likely going to have increased demand compared to some of the historical developments, because we're going to see all electric communities or at the very least more electrified and uses. So I know you don't have a crystal ball yet that tells us exactly how this change is going to happen. But what are LDCs doing to adapt their long term grid planning to account for this uncertainty?

 

Teresa Sarkesian  28:22  

Yeah, you're so right, Trevor forecasting is getting more challenging. And I just want to start with a little story before I get into my answer about that. So, you know, electric vehicles are kind of the hot thing right now. And you know, although people I think are still on a waiting list for certain cars, there's lots of others that are available. And so one of the concerns that our sector had was we didn't know where these electric vehicles were going to pop up. And we weren't getting any kind of pre advanced warning when people started making orders or, you know, advanced purchases for electric vehicles. So we actually did a great advocacy campaign, with the province with both the Ministry of Energy of the Ministry of Transportation, to secure postal code data for utility, so they could see where people were going to be purchasing electric vehicles to help them with their own planning, in terms of, you know, making sure that their local feeders were upgraded their local transformers, and so that just got announced a year ago. But that's obviously not going to be good enough. And that just tells us about electric vehicles, you know, in the near term, but this is I think, you know, having sightlines into our customer behavior, whether we do that proactively with you know, consultations and communications with customers, or we can do it by you know, pinging the meter, or getting data such as postal codes. We are going to have to, you know, adapt and have greater visibility and sightlines into the customer. And so this is that some of that technology that I was talking about earlier, the sophisticated future grid is going to need lots of visibility and transparency, for usage and investment to be able to, you know, look at these two way power flows, look at how customers are behaving, in order to better plan the system, we also need to maximize and optimize the data that we have, you know, from our planners, it's going to be vital to protecting the grid reliability and resilience, we're going to have to have more partnerships with municipalities, in terms of their energy planning for the future and things that they want for their community. And, you know, one of the things that we're asking for on our paper is actually to, you know, rethink the distribution system plan, that the utilities have to file with the OMB every five years, and start building in a, you know, Grid Modernization plan within that broader plan. So we can get the regulator to start looking ahead and seeing what these requests are, it'll be important to also have various performance metrics and filing guidelines for grid modification from the energy board. So you know, these are some of the things I think that the membership is going to have to look at but it is going to be a very iterative experience, because it's just it's the pace of change is the big unknown. And so everyone talks about these things. But you know, I saw something today, I think it was from Ford Motor Company, and they're kind of slowing down, it's taken them a while to retool their plants. So that could take an extra two years now for them to be up and running and producing electric vehicles. So there's going to be all these other pieces of the puzzle that are constantly going to be changing a moving and evolving. It is I think, planning for the future is going to be very challenging. And I do expect the province to start talking about this higher level, maybe starting at the end of this year, they just came off a massive exercise related to the energy transition electrification panel. And I do expect to see more guidance from the province as well, in terms of how they're going to manage this planet, because it's not just planning for us. It's planning for everybody else in the system, too. 

 

Trevor Freeman  32:02  

Yeah. And for listeners out there, if you haven't had a look at that energy transition electrification panel reports, a really fascinating read. So I'd encourage you to take a look at it. You mentioned a lot of interesting things there. So for our listeners, and I'll probably do a future episode on this so I won't get into detail, but LDCs typically have to file five year rate applications once every five years that really lay out their plans for those five years and how they're going to fund them. So coincidentally, hydro Ottawa was getting ready to do our next one. And like I said, I'll probably talk about that on a future episode. But one thing we did when it comes to forecasting is, we conducted a electrification study that looks at if we electrify by 2050, like our plans, say we will and you know, society wise, what does that mean for the grid? And some of the inputs we took is, you know, what are the federal plans for electrification? What are our own municipal plans for electrification? What are we hearing from our customers, and that really, is helping us modify and change how we do grid forecasting, based on some of the changes that we're seeing from our customers. So I think this is a really important piece that, like you said, we're going to need to iterate on we're not going to get it right the first time. But we're starting to think of how do we need to change the way we do things in order to keep up with what our customers are doing.

 

Teresa Sarkesian  33:28  

I think one thing I've seen more of the last few years, because this is much more complex than it's been in the past that I've seen, like the IESO, for example, they've done more, you know, scenario setting. So when they've had their, you know, their APO's and AER safe, they sort of had other two or three scenarios, and they're constantly updating their numbers every year. So these are other changes that we're starting to see. And even myself, I was just looking at the provincial budget detail the other day, they also set out, you know, scenarios as well. They're just not picking Oh, it's going to be, you know, X amount of deficit. And you know in 2028 they're actually forecasting out different scenarios. So I think that's another piece I see more in play, that people will, you know, showcase what assumptions they have, and will have maybe two or three different scenarios as well. 

 

Trevor Freeman  34:21  

Yeah, and I think it's a, it's a great way to tackle that unknown component to where we've never really been through a change like this before. We've never wholesale changed the way we use energy in our society. So there's a degree of uncertainty, obviously, and I think, targeting out that kind of, let's call it high, medium, low scenario, or whatever the metric might be, is going to be really critical for us to make sure we're staying within the boundaries of what's possible and what's probable and refining that constantly as we move forward. So that's a great point. Something else you mentioned a little bit ago, that's, you know, could be a bit of a nebulous term is grid modernization now I've actually got a future episode, and specifically about grid modernization and what hydro Ottawa is doing, I think it might actually be our next one. So we don't need to go into all the details on this. But let's just help our listeners understand what do we mean when we're talking about grid modernization? And why is this important? Why is it important to our customers that we do this kind of back office improvement?

 

Teresa Sarkesian  35:23  

So I'm going to keep it really simple, because I know you're going to do a deep dive on it and a future episode. But essentially, Grid Modernization are improvements that LDCs will make simply to augment our capabilities, and enable us to offer new or improved services to customers. So back office improvements might look like things like real time sensing, and monitoring systems to improve efficiency and reliability. Or we may be investing in new digital infrastructure communication systems to improve safety, cybersecurity, it can also include more visible improvements to safeguard our infrastructure against extreme weather, and climate change to reduce outages. And like one, I guess, example that some of your customers might already be recognizing, you know, we made investments in green button, which enables customers to download their data, send it to a third party if they want to save on customer use. So it really is the whole soup to nuts, it really is not just one type of technology or solution. It is a combination of a whole series of things that the that the utility will need to do. And I think why we want to do it, I think when we look at all of the pressures on the system, from NetZero objectives to housing priorities, you know, to accelerate broadband development, and support electrification, the pressures seems to be never ending. And the only way that we can respond to all those pressures, is to be grid ready. And, you know, like I said, it's it is a form of continuous improvement. It's just that now it's the pace accelerated pace is such so extraordinary, that we need to have a more dedicated plan. But most importantly, we have to make sure we have dedicated attention by policymakers and regulatory decision makers as well. Because right now, there isn't that dedicated attention to this very important task. Yeah,

 

Trevor Freeman  37:28  

Yeah, I mean, it's, it's great that you bring up all these pressures that we're feeling that it's I think it's time we kind of talk about that elephant in the room, our customers often ask us about affordability, or we're hearing from our customers about affordability, I was actually at a customer event not too long ago, and talking about the change that we're going to see here talking about some of this, you know, large scale transition of our of our energy sector. These are not small investments that we have to make. We're talking about both an increase of our infrastructure, you know, you mentioned almost doubling the capacity of the grid. We're talking about modernizing our grid systems, that's a lot of back office work with new technology, and bringing on new programs. Like this is a big change. Energy affordability is already a kind of a challenge today for some folks. So as we get into this new investment that we have to make as we start moving down the path of the energy transition, how do we balance affordability, especially for our vulnerable populations, with the level of investment that we know is necessary to do the things that we have to do? Yes,

 

Teresa Sarkesian  38:42  

Yes, that's the multibillion-dollar question, Trevor. And it's something I'm going to carve out my response, because there's some things that we've put into our vision paper for the future, because affordability is absolutely critical. And as you know, this is basically a massive restructuring of the economy going forward. So, there's may be other participants who might be playing a funding role. So, you know, right now, obviously, you know, customers aren't monolithic, and you know, residential customers who are struggling to pay bills. Do you have some programs that they can, that they can access, they have the low income Energy Assistance Program, they have the Ontario electricity support program. Some of those are funded by the tax base, some are funded by other electricity customers. The province also gives a rebate to customers in Ontario, and that's a pretty big rebate. I don't think a lot of residential customers are aware of it but it is over 7 billion annually to residential small business customers. That's a lot of money. But I don't know if customers really appreciate that. So I don't know what's going to be available going forward. These are some of the challenges that you know policy makers, you know, have to address as well. So, when we were thinking about this as part of our paper, we sort of looked at it from a number of perspectives. So, the federal government has set up all these Net Zero targets, they've set out, you know, targets for electric vehicle manufacturing, as well. And so it might be appropriate for them to share part of the burden with this massive energy transformation. And it's interesting, we actually pulled customers about 2000 Customers two years ago, we asked them a whole series of questions about the changes going forward. And customers do have different perspectives about who should be paying for some of this energy transition. So when we asked them about who should be paying for electric vehicle, charging infrastructure, and they said, Oh, electricity, customers should pay for that, because that's something that everyone's going to benefit from. When we ask them about, you know, who should be paying for the electricity grid, to address climate change and hit Net Zero targets, they actually the majority, 58% said, the taxpayer should be paying for that. So I think that's just a very interesting data point. But it's something that, you know, we've been active on in terms of having those conversations with the federal government, saying that, you know, you have offered different subsidies to attract different companies to invest in Ontario, based on our clean grid, but we need to have the whole grid support it. So, you know, we're pursuing federal government support, we also are looking at increased maybe private equity engagement in in our sector. So right now, we have a couple of private members, but there's not a lot of private equity money in the sector, most of our members are municipally owned, and municipalities can't invest in their utility, probably even if they wanted to, because they're in short supply of funds as well, they have their own taxpayer that they have to deal with. So one of the solutions we are putting forward to government is to increase the private equity threshold, so it doesn't trigger additional taxes, right now, it's only 10% ownership. But we're saying that maybe a tool in the toolbox should be up to 49% ownership. So it would allow private equity to come the patient capital, they're not maybe looking to seek a return right away. So there's some you know, flexibility there as well. Another thing we're looking at is to revisit the debt equity ratios of utilities to manage the costs over the long term. So you'd be effectively amortizing on some of those grid investments as well. So these are some of the ideas that we have around how we can basically fund the energy transition going forward. You know, and some people say, Well, if you could get customers to think about their energy usage holistically, so if they're going to be, you know, moving away from a, you know, a combustion engine car, and they're going to be using heat pumps, instead of, you know, natural gas heating in their home, if you could get people to think holistically what they're saving on the kind of, you know, GHG side of things, versus what they are going to be spending on electricity, they may actually be spending less if they look at it holistically, but I don't really know, to be honest with you, so that I'd rather focus on the things that we could ask government for, as opposed to asking customers to be, you know, thinking more holistically at their entire energy usage, which is just not how they think. And I think, to change that behavior, would be quite a monumental task going forward. But those are some of the things that we think about, because we are very concerned about the affordability going forward, because it is such a massive change that we're all experiencing.

 

Trevor Freeman  43:50  

Yeah, I think this is another example of there is no single solution here. There is no you know, silver bullet that's going to help us pay for all of this, we need all the tools on the table here, we need to look at all different options. And I think you outlined a couple of them, you know, in what you said about our customers impression of some of this change and who should pay for it. Last episode, I talked to David Coletto, from Abacus data, and he was saying on the whole Canadians really believe that a an electrified energy system, we know once we make that transition, we will be more secure, it will be more affordable. And I think those customers who have made some transition in their lives can see the benefit of that. But sometimes the initial hurdle is pretty hard to get over that upfront capital cost. And so looking for ways, both at the customer level as well as at the utility level, the LDC level I think is going to be important to help get over that initial capital outlay that's required, so that we can realize those benefits that we all know where they are that we know we'll see. So . Yeah, great filling some of those out. So I know I mentioned that I will get back to this. But I do want to talk to you about the advocacy role that the EDA plays. So you mentioned, you know, talking to governments and Ontario, the provincial governments across Canada, the provincial government has jurisdiction over most energy matters. So advocacy to the government is a key role that you play. I'm curious, what are you asking the government to do or to provide to help some of these changes that we're talking about happen? What is the advocacy that you're pushing for with the government.

 

Teresa Sarkesian  45:32  

 So I'm going to try to keep it really simple and just sort of, you know, tie it back to our vision paper for now, because at any given time, I'm working on 20 or 30 l policy issues, primarily with the Ontario government. But this past year, we have expanded our work to also include the federal government, because they have investment tax credits that we are interested in for our members to see if they could be eligible for those. We're interested in them changing things to the Canada Infrastructure Bank, also to provide new sources of equity there. And we're also pursuing grants, as well, for grid modernization. So provincially, a whole whack of issues. But I'm going to go back to our paper just to give your audience a little bit of a sneak peek on some of the things that we're going to be asking for. So one of the first things we're going to be asking for is to get a common understanding and definition of grid modernization, and electrification. And this is not really new of an idea, we kind of have copied it from the US, there's a lot of jurisdictions, there where very clear objectives that have been set out in order to justify grid modernization, investments. So we think that it'd be beneficial for Ontario to do that, because then once you have those objectives in place, it is going to make it a lot easier to be able to prioritize grid modernization capabilities, functionalities, and investments in line with those objectives. You know, and then from there, you know, we're looking at creating a series of foundational investments. So going forward, some of the things that we think are foundational, are things like the distributed energy resource management systems and the advanced metering infrastructure, which is sort of like smart meters 2.0, for lack of a better term, and also the advanced distribution management systems. So we see those are going to be foundational pieces that all utilities are going to need to be able to help customers interact with the grid, and they're going to be necessary grid investments. So how what we see for those is we would like it to be similar policy direction, like we had for smart meters and green button, where you have government mandated activities. And then those are given, you know, a kind of lower standard of evidence with the Ontario Energy Board to support that capital infrastructure, they're deemed as priorities and ties back to that initial plan, where you set objectives, as long as those objectives can be that then those should get a pass through.

 

Trevor Freeman  48:12  

If I could jump in right there just for our listeners. So what Teresa is describing here is, at the moment when there are unique things that are not part of government mandate, yet every LDC and Ontario, of which there are many 60, something I don't even have the number in front of me but every LDC when it comes time to enact that project has to go through a whole exercise of justifying it proving why it's necessary, saying this is why we want to do it. If there was some commonality across LDCs in the province, we wouldn't have to put as much effort into, you know, the report writing side of it, we could just get down to business and make these changes that we all know across the province are important. So I think it's helpful for us to understand how that process works. 

 

Teresa Sarkesian  49:00  

Yeah, and thank you for interjecting on that, Trevor, because if government wants us to move fast, we can, but we need that certainty. So you know, we're no different than any even though we're regulated monopolies. We're really no different than any other business that wants to do business in Ontario, you're always looking for certainty and clarity, from legislation from policy from regulation, because the uncertainty is what slows things down. Another recommendation that I'm moving forward with is that we need to move beyond pilot projects. I had a conversation with a consultant who is working with Enercan on this and they want to move beyond I love their term, death by demonstration. We've got a couple of dozen pilot projects currently in the sector, whether they're funded provincially through the IESO or they're funded federally through Natural Resources Canada, and you know, there's some very exciting results that are coming out of those. But some of those pilot projects have been going on for all almost four years, in one case, almost five. And at some point you need to pull off the band aid said, Yes, this is a success, all LDCs would be eligible for funding in this. So we need to be able to scale it up. Or we just say no, that's not going to work. But being in this constant state of the pilot projects, while it's informative, at some point, someone has to have the courage to say we're moving forward, this is going to be scalable. Another recommendation we have is to create an action plan to develop a comprehensive human resource strategy to address quantity quality, and partnership aspects of the labor force going forward. There's some great work that electricity, Human Resources Canada has done. And, you know, DC 28,000, replacement and new jobs in our sector, by 2050 and that's, the electricity sector at large across Canada. And I did some, I think back of the envelope calculations to try to figure out, okay, some assumptions about distribution. And we're looking at close to 10,000 new positions in the sector, over the next 25 years. Every sector is having challenges, filling current jobs, never mind jobs, that we're not even sure what they are quite yet. So we don't necessarily have the right programs at the universities and colleges or private training institutions to start getting the right people and talent into our organization. And, you know, so we need help for that. And, you know, I am encouraged, I saw a little announcement out of the province yesterday to have more electricians down on the Chatham Kent area, because that's the whole greenhouse industry. And so I said, Okay, that's exciting. So people are starting to pay attention, but we need it more than just in one local community, it needs to be province wide. And, you know, like I mentioned before, we need to have more conversations about what the funding models are going to be to fund the energy transition. So these are some of the issues and recommendations that we're taking forward from our vision paper. But day to day, I guess that's the other thing, I want to mention in terms, the change I've seen, I've never seen us work on so many issues, prepare so many submissions, invest so many staff at various tables and working groups. And we love doing all that work. We love representing our members at every table of discussion possible, but I've never seen so many. And they're not just oh, you're there for a month, and you're done. Some of these they are multi year. So they have longer legs, because they are far more complex. But you know, we're working every day, you know, for members that way. Very, very proud to represent our sector think it's a fantastic sector. And the fact that they're going to play such a pivotal role in the future makes us only want to work harder to make sure we get the best of everything for our membership. 

 

Trevor Freeman  52:54  

Yeah, I know, we echo that at our level, we can certainly see a lot more stakeholdering and engagement happening with all players in the sector, but especially the government as they figure out this energy transition to right, let's not, you know, let's not forget that the government needs to figure out where policy needs to go to lead it, and it's a great role that you're playing to kind of bring the voice of the distributors to the government. Because again, as we've talked about a couple of times, we're really on the front lines, and we're hearing from our customers, and we're seeing what needs to change right at that customer level, in order to enable some of this stuff that's happening so that that conversation between the LDCs and the government I think is really important. So you know, we don't work in a vacuum, I just mentioned a number of stakeholders in our sector. And I highlighted the interconnected nature of our grid at the beginning of our conversation. There are a lot of different players working together to really, at the end goal is bring power to the customer. How do you see the existing model changing or expanding in terms of, you know, the kinds of partnerships that LDCs have moving forward? So you know, you mentioned private equity is being a potential upcoming role. There are things like technology companies that are developing innovative solutions, who, you know, we maybe were a bit more arm's length with in the past. There's a changing nature of our relationship with the customers, you brought up the idea of going from one way power flow to kind of two way back and forth. arrangement. How do you see that partnership evolving in the future?

 

Teresa Sarkesian  54:30  

Well, I think the good news is, there's a very strong foundation knowledge to build on. So I'm going to talk about three different areas. I'm going to talk about sort of shared services across utilities, and I'll talk about a partnerships with the private industry. And I'd like to talk about the engagement with customers as well. So firstly, there's lots of shared services going around in the industry already. There's all kinds of partnerships that members are trying to reduce costs for customers and find the best solution. So instead of saying, having 60 utilities run, seek out the best solution, you know, you get everyone working collaboratively to find a solution at the best price for customers. So we've seen a lot, just in my 15 years I've been there you've got in the past, there was, you know, common delivery of conservation programs, members work together on common engineering standards, lots of mutual aid assistance agreements across among utilities, for Storm Recovery. I've seen shared billing services, bulk purchasing products, and shared control room practices and services. And I've seen private sector play a much bigger role in utilities, as well. I've had the privilege to attend some openings, and launches of micro grids, where you have maybe a solar company and an energy storage, battery company, that are part of that group with utility, creating a micro grid for their community to provide maybe warming and cooling charging services when there's a major outage, for example. And I've seen now, some smart grids, you know, one that's already been implemented up in the north that has a significant private sector partner. And I've seen it also there's a new one, that's another one in the north, that's going to be developed with a private sector partner. And I've seen, not just Ontario businesses, I've seen what businesses come in one of our members is doing a distribution system operator pilot model with a partner in from Norway. So I'm really encouraged, I think the foundation is already there to kind of build on all those successes we already have, and do more, you know, and we talked about the customers going forward as well, that they're going to be to help playing a role, or we hope they're going to be playing a role. Because there's a lot of energy, battery storage and solar generation, sort of behind the meter, whether it's a farm, or it's a residential customer, or it's a big industrial customer. And so we want to be able to optimize all of those resources into the system to be of benefit to all customers to reduce costs. But we'd have to give an incentive to those customers to participate, no one is going to let you know a utility access their, you know, solar panel generation or their battery storage, unless they're going to be getting paid to do so. And I think that's going to be really important going forward, because we don't want to over build the grid, I mean, the grid is going to be so big, going forward. And we have to find ways to avoid over building it. Because we don't want to be in a situation where you know, customers are having to pay too much for a grid that's not properly optimized. So trying to find solutions behind the meter, that will maybe either avoid or delay bigger generation investments or transmission investments, or even actually distribution investments, we want to optimize that. But right now, there's not really a lot of permission to do that. So we need to get that legislative and regulatory permission to do that, to turn those, you know, more passive customers into prosumers, that they're basically your their proactive customers by selling their energy storage back to the grid. So I'm really optimistic. I think we've got a great foundation work to do on the customer peace, letting them participate as prosumers and the system, but I'm pretty optimistic that that we can get that job done.

 

Trevor Freeman  58:27  

Yeah, I think it really highlights, there's a lot to be excited about when it comes to the change, that's going to happen. There's a lot of opportunity out there both for the LDCs, for the other stakeholders for our customers, that this energy transition, this change is going to bring about, you know, there's some challenges to I know, he talked about the challenges. I wonder, though, what do you see, as you know, one of the single biggest are a series of risks to achieving the vision that you've outlined in the paper, how could this go off the rails and not happen the way we need it to happen?

 

Teresa Sarkesian  59:03  

Well, I always like to be glass half full as opposed to half empty, but you're taking me down that road? Trevor? So I'm going to answer that question. 

 

Trevor Freeman  59:11  

It's my job. 

 

Teresa Sarkesian  59:11  

So you know, obviously, our vision for the future role is big, but it's practical. The energy transition is upon us now. It's not something to contemplate for the future. So we think that the biggest risk is effectively inaction or kind of, you know, kicking the issue down the road, 510 years. We're seeing this right, nearby jurisdictions in the US are taking action. There's been significant funding out of the Biden administration, for all kinds of initiatives from you know, cybersecurity, to grid modernization down there. They're doing they're very competitive. They want to attract businesses, to the US. And so, you know, that's a major competition for Ontario. So if we don't seize the opportunities to kind of start working on these important issues now, we could lose economic development opportunities, we could lose jobs, we could lose investment, we could lose our talent as well, that may want to move to another jurisdiction. So to mitigate that risk, the LDCs, and policymakers have to work together on developing a shared vision around electrification and grid modernization, develop a plan of action and create a realistic timeline to turn that vision into reality.

 

Trevor Freeman  1:00:26  

Yeah, it's a it's a great point. And I think it's important for people to understand that change is happening, the change is going to happen, whether we want it to or not. And, you know, often sometimes people say, Are we are we really going to see this change? I think we're already seeing it, we're already seeing customers want to change the way they interact with energy. The risk here is if we don't react quick enough or properly enough, the costs of that change becomes higher the reliability of the grid that we're working with, goes down, that general customer experience is not where it needs to be. And then you've highlighted some other ones, you know, we can really struggle with talent if we're not offering them the kind of cool innovative roles that they're looking for. But the neighboring jurisdiction is, so it's not so much that the change may or may not happen, it's how do we react to it in a way that really serves all of our stakeholder the best. So, Teresa, this has been a really great conversation. And I really appreciate you taking the time to join us and chat with us today. I think there's a number of things that we talked about today that really set up future conversations I'm going to have nicely. So thanks for the half for teeing that up. And this is your second time on the show. No doubt, there'll be a third time because I think there's a lot more that down the road, we can we can pick apart. So thanks for that. We typically end our interviews here with some common questions to all our guests. So to start off, what is a book that you've read that you think everybody should read?

 

Teresa Sarkesian  1:01:56  

So one I recently enjoyed it's by a friend too. By Darrell Bricker, he wrote Empty Planet, and that is very, very good talks about actually declining global population. And what that means from everything from, you know, businesses to climate change to pension plans. So it's a fascinating read. People have time for it. 

 

Trevor Freeman  1:02:19  

Yeah, very cool. I'll check that out. So kind of the same question. What's a movie or a show that you'd recommend to everybody?

 

Teresa Sarkesian  1:02:24  

I watched one a few months ago was a Netflix series called the Blue Zone. And it was an investigation on people who had made it to 100 I think they called Central Jamarion’s I can't remember the name. But basically, they interviewed all these people living around the world about what it takes to get to be 100. So I really enjoyed it. It was just, it was just very beautifully done. And the people they talked to, I found fascinating and so interesting. So I really enjoyed it.

 

Trevor Freeman  1:02:52  

Yeah, I also watched that one that was really great. If somebody offered you a free round trip flight anywhere in the world, where would you go?

 

Teresa Sarkesian  1:03:00  

Well, I couldn't pick just one place, Trevor. So maybe I could like, have like around the world trip. But Sydney and Tokyo are places I really want to go to

 

Trevor Freeman  1:03:09  

Have you been there before? 

 

Teresa Sarkesian  1:03:11  

 No, no, but I think they look like places. Totally,

 

Trevor Freeman  1:03:16  

Totally. Who is someone that you admire?

 

Teresa Sarkesian  1:03:18  

 for years it has been Terry Fox, great. My kids are in a big, I don't want to say Terry Fox phase, but they obviously they learn about Terry Fox a lot at school. And so they often will come home talking about Terry Fox, and we've got a little book that we read about, you know, the story.

 

That's fantastic that he really is an exemplary Canadian. And if he can only know today, what he has achieved, you know, even though his it wasn't able to make his run across the country, because unfortunately, he passed I think he'd be blown away by the fact that people have kept the memory going. And you even talking about your kids, you know, obviously doing things to support his memory, and his initiatives. And he's just extraordinary to me.

 

Trevor Freeman  1:04:04  

Now, there's definitely a lesson there. And we don't always know the impact that we are having. And we may never know the impact that we're having. long as we're kind of aiming at the right things. Good things will happen. So finally, to wrap it all up, what's something about the energy sector or its future that you're particularly excited about?

 

Teresa Sarkesian  1:04:23  

Firstly, excited about everything. But if I had to sort of pick one, I am very excited about the potential for customers to be pro sellers and engage with the with the energy system. I think that could be absolutely transformative going forward. So I'm excited. And I hope to see that before I retire, that's for sure.

 

Trevor Freeman  1:04:45  

For sure. I mean, I think there's no question. We're going to see lots of change, as we've talked about a lot today. And I'm excited about that, too. So that's great. Teresa, thank you again for coming on the show. I really appreciate it and it's been great chatting.

 

Teresa Sarkesian  1:04:57  

Likewise, thanks so much, Trevor. Really enjoyed Our time together.

 

Trevor Freeman  1:05:00  

Right Take care. Thanks for tuning in to another episode of he thinkenergy podcast. Don't forget to subscribe wherever you listen to podcasts and it would be great if you could leave us a review. It really helps us spread the word. As always, we would love to hear from you. Whether it's feedback, comments, or an idea for a show or guests. You can always reach us at thinkenerg@hydroottawa.com

 

HYDRO_ThinkEnergy_Aug5_Audio

Wed, Jul 31, 2024 1:07PM • 30:42

SUMMARY KEYWORDS

energy, canada, side, country, council, utility, ultimately, philip, big, clean energy, single, transition, challenge, governments, perspective, climate, decarbonize, involved, work, electricity

SPEAKERS

Trevor Freeman, Dan Seguin, Philippe Dunsky

 

Trevor Freeman  00:00

Everyone, well, it's officially summer and the think energy team is taking a break to recharge over the next two months, but also to plan our content for the fall. So stay tuned for some great episodes in the fall. Not to worry though, we still have our summer rewind to keep you engaged. This is where we pick out some of the great past episodes that we've done and repost them. So whether you're lucky enough to be sitting on a dock or going on a road trip, or if you're just keeping up with your commute through the summer, it's a great time to revisit our past content. You will hear past episodes from my predecessor and the host chair Dan Seguin as well as a couple of mine from the past few months. And you're welcome to check out your own favorite past episodes as well. Wherever you get your podcasts. We hope you have an amazing summer and we'll be back with new content in September. And until then, happy listening.

 

Dan Seguin  00:06

This is think energy, the podcast that helps you better understand the fast changing world of energy through conversations with game changers, industry leaders, and influencers. So join me, Dan Seguin, as I explore both traditional and unconventional facets of the energy industry. Hey, everyone, welcome back. Right now, there are scientists, entrepreneurs, policymakers, indigenous and industry leaders, helping to shape the direction that Canada will take to accelerate a transition to clean energy. Everywhere you look, whether it's academia, municipal, provincial, or federal governments, there's another council or committee being formed to address the most pressing issues of our time, climate change, from transitioning to sustainable energy sources, electrifying transportation, and improving energy efficiency to protecting our natural environment and reducing carbon emissions. One thing is for certain our country is embracing the renewable revolution, like never before. But those with seats at the decision table know that it must be done responsibly, and affordable. As we know, every region of Canada is unique and presents its own set of challenges and opportunities when it comes to tackling climate change, and ways to implement clean energy. So here is today's big question. How did we get such a vast and diverse country like Canada to agree on a pathway forward to a cleaner, greener and more sustainable energy future? Joining us today is Philippe Dunsky of Dunsky Energy and Climate Advisors, a consultancy firm that Philippe founded. It supports government, utilities, corporations across North America to accelerate their transition to clean energy. Phillippe, is the co chair of Canada's new Canada electricity Advisory Council, the co chair of efficiency Canada, and the director of the greater Montreal Climate Fund. He also previously chaired the Quebec government electrification Working Group. Welcome to the show, Philippe. Let's start by asking you this. Having just gone over some of your accomplishments, where does this passion for clean energy and climate come from? Where did it start?

 

Philippe Dunsky  02:44

So, so great to be here. By the way, thank you so much for having me. It started, I guess, I guess very early on. I'm Jewish background and grew up with, you know, endless stories about the Holocaust. And somehow that kind of morphed into just a general  interest for world affairs and for big challenges, big societal challenges. And then as I was growing up, those became really focused on environmental issues. So that was the genesis. I became very, very interested in environmental issues. And then through that, and climate change in particular, as probably the greatest challenge of my generation, and for my generation. And then, I guess the other thing is, I've come to discover that I'm a pretty analytical guy. So I'm not a no great protester, I'm not a great to great movement leader, I tend to see a lot of gray, not so much black and white. And so that's how I ended up deciding to get involved in these issues. But, you know, in my own way through more of an analytical lens,

 

Dan Seguin  03:55

Okay, you've served and are serving on numerous councils, committees and boards. Can you tell us what has been the biggest takeaway you've learned through each collaboration? And how has it changed you?

 

Philippe Dunsky  04:11

Yeah, because each one does change you and changes your perspectives. Because ultimately, the biggest takeaway is that no matter how much I think I know this stuff and know this stuff. Well, and I've been working on energy issues for over 30 years now. And so, you know, I always end up thinking that I know the answer. What we discover is that, you know, there's not a single answer, there are many perspectives. And if you can combine knowledge with multiple perspectives, then you can come up with something that's hopefully going to be closer to that, you know, to that truth, or whatever you want to call it. My big learning is that every time you go into something like this, you go in with an open mind and an open heart. And if you do that, and you're listening to others perspectives, then you're bound to land on something that's a hell of a lot smarter. And then what you initially thought coming into it?

 

Dan Seguin  05:02

Okay, cool. Now, you were appointed chair for a recently formed Canada electricity Advisory Council. Can you tell our listeners who's on it? What is the mandate? And just how big of an undertaking is this?

 

Philippe Dunsky  05:19

Sure, I can start with the last question, by the way, that the undertaking, it's a really big issue, it's a really big challenge. On the other hand, the undertaking itself is time limited, it's a 12 month thing. So I'm a pumpkin and I turned into a pumpkin in May. It's been five months now. So I got another seven to go. From that perspective, that's the timing that we're looking at. Okay, Council itself is a group of 18 Canadians from across the country, every single, every single province, no exception. It's, it's extraordinary mix of individuals with an extraordinary mix of experience and perspective. So I'd say roughly half of council members are either current or former utility executives. The other half is a bit more of an eclectic mix of former regulators, we have people involved in the power production side of things, we have first nations leaders, so indigenous leaders, and a couple of others with different perspectives to bring to the table. But the really important thing here, I think, is that you're looking at the leadership level from every single province across the country. And that makes for really, really enlightening and challenging conversations as well. And then I guess you asked about the purpose or the mandate of the council. So I'll put it at a very, very fundamental level as a country, we're trying to largely decarbonize electricity by sometime in the middle of the 2030s. And we're looking to grow electricity, very substantially to decarbonize the rest of the economy. By 2050. That's that dual set of goals is at the heart of our mandate. And our mandate is to figure out what the feds can and must do. And at the same time, what can and must be done by others in the country, to help make this an easier journey, a more affordable journey. And ultimately, a more successful journey on the way there.

 

Dan Seguin  07:22

Okay, great segue here. Now, with respect to Canada's goal to achieve a 100%, Net Zero electricity system by 2035, you stated, "Is it better to optimize than maximize? Can you maybe break that down for us? And can you give us some examples?

 

Philippe Dunsky  07:41

Yeah, sure. I mean, you know, what I mean by that is, if all we do is say we want to decarbonize, there are many, many paths to do that. And, you know, we can say, hey, we're gonna, we're just gonna build, build, build, build, build until there's no tomorrow. And we could probably get there, doing nothing but that, but we'll get there in a less affordable way, than if we really think through the intricacies of what needs to be done. Yes, on adding, also on subtracting, so actually becoming more efficient in the way we use energy, relying more on consumers' involvement in the marketplace to achieve some of those goals. I just think there are quick ways to get to the goal, that ultimately, are going to cost too much and or create reliability issues. And if that happens, there'll be a backlash. And we'll never get to the goal. Alternatively, there, they're thoughtful ways that maybe aren't exactly the way we've always done things in the past, but that involve a lot more complexity and being able to wrestle with complexity and stuff. But ways that are focused on keeping this as affordable as possible, ultimately, for everyone across Canada, making sure that we do this in a way that's reliable, so we can always count on electricity being there. And in doing it in a way that actually involves some cooperation, as well.

 

Dan Seguin  09:04

So the electricity Council fulfills the minister's mandate to establish a pan Canadian grid Council. How viable is a pan Canadian electricity grid? Or are you seeing your movement in regional interconnections?

 

Philippe Dunsky  09:22

Yeah, so it definitely looks regional. Let me be really clear about that. And I know the original Originally, the name for the council was supposed to be the pan Canadian grid Council, as you pointed out, you'll also notice it, it was not it does not have that name. And there's a reason for that. And, and I will say, you know, and I've said this publicly many times, I don't believe that that's the right answer. We definitely need a lot more cooperation. at the regional level. There are a lot of opportunities for provinces to exchange more to continue exchanging with the US by the way, and this isn't, you know, we're not caught within, within our borders. So we have to do more on the cooperation side to keep costs down again, as low as possible to make this as smart and thoughtful and as achievable as possible. But that doesn't involve, you know, I love the old Coast to Coast Railway analogy. It's nice, it's working for railways. We're not talking about a single grid that goes coast to coast that's just not in the cards.

 

Dan Seguin  10:28

Now, for those who are not aware, can you tell us about your firm, its purpose, and what makes your approach unique, and particularly effective?

 

Philippe Dunsky  10:40

Sure, I mean, I'm thrilled talking about my firm. So these days, I spend so much time talking about look Council, which is kind of like my evenings and nighttime job, or evenings and weekend job. But my day job is running my firm, my firm is a group of over 50 professionals. Now, I think we're about 55 now that are dedicated exclusively to supporting clients in their clean energy transitions. And our clients typically are utilities and governments, increasingly large corporate clients as well, across Canada and across the US. So ultimately we work with utilities and governments that are in the throes of this energy transition, that are trying to figure it out. They're trying to find a way to help their customers navigate through it and a way for themselves to navigate through it, to define what the business case is for them and what their proper role is in it. And, and then we also have helped them in some of the nitty gritty. So, you know do you get customers involved on the demand side management side to reduce the pressure on right on the big build out? And all the capital is involved there? You know, what do we need to do to electrify vehicles, for example. So we've developed for some places, charging, charging infrastructure plans and charging infrastructure, business, business plans, strategies, investment plans, we work with, with our, with our customers in helping helping to decarbonize buildings through whether it's direct electrification, or hybrid heating systems without just the natural gas, depending on the on the need, we work with to decarbonize industrial loads, as well. And oftentimes, we're working with our utility customers to help them help their industrial customers decarbonize. So all of those things, and more and of course, planning out the whole transformation of the electricity system on the supply side, is a big part of it. That's a lot of what we do. It's hard to put in a single sentence. But the interesting thing, I guess, for us is, you know, ultimately, we're a consulting shop that is exclusively focused on the clean energy transition, we do nothing other than that. And, and I think that makes us pretty darn good at it.

 

Dan Seguin  13:02

That's perfect. Phillippe, your company emphasizes support in four focus areas, buildings, mobility, Industry and Energy. How were those identified? And can you maybe provide some specific projects or initiatives that have made a significant difference in the sector's?

 

Philippe Dunsky  13:25

Yeah, sure. And those sectors are, you know, 80 to 90%, of the energy equation, right. So they've grown over time, in a very deliberate manner, we started out working on the building side of the equation. So you know, what we call DSM or in Ontario, you call it CDM. Just to be different. But so we started out working on that. And then over time, we added mobility, especially electric mobility to our portfolio of expertise, and then built out from there, including on the generation and TND side, in terms of some examples. I mean, I'll be honest with you, we do well over 100 projects a year now. So there are a lot of different ones with a pretty large variety. But for example, I actually just came back from meeting with one of our clients, a large, large electric utility, where we've helped them to revamp their whole CDM approach. So that's, you know, from top to bottom, on the strategy side, on the regulatory side, and then on what the programs actually look like and how they operate and who they involve. In Ontario, we actually completed something I think is absolutely fascinating. I really enjoyed reading it. And that was a study of the potential of Drs. So distributed energy resources in Ontario to essentially keep the lights on, you know, we found 1000s of megawatts of exploitable resources there that you don't need to build because they're already there on the customer side of the meter. So stuff like that. We've worked with a lot of states in the US including California and New York designing, designing measure is to help their customers finance, the transition on their side, we've done a lot of work with, with utility executives helping them think through the strategy side of this, how am I going to actually the change management? How may I change my own utility to go from what it was in that steady state environment of the past 75 years to something that is a completely different beast in a very much more dynamic world. And it's focused on customer service and, and focused on transitioning the energy system as a whole. So, again, a pretty broad array of, of projects, but all of them. Absolutely. Absolutely exciting. And, and fascinating for me to be involved in and learn from.

 

Dan Seguin  15:45

Okay, now, wondering if you can speak to the importance of responsible and sustainable practices in the clean energy sector? And how has your company prioritized these principles in his work?

 

Philippe Dunsky  16:00

Yeah, sure. I mean, I mean, look, the world right now is looking to the energy sector to lead and to transform itself. And as we do that, you know, leaders have to have to walk the talk. So, you know, I'm, I'm very proud that most, if not all of my clients are doing that right now within their own operations. And my firm does that in our operations. I try to do that, in my own life, I've been driving nav for seven years. Now, it's a great way for me to, to, to lead by example, but also, quite frankly, to get a head and on the experience curve, and actually understand from personal experience, all right, what are the challenges of of EV ownership and what needs to happen to make it a more seamless process? So you know, that's on the personal side, my company, we're actually a B Corp. So we went through a process to be certified by an independent organization that looks at all of our practices, from soup to nuts. And in our score, our B Corp score has increased. Year over year, I think we started out somewhere about 80 Something points, and now we're at 119. So you know, it's just a process of continuous improvement, just like, just like all of our clients have to have to do.

 

Dan Seguin  17:12

Okay, cool. Now, we all know, there's always more every country can be doing to combat climate change. But it's complex. In your opinion, Philippe, how does Canada compare? Is it on the right track, and focusing its effort on the right initiatives?

 

Philippe Dunsky  17:34

Yeah, I think it's, I think Canada is, is definitely moving in the right direction. I think there have been a lot of very important policies brought forward over the past several years that I think, bring us forward. Are they all done exactly the way I would like them to be done? No, if I had a magic wand, would I do it a little bit differently? Probably, but directionally there. Actually, I think we're heading there. You know, that being said, it's a long and winding road. Right. And it will be for the next decade. So there will be setbacks, and there will be things that we're doing that are suboptimal. And that's a little bit part of life. So my job and the role I've kind of given myself and my firm is to help make that path as straight and narrow as it reasonably can be. But you know, recognizing that this is a big learning process and, and mistakes you're gonna make for sure.

 

Dan Seguin  18:31

Now, Philippe, what are some of the biggest challenges or even threats to achieving a clean energy future in the timeline set out by scientists and the government? How is your company positioned to address them?

 

Philippe Dunsky  18:46

The biggest challenges and threats and I'll decouple those questions, okay. Because I think that, from my perspective, there are enormous challenges. There's first and foremost, a challenge of time, right? Because what we're talking about if we're talking about, you know, getting to net zero or something like it by 2050. I mean, that's a single generation. So we're talking about literally transforming the backbone of modern economies in a single generation. That is, number one, because frankly, that's never been done before. We've done it within sectors, right, we've done we went from, from horse drawn carriages, to to you know, horseless horseless carriages. And you know, we've, we dumped manufacturer, gas and went, went to natural gas, and we've done individual changes like that before. We've never done all at the same time dealing with that and getting it done. The single generation is a race. And so I do think that time is probably the number one challenge number two challenge. And, you know, if you really take a take a step back here and think about what we're talking about it, it's largely from an economic standpoint, we're largely moving from optics to capex, and there's we're largely it moving from a context where whether it's utilities, or business owners or homeowners, today, we pay our bills, you know, we're buying fossil fuels, right, we're buying and burning the energy that we consume. And so that's an OP X thing. Now, what we're talking about is increasingly stuff, that's just all capital, if you think of, you know, going from a gas plant to, let's say, a wind farm, a wind farm is, you know, it's once and done all of the entire cost for next 20 years, or 95% of it goes in the ground on day one, that's moving objects to capex, it's a really big change. If you're thinking of it from a homeowner perspective, we're talking about, let's say, take my example, you know, I bought an Eevee, my Eevee cost a lot more than that my previous gas car did. On the other hand, I'm paying a hell of a lot less to keep it up to optics to capex. So there's a real challenge around getting enough capital for all this to happen, whether it's for large utilities or down to an individual homeowner or car owner, I think that's a real big challenge that we have a couple more, maybe I'll, maybe I'll stop there. And then the things that my firm is doing to address those, I mean, look, like I said before, on the timeline side, everything we're trying to do is just minimize errors, we're not gonna eliminate them, but minimize errors. So that that line between here and there can be as straight as possible, and as least painful as possible on the capital side, that's a very specific thing. But we actually do a lot of work developing innovative financing mechanisms that utilities and governments can offer to homeowners and business owners, to allow them to have access to the capital that they need, as they tried to save money on the operation side. So those are, those are a couple of them, anyhow.

 

Dan Seguin  21:57

Okay, Philippe, what do you want Canadians to know about the country's transition to clean energy that they might not already know or be aware of?

 

Philippe Dunsky  22:10

You know, I think, I think everyone is aware that this energy transition is really big, and it's gonna be really hard. Maybe the one thing I'll add on to it is, there's a lot of benefit on the other side of this. So a lot of benefit, you know, what we're talking about ultimately, is, is transformative in nature, it's the sort of thing that's happened. I'm thinking outside of the energy sector, but just holistically, these kinds of changes have happened a few times in the past 100 years or so. And they tend to always be ultimately about moral leadership to start. And so I think we need to think of this, first and foremost from the perspective of moral leadership, which is something that is one of the reasons why Canada has such a great, strong brand around the world, because we punch above our weight on the great moral issues of the times. And that was true when we went to help out Europe during World War Two, and that was that true. And we went Mulrooney led the boycott of South Africa under apartheid. I mean, we've stood up when we've needed to, that has positioned this country internationally in a way that I don't I'm not sure that we fully measure. This is one of those times. And so being at the forefront of this, I think is extraordinarily important for our country as a whole. That being said, there's also some really economic benefits at the end of this and flip it on its head to there's some real economic costs and risks if we don't do this, and if we don't get it right, well, one thing, one thing I'll point to, I remember about 10 years ago, being in conversations with some provincial governments about the possibility of governments eventually taxing imports of our products, if they're too carbon intensive, and the idea sounded a bit crazy back then we're recording this today on October 30 29 days ago, on October 1, Europe's carbon border adjustment mechanism came into effect for the first time. And that is effectively going to tax import of products from everywhere around the world based on their carbon content. So if we get ahead of this fast, if we succeed in this, if we lower our carbon content of what we produce, we've got a hell of a nice economic advantage at the end of it.

 

Dan Seguin  24:33

Now, what advice would you give to an aspiring entrepreneur or those looking to make a positive impact in the clean energy and climate sectors?

 

Philippe Dunsky  24:48

You know, my advice is it's gonna sound a little wishy washy, but it's just figuring out what you're great at. You know, everyone's great at something different so I have a hard time. I'm providing really concrete advice to people I don't know personally, but everyone's got their magic. Everyone's got their special exceptionalism. I think it's important to know who you are, know what you really like to do know where you excel, and then whatever that is, to the extent that you can bring that to service of a greater cause, whether it's climate, whether it's portability, whatever it is, I think that's just a beautiful thing. So I encourage everyone to ultimately lead a purpose driven life and, and lean on their own strengths wherever they may be.

 

Dan Seguin  25:35

Okay, that's fair. Lastly, Philippe, we always end our interviews with some rapid fire questions. Are you ready? Maybe. Okay, here we go. What are you reading right now?

 

Philippe Dunsky  25:51

Right now I'm actually sounding nerdy but I'm actually reading the CIA's 2030. Outlook, the latest 2030 outlook by the International Energy Agency. Absolutely fascinating read. If you're a nerd, like I am about energy.

 

Dan Seguin  26:04

Now, what would you name your boat? If you had one? Or maybe you do have one?

 

Philippe Dunsky  26:10

My boat? My boat is a canoe. And what would I name my canoe? I'm not sure. Maybe I named it the Power Canoe. One of the reasons I love canoes, by the way, is they're probably the most efficient way of getting from point A to point B on water. So I'm a big fan of energy efficiency and, and a canoe is just that.

 

Dan Seguin  26:31

Who is someone that you truly admire Philippe?

 

Philippe Dunsky  26:35

Oh, goodness, I admire so many people, I couldn't come up with a single name there. You know, I work with a lot of leaders who dedicate their time and energy and excellence to, for public purposes. And every single one of those I'm in deep admiration of, I'll maybe add one other group, the folks I work with here in my firm. I've never known a group of people as dedicated and passionate and smart and curious. As they are, they do inspire me.

 

Dan Seguin  27:05

Good, good. Okay. What is the closest thing to real magic that you've witnessed?

 

Philippe Dunsky  27:10

I'm from Quebec. So I'm a big fan of the circus, the modern circus, whether it's Cirque du Soleil, Cirque Éloize or les Sédois de la mayenne, they always amaze me and I'll always leave me spellbound.

 

Dan Seguin  27:24

Okay, next, as a result of the pandemic. Many of us are guilty of watching a lot of Netflix or other streaming platforms. What's your favorite movie or show?

 

Philippe Dunsky  27:38

You know what, I watched many different Netflix shows. These days. I'm just trying to think what's in bridgerton would be one of them right now. I'm really enjoying it.

 

Dan Seguin  27:52

Now, lastly, Philippe, what's exciting you about your industry right now?

 

Philippe Dunsky  27:58

What's exciting is the same thing that's exhausting me. And that's the pace of change. It's just an extraordinary time right now. And I'll tell you what's really exciting me is that five years ago, because this is all I do. Right? I'm a one trick pony. So I think about this every day. Five years ago, I felt pretty alone in seeing and understanding the pace of change that we needed today. I feel like pretty much every leader I speak with is very clear eyed about how big this is, how fast it's gotta go, the challenge that it represents, and the near the you know, the knowledge that we need to get going and get going in a big way. So that excites me.

 

Dan Seguin  28:37

Now, if our listeners want to learn more about you, or your organization, how can they connect?

 

Philippe Dunsky  28:44

Well, my organization's website is very simple. Dunsky.com. That's probably the easiest, easiest way. And if you want to connect with me, try info@dunsky.com or my own email. The simplest email in the world is philippe@dunsky.com.

 

Dan Seguin  29:05

Well, Philippe, this is it. We've reached the end of another episode of the thinkenergy podcast. Thank you so much for joining us today. I hope you had a lot of fun.

 

Philippe Dunsky  29:15

It was fun. Thank you. I love your questions.

 

Dan Seguin  29:18

Thanks for tuning in for another episode of the think energy podcast. Don't forget to subscribe and leave us a review wherever you're listening. And to find out more about today's guests from previous episodes, visit thinkenergypodcast.com. I hope you will join us again next time as we spark even more conversations about the energy of tomorrow.

Summer rewind: What role do communicators play in motivating change? Specifically, how can they move their audiences to take action against climate change? In thinkenergy episode 122, we delve into the world of climate communication with Amber Bennett, Deputy Director of Re.Climate. Explore the driving forces, opportunities, and challenges of inspiring climate action—from bridging research to practise to empowering change. Listen in for an insightful conversation on shaping a sustainable future.

Related links

• Amber Bennet on LinkedIn: https://www.linkedin.com/in/abennettyyc/ 

• Re.Climate: https://reclimate.ca/ 

• Intergovernmental Panel on Climate Change: https://www.ipcc.ch/ 

• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-8b612114/
  
  

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Transcript

Trevor Freemon

Everyone, well, it's officially summer. And it's been about four months since I took over the mic as the host of the think energy podcast, which is kind of hard to believe. It's been really fun having great conversations with great people in the energy sector. I now mostly know my way around the recording equipments and the software, and really feel like we're kind of just getting started and looking forward to where we go from here. That said, the think energy team is taking a break to recharge over the next few months, but also to plan our content for the fall. So stay tuned for some great episodes in the fall. Not to worry though, we still have our summer rewind to keep you engaged. This is where we pick out some of the great past episodes that we've done and repost them. So whether you're lucky enough to be sitting on a dock or going on a road trip, or if you're just keeping up with your commute through the summer, it's a great time to revisit our past content. You will hear past episodes from my predecessor and the host chair Dan second, as well as a couple of mine from the past few months. And you're welcome to check out your own favorite past episodes as well, wherever you get your podcasts. We hope you have an amazing summer and we'll be back with new content in September. And until then, happy listening.

 

Dan Seguin  00:06

This is ThinkEnergy, the podcast that helps you better understand the fast changing world of energy through conversations with game changers, industry leaders, and influencers. So join me, Dan Seguin, as I explore both traditional and unconventional facets of the energy industry. Hey, everyone, welcome back. Did you scroll through the news this morning? How many of those articles that you skim covered a topic related to climate change? I guess it was probably a few. It seems. Every couple of weeks there's a new story dominating the headlines about forest fires, hurricanes, floods, heatwaves, and more, both here in Canada and abroad. We are seeing firsthand the effects of climate change and As consumers, we are receiving information about it. Everywhere we look. Have you ever thought about how you are being communicated to? How is climate change presented? What wording was used? And why? And are their calls to action? How does it make you feel? think not only about news articles you read, but also about documentaries, podcasts, Hollywood movies, right down to your everyday life. Think about the newsletter you receive from your municipality. The assembly instruction on the last piece of furniture you purchase, or this section on your favorite clothing brand, website about their sustainable practice, communications surrounding climate change are pretty much everywhere and the need to be. In June of 2021, the Canadian government introduced the Canadian net zero emission Accountability Act, which puts into legislation Canada's commitment to achieve net zero emissions by 2050. Different companies across the country are making their commitment, much like we did in 2022, when we committed to leading the way to a Smart Energy Future by becoming net zero by 2030. The push on to stop the damaging pollution emitted into the environment on a daily basis, namely caused by burning fossil fuels. Scientists are urging that this is crunch time. So if you haven't already, now is the time to hone in on how and what you are communicating to your customers. So here is today's big question. What role do communicators play in motivating change within their audiences to take action against climate change? Our guest today is Amber Bennett, Deputy Director of Re Climate, Canada's first climate communications and Engagement Center. This new organization launched in 2022 brings together Canada's leading climate communication academics and practitioners, and aims to help communicators create strategies that inspire the public to support climate action. Amber is one of Canada's top climate communication strategists and capacity builder who works with groups across the country bridging gaps between research and practice. She led the groundbreaking Alberta narrative project and supported much of the foundational work to pilot and build reclaim it. Amber, thank you for joining us today.

Amber Bennett  03:54

Thank you for having me.

Dan Seguin  03:56

Amber, maybe you can start by telling us a bit about yourself and Re Climate How did you get into climate communications? How did Re Climate come to be and what does it aim to achieve?

Amber Bennett  04:09

Okay, I'll try to hold all of those questions at once. Well, I am based in Calgary, Alberta, which may seem like an unlikely place for some for the executive director of a Canadian organization or Canadian center focused on climate communications and engagement at Carleton University. But that's where I live with my family. And what to say? Yeah, I mean, I think I've been circling around climate communications for a very, very long time. You know, the the mind has a funny way of making sense of things in retrospect, but I started with a Bachelor of Science and then I moved on to a public relations degree and then I worked with the mayor of Calgary on the one of the I forget which numbered cop, but it was a Copenhagen. And I think that was really the first time I began to think about what, what is climate change and had a certain kind of exposure to the, to the, you know what the challenge was and what not. And when I saw I kind of went on, and I did a master's degree. And it was when I had needed to choose a topic for my master's degree when there was the catastrophic flooding here in Calgary. And there is this, like, amazing paradox where the, you know, Calgary Stampede, which is the epitome, I would say, of the, you know, kind of old boys club. And when that happened, when the floods happened, their motto was come hell or high water come hell or high water, they were going to, you know, produce the show. And at the same time, one of the readings I was doing as a part of my master's program was also titled come hell or high water. And it was really about the science of climate change, and why it is making it so difficult. Why is it so difficult for humans to kind of wrap our heads around it. So fast forward, I completed a master's, and then did a series of really interesting projects. I did some work with a group out of the UK called Climate outreach, which is focused on climate communications and engagement as well. And then started working with a group of people here in Canada to set up a similar center or similar organization that would focus on supporting climate communicators, helping to kind of bring together the research that was happening, as well as the practice. And so that's really why Re Climate it is set up to do, we're really dedicated towards advancing the practice of climate communications and engagement through research, training, offering resources, pulling resources together, strategy, and developing strategy with other types of practitioners, as well as convening networks of both scholars, as well as those people who are kind of out there in the real world doing campaigning and advocacy work and trying to, you know, communicate with citizens and whatnot. So, that's kind of where we're at.

Dan Seguin  07:34

Now, Amber, it sounds like Re Climate, is a very diversified organization that brings together experts in social science, Public Affairs, and science. What kind of professionals work together in this environment? And what does it each bring to the table?

Amber Bennett  07:55

Love this question. So Re Climate brings together I think I've said it research and practice. And so you have those practitioners who may be doing public engagement campaigns, they may be working for utilities, they may be working in local governments or other kinds of government, they might also be working in advocacy organizations. And so they often don't have the time, or I would argue the luxury of going into, you know, latest academic journals, or even, you know, kind of other thought leaders who are publishing in the field. Why? Because they're busy, they're doing the work. And so, you know, that kind of takes a lot of time to kind of go in and look at the research, track it down, make sense of it? They're also, I would argue, very few who have the time to do an evaluation, like after they've done something, what did we learn from it? You know, What, did we make a difference? You know, what kind of impact are we having, and similarly, just getting together with other folks, right, and talking about it and sharing what they're learning. So that's kind of on the practitioner's side. And so, you know, when we say we bring or convene networks of people together, we're really trying to do that, you know, we're trying to provide resources, synthesize, you know, research, both, perhaps, you know, it's public polling, or maybe it's social science, you know, what's happening in in, that's relevant, but also bringing people together to share with each other and learn with each other. So that's kind of that practitioner side. And, you know, there's also, I would say, sometimes a culture where people feel like they're competing with each other, you know, certainly within the charitable sector. So kind of, I think, for those folks who are coming in, who are kind of in the field, having that support and someone who's doing In the work on their behalf to kind of make sense of synthesize, pull it in together like yours, your five tips here, the things you need to do. That's extremely helpful. And then on the flip side, I think for researchers, you know, they're, they're kind of passionate, there's a reason why they're there thinking or trying to understand, you know, how to better engage people, or what's the right framing, or what are the values or whatever it is, because they're passionate about it. So by being able to kind of bridge from the practitioner world into a more academic or into a research field, we're able to just give people real world challenges. It's like, here's why practitioners are actually struggling with, you're an expert in this, please talk to us about it, or please, you know, this is the kind of information that they need. So, you know, kind of the practitioners, I would say, Bring the complexity of the real world, right, that we're dealing with real people, resource constraints, you know, various kinds of issues and whatnot, whereas researchers bring the kind of precision of being able to look at something with a whole body of understanding behind them to be able to kind of see, well, here's what may be operating within this situation, here's what we know about it. And here are some other kinds of interventions or approaches that we might be able to take. I don't know if that exactly answers your question. Maybe the scientists part, I would say they bring the public trust. Right. So whenever we're polling, you know, consistently, scientists come up on top as having high levels of public trust on climate and energy transition. And so I think that they bring that kind of authenticity. And, you know, they're not there, they're often unpolitical, right? They're not seem to be benefiting, you know, personally from talking about it. So they're really effective messengers.

Dan Seguin  11:57

Wondering if you can share some insight into what the average Canadian's knowledge on climate change is? How much do they know about the main causes and the path forward?

Amber Bennett  12:14

Well, I would say that Canadians probably know a lot about climate change. But what we measure, it's a little bit different. So when, and I would encourage folks to take a look at some of the reports that we have published on ReClimate.ca The one that I'm, you know, I kind of go back to was published this year, or maybe it was last year. But within these reports, we basically look across 65, or more, either private or publicly available surveys, or public polls or whatnot, and we kind of do it a roll up of okay, so it's not just one survey that has said, this is multiple surveys that are showing kind of trends and themes in in where the Canadian beliefs or attitudes or or mindsets are. So when you do that, and when we looked across, you know, 65, or so what you can see is, is that, even though you have the majority of Canadians that would say yes, climate change is real, and it is happening, almost half of them attribute both natural and manmade causes, you know, attribute the cause of climate change due to natural causes as well as as manmade. And so why is that important, is because when we get into the conversations around solutions, then without the kind of foundational understanding that burning fossil fuels creates pollution, which creates a heat trapping blanket, which is heating our planet, and causing all of these extreme weather events and natural disasters that we're seeing. Without that kind of clear understanding that burning fossil fuels is the cause of climate change. And when you get into the solutions, and what people actually have to do about it, the conversations a bit more, there's a lot of confusion, or there's a lot of room for confusion, which is kind of what we're seeing and I can talk a little bit more about that. So you know, I spend a lot of time in focus groups, and this kind of conversation comes up. So when we talk about solutions in the path forward, you talk about climate change, and you start to have discussions around what you are doing, you know, recycling will often come up, plastics will often come up. There's a whole kind of suite of things that people are doing, but very few people are able to name a particular policy or real intervention that you know, that will address some of the root causes. And we people on this podcast may not be like, Hey, why really. But you know, there are a lot of different people and for many climate change, even though they may be living within the impacts are the, you know, experiencing in their daily lives, they have many other kinds of concerns and priorities that are happening at the same time. So what I would say is that Canadians believe that climate change is happening, there is at least half that are uncertain, or would attribute it to both natural causes, and manmade causes. This kind of understanding of burning fossil fuels, the trapping blanket, you know, that's not well understood by many. And so they're kind of subsequently stopping burning fossil fuels, as a path forward isn't clear, as it could be, or, or should be at this point in time. And maybe the other thing I if you, if you'll let me, the other thing I would say is, is that, you know, Canadians consistently report, when you ask them very high levels of concern about climate change, right? Most people can see forest fires, you know, that's how we are making sense of what climate changes. It is through these kinds of experiences, either directly, or our experiences of seeing, you know, extreme weather and natural disasters. So people are expressing very high levels of concern. But if you ask, unprompted, what are you know, what are the issues that you're most concerned about? It often will address climate change as mentioned Much, much farther down on the list. Right. So, affordability and access to health care, cost of living, housing, there are many other issues that people are faced with and dealing with in their day to day lives.

Dan Seguin  17:18

Okay, see the term movable middle mentioned in reports and on the reclaimed site, what is the movable middle? And why is it so important?

Amber Bennett  17:34

Great question. And I feel compelled to say that I think that term movable metal is used differently by different people. I think within the context of, you know, the work that we do, it kind of comes out of, you know, some of the themes that I was talking about in the last in in the last question or last answer. It's this idea that, you know, people are kind of undecided. Or they're conflicted about an issue. So they could move either one way or the other, but they're not at the moment. oppositional? Right. So if you think about, you know, a broader population, there is a segment, you know, of Canadians, whose identities are really built around the idea that they don't believe in climate change. They're not going to support, you know, climate action and whatnot. There's also on the other side, a whole group of Canadians whose identity is built around me. I'm a climate activist, and I'm a climate advocate. And you know, and I'm an environmentalist, and so they're on the other side, but most of us just kind of live in the middle. Some are more well informed than others. But for the most part, people are concerned, right in the middle. They have they, you know, when they ask, yes, we want the government to act, we are highly supportive of it. But when it comes down to it, it's this tension around the fact that because they may not be well informed, or not thinking about this, they have many competing priorities. You're kind of undecided, or sometimes they're just conflicted about an issue. Right? Because on the one hand, as an example, yeah, I think we absolutely need renewable energy. We need lots of, you know, solar panels, I just don't want them in my house, or we need lots of, you know, solar, renewable solar farms. I just don't want them all over the landscape that I cherish from my childhood. So there are many things that you know are underneath that are operating underneath for people that kind of create some conflict for them. So people, when we talk About the movable metal, really, I think what's important is to acknowledge that most people are concerned. They want when they support action, but they're undecided, potentially about one particular aspect or issue of it. Or there's some other kind of thing that's happening for them that's creating a conflict. Or they're kind of uninformed. So, you know, I think that you know, why an example? Or rather, I'll back up that uninformed piece is particularly important right now, as we see more and more kinds of organized misinformation and disinformation. Right. So as an example, when I'm in focus groups, I can predict with very, you know, a lot of certainty, what are some of the kinds of key narratives that are coming to the surface where people are kind of undecided? One of them might be, well, EV batteries are actually worse, you know, for the environment than, you know, driving a car, or there's no way that we're going to be able to electrify everything the grids can't support. Or it may be that solar panels actually create more emissions when you produce them than they save in their lifetime. So these kinds of things that are very dominant are kind of recurring pieces of information. And when people who are not thinking about this a lot or deeply, as much as maybe you were, I are people who are listening to this. So when people encounter these, this kind of information or confusion about what are the actual solutions? They really don't know what to think. Right? So like a third of us sit within that category, right? If I actually don't know how to make sense of the information that I'm hearing, right, and I don't trust so much of it. Because I know that, you know, I know about misinformation, I know that I shouldn't be, you know, you know, trusting everything that I hear, etc. So that's kind of the deal with the movable middle, right? So they believe climate change is real and not climate deniers. They just may be conflicted or undecided, or just not, you know, as informed because they're not thinking about it on a daily basis.

Dan Seguin  22:32

Now Amber, why is it important for the average communicator, like those in the energy sector, for example, to better understand the strategy behind climate change communications?

Amber Bennett  22:45

Yeah, um, I think because climate change is a super wicked problem, and is really complicated. And maybe me rambling on for the past 20 minutes might give folks a sense of the things that, you know, we were trying to think about and grapple with all at the same time. And so I would say that, in other cases, although arguably, I would argue that information, probably doesn't work it in on any issue. But what we do know, is just giving people information, they're not, you know, people can't reason their way into kind of behavior change. So, you know, we live within systems. You know, we live within communities where, you know, we're surrounded by friends and family, we see ourselves as kind of certain types of people. There are all of these kinds of social needs and emotional needs that humans bring to the table, that climate change communications, and I would argue, probably any good communications needs to attend to. So this sense of belonging, right, so I belong to a community. Other people like me think and act this way, or I expect other people like me to think and act this way. Being able to understand even what the problem is can kind of create shared understanding so that people who are making decisions aren't making decisions that don't consider you that kind of shared understanding peace. People need a sense of efficacy, control in their lives, they need some agency, they just don't need someone making all these decisions on their behalf without any involvement. You know, people want to be good people. And to be able to ask questions and to challenge things that are going to impact their lives without being dismissed as a climate denier or shamed or whatnot. And people trust others for different reasons, right. So scientists are highly tuned lasts. politicians aren't big corporations aren't, right. But the ones who are often leading this conversation in public are big corporations and politicians. So all of those are the things that we need to attend to when we think about, you know, climate communications, and because it's such a complicated problem, and extends to so many aspects of our life. And to be fair, there's a lot of organized opposition and strategies to create polarization to create misinformation. There's a lot happening all at the same time.

Dan Seguin  25:43

Okay, let me ask you this, what effect does it have to all be on the same page?

Amber Bennett  25:51

I often give the analogy of an orchestra, right, where we all have the same song sheet, but we're all playing different instruments. And part of that is, you know, there is a role for the government in setting regulation. And there's a role for activists and advocates to be, you know, opening up new possibilities, holding governments and corporations to account. But actually, we also need businesses to be building out the products and the services and the and the things that we'll be using in our lives. And you need all of these different actors operating all at the same time. And, you know, to live, I guess, within an ecosystem, so I'm very skeptical of how one message is the efficacy of one message, I think that really what is helpful is if people are exposed to and have the ability to make meaning out of climate change, and out of energy transition through many different parts of their lives, and they actually have many different avenues to talk about it and to create, you know, a shared understanding of what they want for their future, or where we're going.

Dan Seguin  27:23

Let's move to electrification, and renewable energy. Cool? These are important pieces of the world's response to climate change. For those in the energy sector who have a direct relationship with electricity consumers, is there a certain messaging that we should be sharing with our audiences?

Amber Bennett  27:47

Such a great question. I might change, I might have a different thought while I'm making a cup of tea, you know, in a couple of hours from now. But I think that there is a very, goes back to the question that we talked about with literacy. And also goes back to some of the things I mentioned around people needing to have a sense of control in their lives. Right. So what we know from the research is that people's motivation to do something as a whole has a lot less to do with their perception of risk than it does there because their perception of their ability to act, and that that action will make a difference. What people really, I would say, based on all the things that I look at and read and whatnot, want is a place to act that makes sense. And that is relevant to their lives. So I think for folks who work in electrification, work in renewable energy, a part of what we need right now is both to fill in all of the pixels around, like, where are we going? What is this going to look like in my daily life? What are the things that make sense for me to do right now? And how are the things that I'm doing making a difference within, you know, the broader community that I know and love and want to make sure it's safe and prosperous? And all of those things? So I think what we're, what we need, in part, are those people who are responsible for infrastructure, for services, for that kind of daily life to start filling in the pixels of what is this going to mean? Because people get a little stuck on, like, blind faith. We're just going to hand it over and other people make decisions. People want to have a conversation. They want to have a space where they can kind of create a shared understanding, right, like a public imagination of like, where are we going? And what's it going to be like when we get there? And what is it going to need in my daily life? And so I think that there's that part, like, what is this going to look like? And then I think the other part is, what are you asking me to do? And how is it gonna make a difference? For me and for my community, Canadians are very generous, right? They're willing to do stuff, even if it doesn't benefit them, if they really believe that it'll, you know, benefit the broader community or collective good, they'll step up. But I would argue that we haven't done a really good job of giving people tangible, practical, relevant things that do make a difference. Neither have we done a great job of filling out the vision of what this is gonna look like, right? It's kind of a little bit like a cliff at the moment, right? We're all going to transition to renewables. And we haven't filled in, what is that actually going to look like? Right? Am I going to have a gas station at the end of my street? I don't know. What is it going to look like? That's what I would say is storytelling, right? What's the story of what this is? How is this going to happen? And what it will look like when we get there.

Dan Seguin  31:27

Okay, Amber. I'm not sure if you're aware, but Hydro Ottawa has committed to being net zero by 2030. Does this kind of messaging resonate with the general public? Are there best practices in how to communicate this type of message in order to influence and maybe even promote change in our community?

Amber Bennett  31:51

Well, I would say if we kind of got back to, you know, when we think about Canadians, right, so I think that you've got a little section of folks who sit on one end, who net zero by 2030 makes a lot of sense. They understand what Net Zero is, they understand why you've chosen 2030. They understand what getting to net zero, you know, even means, however, it's likely that a section of those people are kind of skeptical. Why? Because they've been hearing a lot of targets, and not a lot of action, you know, for many, many decades. And then, so that's, you know, that one group, right, we start to see kind of dropping, you know, belief that, you know, it's possible, or that's going to happen. And then you have that whole other group in the middle that I was talking about, where net zero means absolutely nothing. The word the language, net zero means, you know, I'm being a little bit brutal, but it's true, right, where net zero doesn't really mean a whole lot. And, and neither does 2030, or the importance of it. And I think, you know, I sitting in a boardroom or a meeting room the other day, and we're talking about targets, and it really struck me when the person on the other side said, we know that this is ambitious, and we know that it's impossible, but we have to say it, because it's actually what science requires of us. These are not a political target, it's actually a scientific target, that we need to reduce emissions by this amount by this period in time, even if we'll never get there. That's what science requires of us. So I think all that to say, targets, I think are very helpful for administrators, for policy makers, for business leaders, etc. To help, you know, turn the ship, and to help start getting the kind of resourcing and planning and whatnot in place. But for the general public, what they actually want is what we were just talking about, tell me where we're going and tell me what I have to do. And tell me why it makes a difference.

Dan Seguin  34:17

Cool, Amber. You were a co-author on an incredibly helpful document entitled, climate messaging that works, talking about energy transition and climate change in Canada, which outlines the concept of message triangle. For me, it was a simple takeaway that could be immediately implemented into any communications surrounding climate change. Could you share the coles note of the message triangle with our listeners?

Amber Bennett  34:50

I can, and I would love to. And I suspect that, you know, there'll be parts of what I'm about to say that begin to resonate with some of the past things that I've said or are connected to. So really in a triangle, the underlying principle is that we're trying to create a whole story or a whole narrative for people. And that has a lot to do with how human beings and how we have evolved and how we make sense of the world, we make sense of the world through narrative and through stories. And so when we just give people one piece of something, it doesn't satisfy the way that we have been trained. Since, you know, the, since the beginning to kind of make sense of the world. So what we want to do is we want to give people a challenge that has to either be overcome, or that we're at risk of losing something. So there's a challenge, there's a choice that we have right now that we need to make. And then there's an opportunity. And if we can hit each piece of that triangle, what we're doing is we're creating a whole story for people, which allows them to make sense of why are you taking my time? And why should I listen to you? So you know, as an example, when we talk about the challenge, you know, part of this is really, I think, being more clear about the cause of climate change. But also, what are some of the challenges that we're seeing, that are related to climate change within our communities? You know, I was listening to a CBC program the other day, and there's an entire community in Newfoundland, that's actually moving back from the water. And this is, you know, after the aftermath of Hurricane Fiona and whatnot. So, you know, some of the challenges that we're seeing, what's the challenge that we're trying to overcome? And ideally, I would, right size that at a community scale, right? So people feel overwhelmed when it's my personal individual problem. But if we can begin to talk about this as a community challenge, then people are much more likely to engage because they don't feel like doing it all on their own. Similarly, a choice, right, as communicators, if we're talking specifically to communicators, we often leave out the choice at the moment, what is the call to action? What are you actually trying? What are you asking someone to do? Is it voted a certain way? Is it a conversation? If it takes a particular action, we need something, there's some sort of choice, and there's some sort of action that has to create tension within this story, right? All good stories have a choice that has to be made by the main, you know, character, and then the opportunity. And I think, you know, part of what I've been talking about around, where are we going? What's it going to look like when we get there is that opportunity. So if we're talking about the challenge, is, you know, we're seeing increasing extreme weather, that's because of burning fossil fuels and pollution, the trapping blanket, our choice right now is we need to electrify and that means building infrastructure, the opportunity that we have is at a community scale, both for you know, ourselves and and for others. This kind of, you know, whatever might be the relevance of it right, we'll have a more dependable electricity supply. You know, if we're all in EVs, and we have backup, you know, batteries in our cars, when the power goes out, you know, you've got a little mini generator that you can draw on that gives you electricity, you know, through the storm or something, whatever it might look like. But that's the point is that we're trying to create a full picture for people. We want to talk about, what's the challenge? What's the choice? And what's the opportunity on the other side?

Dan Seguin  39:22

Now, climate change has been a hot topic for oh, God, at least 20 years now. Are there any challenges with keeping an audience engaged and interested for so long?

Amber Bennett  39:36

Yeah, there's actually a woman out of the States who wrote an article. Her name is Suzanne Moser. And it's something I'm going to botch the title but it's something like, you know, Climate Communications 20 Years Later: What Have We Really Learned? And I think that in fairness, I think we've learned a lot, right? I think most people understand that it's more complicated than just giving people a brochure at this point. And I think that in 20 years, we've done a much better job of crystallizing, what is it that we need to do? However, there's also been 20 years of misinformation, 20 years of broken plans and not, you know, unachieved targets etc. And I was chatting with a woman the other day and, and she's like, because I kind of feel like forest fires and floods and hurricanes are doing the job that we used to do, you know, which is creating alarm and concern and demonstrating like, this is real. And it's a big problem. So I think in 20 years, we've had 20 years more of all of that. But we haven't, you know, but, but rather, I would say the job now in this moment, is the pathway, right? And giving people that kind of those choices, that control, and that sense of agency, that they can do something about it. And we need to get on with the action part, right. So we can't leave people in just concern. Because our minds can only hold so much anxiety and concern at one time, amongst all of the other things that we're concerned and anxious about, you know, climate change is just, you know, even more dreadful, particularly, I think, for younger people. So we can't, you know, people can only stay there for so long before they start to kind of check out because, as I go back, you know, I kind of mentioned it in the beginning. It's like our sense of whether or not we or our sense of motivation, or motivation to act has a lot more to do with our sense of being able to do something about it, rather than the risk that it that it proposes or that it is, so yeah. So, I would say the challenges of keeping people interested or if you can't give them something to do, then, you know, at a certain point, you kind of have to just check out of the conversation until, you know, you get clear about what are you asking me, and I think that this kind of anxiety is a real problem. And so the road for them, this moment really requires us to get much more clear about where we're going in the pathway forward.

Dan Seguin  42:52

Okay, Amber, we always end our interviews with some rapid fire questions, and we've got a few for you. Are you ready?

Amber Bennett  43:00

Ready to go? Okay,

Dan Seguin  43:03

What are you reading right now?

Amber Bennett  43:05

Wine Witch on Fire by Natalie Maclean, I think.

Dan Seguin  43:09

Okay, now, what would you name your boat? If you had one, maybe you do. Maybe you don't.

Amber Bennett  43:17

I don't have one. And it would be a miracle if I ever have one. So I'm going to name it a Miracle.

Dan Seguin  43:24

Who is someone that you truly admire?

Amber Bennett  43:28

This is kind of really out of left field, but I'm gonna go with it. So during COVID, there was a woman named Trinny Woodall who used to do What Not To Wear on the BBC. It was like one of the original kinds of reality programs, like one of those. And, you know, I'd love to be more philosophical than this. But I admire her because her whole... a) she works so hard, but also she just wants to make women of a certain age or any woman just feel good. And I really just admire someone whose life and business and purpose is really just trying to make other people see the goodness in themselves or to feel better about themselves. So she's, and she's also for any one who's interested. I mean, a social media magician, like she's, she's magic in terms of what she did. She started during COVID and kind of as a comms person, like, Yeah, amazing. Kind of how she has set herself up as an influencer.

Dan Seguin  44:42

Okay, Amber, what is the closest thing to real magic that you've witnessed?

Amber Bennett  44:51

Magic? Yeah, this is hard. Okay, so just bear with me. Great start! This is not as rapid as you probably want. I'm moving houses. I bought a house. And there were two moments in like, one was do I put an offer in? Or do we put an offer in? And then there was another moment, kind of later on. And in both cases, I was about to say, I was going to pull back and say no, you know, I'm not going to go forward with it. And I kid you not, in that moment, the wind picked up. So in one case, I was outside and the wind picked up and got very, very strong where I was standing. So the first time you know, you can kind of blow it off. It's like, oh, yeah, okay, whatever. That was weird. But it happened twice. It happened a second time. And then the second time where I was, you know, kind of stuck. And, you know, wanting to retreat and I got a little, you know, scared about, you know, kind of taking the leap. And in that second time, the same thing happened, where the winds picked up, and they got a little bit stronger around me. And then they calmed down afterwards. And not in a like, oh, I kind of feel like no, it's kind of little, you know, it was very dramatic. And so anyways, I move houses tomorrow, so I'm gonna just put that out to magic. Not quite sure. It doesn't make a lot of logical sense. Why? Why did we do it? But we're there now.

Dan Seguin  46:26

Now, what has been the biggest challenge to you personally, since the pandemic began?

Amber Bennett  46:32

Yeah, I'm, like so many parents. And I would argue women in particular, the double bind of having to take care of kids as though I don't work. And work even though I don't have kids. And I think for a lot of parents that was the impossible situation and I don't feel that that's really gone away.

Dan Seguin  47:02

This next one I always enjoy. What have you been watching a lot more of on Netflix or TV lately? What's your favorite? In other words, you know, what's your favorite movie or TV show?

Amber Bennett  47:17

I love the Peaky Blinders. And I've gone back and I've watched certain episodes again, just because they're so delicious with the costumes and the characters and the whole thing. I'm, yeah, totally enthralled. Yeah, love it.  Okay.Now, lastly, what is exciting you about your industry right now. Um, I think that if anyone were to see my email inbox, they'd be very surprised at, you know, I think communion policy was the king for so long. And I think finally, we're at the point where we're beginning to understand that the public has to be on board, the public actually needs to have informed consent about so many of these choices. And we need a social mandate to ensure that climate action is the third rail, right? You know, if you're going to be a leader in this country, or business operating in this country, then you need to be a climate leader, and you need to be a climate business, it has to be fundamental to all of the decisions that you make, and how you and how you operate. Because science doesn't give us any other choice at this moment. So that's, so I think, the kind of realization that we can have all the technology and all the policy that we want, but if people aren't on board, then it's never going to happen. And so I get to work with very interesting people, unexpected from all walks of life, and you know, different sectors who are beginning to understand that, really, this is something we're going to work on until all of us and those beyond. For many generations, yeah.

Dan Seguin  49:12

Now, if our listeners want to learn more about you, Amber, or your organization, how can they connect?

Amber Bennett  49:18

Yeah, well, easiest is to go to our website, so Re.Climate, so that's reclimate.ca. And folks can sign up there if they want to, you know, make sure that they get more information on events, and we do lots of, you know, webinars and talks and we release reports and, and whatnot. So that's a great thing to do. And I'm on LinkedIn, and I'm always happy to connect with people on LinkedIn. So Amber Bennett, and I also share lots of things there. that I find interesting.

Dan Seguin  49:59

Well, Amber. This is it. We've reached the end of another episode of the thinkenergy podcast. Thank you so much for joining me today. I hope you had a lot of fun.

Amber Bennett  50:08

Yeah. Great questions. Great chat. And thank you.

Dan Seguin  50:14

Cheers. Thanks for tuning in for another episode of the thinkenergy podcast. Don't forget to subscribe and leave us a review wherever you're listening. And to find out more about today's guests or previous episodes, visit thinkenergypodcast.com I hope you will join us again next time as we spark even more conversations about the energy of tomorrow.

Summer rewind: As demand for electricity increases, the need to
diversify supply also rises. In Episode 120 of thinkenergy, Lesley
Gallinger, CEO of Ontario's Independent Electricity System Operator
(IESO), unpacks what’s driving the transformation of the province’s
power system, the potential opportunities, and the obstacles standing in
the way. From hydrogen innovation to resource procurement, listen in to
learn how the IESO is helping Ontario navigate to a cleaner, reliable,
and affordable energy future.
Related links

● Lesley Gallinger on LinkedIn:
https://www.linkedin.com/in/lesley-gallinger-784a194/

● Lesley Gallinger on Twitter/X: https://twitter.com/lmgallinger

● IESO website: https://www.ieso.ca/

● Hydrogen Innovation Fund:
https://www.ieso.ca/en/Get-Involved/Innovation/Hydrogen-Innov
ation-Fund/Overview

● Powering Ontario’s Growth report:
https://www.ontario.ca/page/powering-ontarios-growth

● Trevor Freeman on LinkedIn:
https://www.linkedin.com/in/trevor-freeman-8b612114/

To subscribe using Apple Podcasts:
https://podcasts.apple.com/us/podcast/thinkenergy/id1465129405

To subscribe using Spotify:
https://open.spotify.com/show/7wFz7rdR8Gq3f2WOafjxpl

To subscribe on Libsyn:
http://thinkenergy.libsyn.com/
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Transcript:

Trevir Freeman: Everyone, well, it's officially summer. And it's been about four months since I took over the mic as the host of the think energy podcast, which is kind of hard to believe. It's been really fun having great conversations with great people in the energy sector. I now mostly know my way around the recording equipments and the software, and really feel like we're kind of just getting started and looking forward to where we go from here. That said, the think energy team is taking a break to recharge over the next few months, but also to plan our content for the fall. So, stay tuned for some great episodes in the fall. Not to worry though, we still have our summer rewind to keep you engaged. This is where we pick out some of the great past episodes that we've done and repost them. So, whether you're lucky enough to be sitting on a dock or going on a road trip, or if you're just keeping up with your commute through the summer, it's a great time to revisit our past content. You will hear past episodes from my predecessor and the host chair Dan second, as well as a couple of mine from the past few months. And you're welcome to check out your own favorite past episodes as well wherever you get your podcasts. We hope you have an amazing summer and we'll be back with new content in September. And until then, happy listening.

Daniel Seguin: This is Think Energy, the podcast that helps you better understand the fast changing world of energy through conversations with game changers, industry leaders and influencers. So join me, Dan Seguin, as I explore both traditional and unconventional facets of the energy industry. Hey everyone, welcome back. In 1902 electrical pioneers met for the first time in Berlin now Kitchener, Ontario to discuss wiring Ontario's customers together to form a provincial electricity grid. Ontario's electricity grid, like all grids around the world was designed as a one way street, to generate, transmit, and deliver electricity to customers. It's no secret that nowadays new technologies are shaking up the way we produce and use electricity. Back then, these pioneers likely couldn't have imagined that the electricity grid would become a two way interactive system capable of supporting variable supply from renewable energy or accommodating electric vehicles, energy storage, home generation, and a host of other innovations. As the demand for electricity grows, Ontario's supply is diversifying, evolving and transforming at a speed we haven't seen in this industry. One thing is for certain, it's going to be one electrifying ride. On today's show, we're diving into the heart of Ontario's power system and shining a light on the organization that manages the province electricity sector. As we mentioned before, we are at the forefront of a power revolution. Of course, we need someone driving the ship to provide guidance on how Ontario's power system adopts a cleaner and more interactive machine. So here's today's big question. What is driving the transformation of Ontario's power system? And what are the potential opportunities and challenges? Joining us today is Lesley Gallinger, president and chief executive officer of the Ontario Independent Electricity System Operator. Under her leadership, the IESO oversees the safe and reliable operation of Ontario's bulk electricity system, ensuring affordable electricity is available when and where people need it. Lesley, so great to have you join us today. Now, your knowledge and experience of the electricity industry is extensive. Can you talk to us a bit about what drew you to a career in energy sector? And what led you to your current role?

_____________________________________________

Lesley Gallinger:

Well, thank you for that, Dan. It's great to be here, and I have spent the majority of my career in the electricity sector after spending the first third in a different sector. I certainly benefited from working all across North America and in Europe, for some very sophisticated multinational organizations with very talented team members. However, I always had this interest in electricity. And just for a funny story, my first grade school in Ontario was Sir Adam Beck, so I wonder if that was a bit of foreshadowing. But in reality, I had friends and colleagues in the sector who spoke quite passionately about the impact they were making with the work they were doing. And I was attracted to that. And sure I had some skills that I thought would be transferable. And the role that I have now embodies all of that, as we at the IESO are helping inform and execute on energy policy on electricity policy, specifically that will support Ontarians as we transition to an electrified and decarbonized future. I honestly couldn't imagine a better role to be in at this moment.

Daniel Seguin:

At a high level Lesley, what is the Independent Electricity System Operator and what is it responsible for with respect to Ontario's power system?

Lesley Gallinger:

The IESO works at the heart of Ontario's electricity system, ensuring that electricity is available where and when it is needed. We monitor Ontario's demand in real time, 24 hours a day, seven days a week, balancing supply and demand and directing the flow of electricity across the provinces transmission lines. We also oversee the electricity market, which includes putting mechanisms in place to increase competition and ensure cost effective supply. And finally, we also plan the electricity system by working with indigenous communities, with municipalities and stakeholders to forecast demand and secure enough supply to meet Ontario's needs as far as 20 years out.

Daniel Seguin:

Okay, very interesting. Finally, looking forward to your answer on this one here. Can you walk us through how you oversee and manage the electricity systems such as determining the type of supply required to meet demand for electricity in the province? In the short, medium, and long term?

Lesley Gallinger:

Yeah, thanks that that is a good and big meaty question. So we've spoken a lot about where we are now. So after having years of surplus electricity, Ontario is entering a period of growing electricity needs and demand is expected to increase by an average of 2% annually over the next two decades due to electrification and economic growth in various sectors, including residential, agricultural, and mining. One way that the IESO helps meet these growing needs is by securing new supply. In the short term, we have the annual capacity auction that we conduct that allows existing resources to compete. This is cost effective and allows the IESO to adapt to changing supply and demand conditions on a year by year basis. We also look at three to five year commitments for other resources, this timeframe provides more certainty while ensuring it doesn't get locked into commitments that no longer reflect those changing needs of electrification. And finally, in the long term, we look 20 years out to secure resources that require significant upfront investments in order to give suppliers the confidence they need to make those investments. So it's a bit of a layer cake with those three timeframes.

Daniel Seguin:

Great segway here. Okay. What do you see as the IESOs role in the future planning of the evolving electricity grid and your role in supporting the changing energy needs of the decarbonized economy?

Lesley Gallinger:

As Ontario's electricity system planner, we certainly have the long view. Our role is to ensure that Ontario's current and future energy needs are met both reliably and affordably. Our corporate strategy calls out three main ways in which we do this we ensure system reliability while supporting cost effectiveness, we're driving business transformation within the IESO and also driving and guiding the sector's future by working closely with indigenous communities, municipalities and stakeholders. On the decarbonisation front, our main role is to enable technologies that will help us decarbonize. There's lots of emerging energy resources that can help us build a zero emissions electricity grid and the IESO ensures that these resources can all participate in Ontario's electricity system and markets. We're procuring new resources under our flexible resource adequacy framework. We recently announced the procurement of over 800 megawatts of energy storage, which is the largest energy procurement energy storage procurement in Canada to date, that combined with 250 megawatts of the Oneida battery storage project, the IESO, with these projects, is taking steps to integrate this valuable and flexible resource. And in last December's publication of pathways to decarbonisation, we explored ways in which Ontario can move forward to an emissions-free electricity system. The Ministry of Energy consulted on our pathways report, and recently on July 10, very recently, announced a series of actions in its report powering Ontario's growth. And those actions include collaborating with Bruce Power and Ontario Power Generation on pre development work to to consider potential new nuclear generation reporting back on the design of our second long term procurement, which will acquire new non-emitting resources supporting a Ministry of Energy consultation on a post 2024 Conservation Demand Management Framework and assessing additional transmission needs to support new and growing generation and demand in the province. So quite a list of workforce ahead that we're very excited to undertake. And as our system operator for the province, we're certainly at the center of all of this. There'll be a continuing need for coordination with the broader electricity sector in order to plan an orderly transition to a decarbonize grid, there will also be an increased need to revisit how we plan the electricity system. The IESO is looking forward to working with the electrification and energy transition panel to identify ways to adapt and evolve existing frameworks in order to increase transparency and ensure communities and stakeholders are more aware of what we're doing and why. This work, the work of the EETP also takes a broader economy wide view, which reflects how the electricity sector is becoming increasingly dependent on other sectors like industry and transportation. So you know, in short, a lot of work and some very exciting work ahead.

Daniel Seguin:

Follow up question here for you. Now, some Ontarians are concerned about moving to variable renewable energy sources like wind and solar, while others are concerned about continuing use of natural gas. What have you uncovered in your work about these issues? And what would you like residents of Ontario to know?

Lesley Gallinger:

Yeah great question Dan, every type of generation has its own strengths and drawbacks based on its unique attributes, which is why Ontario maintains a diverse supply mix that can adapt to changing system conditions quickly. Renewables such as wind and solar are not emitting when they generate electricity, but they're also intermittent, meaning how much electricity they produce can change rapidly in response to weather conditions. And to help with this, the IESO is looking into hybrid facilities that combine renewables with energy storage. By 2026 we'll also have about 1300 megawatts of energy storage on the grid, which will help more efficiently integrate renewables. We're also going to start designing our second long term procurement which will focus on acquiring non-emitting resources and we'll be engaging on this with stakeholders and communities as we go. Natural gas, for example, has the main advantage that it can respond quickly to change in demand and system conditions, making it an important resource for us as we seek to maintain reliability. Ontario's demand fluctuates constantly throughout the day, and having access to natural gas can help us respond to sudden changes and maintain a balance across the system. It's also very important to recognize and something I'd like to emphasize for your listeners that overall emissions from Ontario's electricity sector are extremely low, the sector accounts for about 3% of the provinces total emissions. While this may increase slightly in the future, the continued existence of natural gas on the grid is an important resource to help us transition and it'll enable the near term electrification of other sectors which in total will drive down Ontario's emissions.

Daniel Seguin:

Okay Lesley, how will the efficiency upgrades at existing natural gas facilities contribute to meeting the growing demand? And what is the plan for these facilities as emerging technologies mature and the reliance on natural gas decreases?

Lesley Gallinger:

Yes, and as I mentioned in my earlier remarks, Ontario's definitely entering a period of increased demand and so with many existing contracts expiring, and nuclear plants undergoing refurbishment or scheduled to be decommissioned, coupled with increasing electrification of other sectors, the province is going to need more power in the immediate future and the natural gas expansions can help with this. In our pathways to decarbonisation report, we looked at the questions the minister posed to us, we looked at a moratorium scenario that would phase out natural gas over time as newer non-emitting resources come online, and in the report we concluded that we could be less reliant on natural gas in Ontario by the year 2035 and completely phased out by 2050. Efforts were made to align this report with clean electricity regulations, and that recognizes that the contribution of natural gas may be restricted over time, but for the meantime, we have you know, the important transitional resource needs, the natural gas fulfills.

Daniel Seguin:

Okay. In May of 2023, the IESO announced that it was moving forward with the largest procurement of energy storage in Canada. What can you tell us about these storage projects and their benefits?

Lesley Gallinger:

Yeah, this was a very exciting announcement for us the energy storage projects we announced in May were for grid connected battery storage systems, which will be an important step towards the transition to a non-emitting supply mix, and will support grid reliability. The procurement was the culmination of the work we've done over the last several years to understand the potential of battery storage to provide supply and reliability services to the grid. The biggest advantage of energy storage is that it can charge during off peak hours when the provincial electricity demand is low and then inject energy back into the grid during peaks when demand is high, which makes it very flexible and a resource that can help us optimize the efficiency of other resource types. And we also see battery storage as a key enabler of decarbonisation. It will help us to integrate more renewables such as wind and solar onto the system, but also get more out of our current nuclear and hydro fleet. By charging during these off peak hours energy storage can use up any surplus green power from Ontario's existing nuclear and hydro facilities.

Daniel Seguin:

Now, how does this procurement help ensure system reliability during nuclear refurbishment and support the overall energy transformation in Ontario,

Lesley Gallinger:

The procurement will help with the transition away from natural gas and it's certainly about maintaining reliability at a time when multiple refurbishments are underway. In particular, the Pickering generating station is scheduled to go out of service mid decade and so right around that time, those energy storage projects are expected to be online. Certainly the timelines of the procurements were aligned understanding what the system conditions would be at that time,
Lesley, I'd like to dig into your fascinating pathway to decarbonisation report just a bit. Ontario has one of the cleanest electricity system in North America, contributing only 3% to the provinces greenhouse gas emissions, that doesn't sound like a lot. So why is it important to eliminate the remaining 3% of emissions from the grid?
Yeah, another another really interesting question and the subject of a lot of conversations we've been having we know that electricity use is going to increase in the coming years driven by an economic growth and electrification across other sectors. Transportation is becoming increasingly electrified as our industrial processes such as steel smelting, and as the pace of electrification speeds up the efforts and investments being made by businesses and households to electrify will increase society's reliance on electricity as a fuel and electricity is only as clean as the resources we use to make it. So that 3%, if we don't tackle that remaining 3%, we will see an increased reliance on less clean generating sources. I mean tackling climate change is certainly an economy wide effort and clean electricity is a fundamental enabler of those climate change solutions.

Daniel Seguin:

Thanks for that, Lesley. Now, I have a follow up question for you. The IESO presents two scenarios to address decarbonisation, what are they and what key assumptions and drivers were discovered with your analysis?

Lesley Gallinger:

So our first scenario was the moratorium scenario where the IESO so looked at restricting the procurement of additional natural gas. And this assessment showed that a moratorium would be feasible beginning in 2027, and that Ontario could be less reliant on natural gas by 2035. At that point, the system would not require additional emitting generation to ensure reliability provided that other forms of non-emitting supply could be added to the system in time to keep pace with demand growth. The second scenario is our pathways to decarbonisation scenario, this scenario assumed aggressive electrification of the transportation and industrial sectors, and that attaining a completely decarbonized grid would be possible by 2050, while balancing reliability and costs, so you can see a lot of variables came to play in that second scenario.

Daniel Seguin:

Perfect. Thanks, Lesley. Now, what are your thoughts on where Canada stands on its road to meet the 2035 and 2050 targets? 

Lesley Gallinger:

Yeah, I think that's, you know, that's what we're all looking towards and bridging the work of today with the needs of a futurized decarbonized world will be challenging and complex, a collaborative approach across all sectors of the economy will certainly be necessary to achieve this. From Ontario's perspective, we're in a strong starting position, our electricity system is already close to 90% emissions free, most of the generation coming from Hydro and Nuclear resources. And in our pathways report, we identify that for Ontario, at least, a moratorium on natural gas could be possible by 2035, and a fully decarbonized electricity system by 2050 provided that new non-emitting supplies and surfaces online. So we certainly had those goals in mind for Ontario as we created that pathway so decarbonisation work.

Daniel Seguin:

Now Lesley, in your opinion, what are the biggest challenges facing the electricity industry in Canada today? And what are the biggest opportunities?

Lesley Gallinger:

Yeah, I anchor on the word orderly because I've used it a lot. The biggest challenge I see is managing the significant transformation that's underway. And doing it in an orderly fashion, electrification is requiring the electricity system to expand and produce more power, while decarbonisation puts pressure on the grid to rely more heavily on low carbon resources, many of which are still in their early days of development. Across the country. Every province is faced with similar challenges. The recently formed Canadian Electricity Advisory Council will provide advice to the Minister of natural resources on ways to accelerate investment and promote sustainable, affordable, reliable electricity systems. And I have the privilege of being on this panel. It's exciting work with colleagues from across the country, many of whom come from provinces in very different stages of decarbonisation. We're sharing best practices and all working towards similar goals. For Ontario, we're entering a period of emerging electricity system needs starting in the 2020s. These electricity and energy capacity needs will continue through to 2040. So demand is expected to increase at nearly 2% per year as I mentioned earlier. All of this presents incredible opportunities for Ontario's communities, new technologies are creating economic growth opportunities and setting the stage for Ontario to build a highly skilled workforce to push to decarbonize will have significant impacts on economy wide emissions reductions, and building the electricity grid of the future also presents opportunities to collaborate and strengthen relationships with indigenous communities and municipalities. Back to my first comment, the pace of this change is a vital consideration. We need to strike the right balance between decarbonizing the grid, while it's still ensuring electricity and energy remain reliable and affordable. If we go too fast, the cost may impede electrification, if we go too slow, we're not going to have the supply available as demand increases. So it really is about thinking this through orderly and it's an all hands on deck challenge.

Daniel Seguin:

Okay, moving along here, maybe you could walk us through some of the scope for what's required to decarbonize Ontario's electricity system. What does an achievable pathway to net zero look like?

Lesley Gallinger:

Yeah, that's the work of the IESO on a regular basis. I mean, I can't underscore my last point enough, which is that it's vital that the transition occurs in an orderly manner, we absolutely need to act but we need to act in a carefully managed way that balances decarbonisation with reliability and affordability. Large infrastructure such as hydroelectric plants and nuclear facilities and transmission lines can take 15-10 years, sometimes more to build, significant investments in capital and materials and labor will be required to build out a fully decarbonized system. And one study I read estimated that 14,000 strong labor force participants, that are that are currently working on our electricity infrastructure would need to increase by a factor of six. So you know, that's a huge investment in training and getting people ready to build all the things we need to build. Indigenous communities and municipalities also have a voice in how and where new infrastructure is located. So meaningful and transparent discussions about siting and land use will be needed. And while many technologies will be needed to decarbonize the grid already known, some are not known and not commercialized yet. And so those are low carbon fuels small modular reactors still in development. At this point, it'll be important for Ontario and for Canada to continue to invest in these and other other innovations as well in supporting the pathway. We need energy plans to be approved and new infrastructure needs to be planned, permitted and cited. Regulatory and approval processes such as the environmental impact assessments need to be resourced, appropriately and streamlined to enable all of these builds to happen. We also need the supporting transmission infrastructure to be planned and built on on similar timelines as demand growth and as new supply comes online and underlying all of that we need to carefully manage the costs to ensure the actual impact on total energy costs is affordable, and that they do not diverge significantly, Ontario from those of our neighbors in Manitoba and Quebec and in the US. So lots of again, lots of facets, but work that can be itemized now and definitely plan forward.

Daniel Seguin:

Cool. What are some of IESO's, no regret actions that can be taken to help meet those growing demands?

Lesley Gallinger:

Yeah, I think the minister anchored on some of those in his Powering Ontario's Growth report, Ontario can certainly continue to acquire new non-emitting resources and incentivize energy efficiency through our Save on Energy programs. sector partners can also begin planning and citing for new potential projects, partnerships between municipal, provincial and federal governments will also be key and we need to continue to develop those relationships now, while we're also revisiting the regulatory frameworks that may hinder and prevent progress. Last but certainly not least, we must track our progress in an open and transparent way. There's no one way we can say decarbonisation happens. It's a gradual change that will take place over many years, and will require lots of little steps to make progress. And certainly the government's recent response to our reports puts in motion some of those actions including asking us at the IESO to explore opportunities to enable future generation in northern Ontario and reducing the reliance on natural gas generation in the GTA. The ministry has also asked the IESO to begin consultations on a competitive transmitter selection framework for future lines with electricity supply expected to continue to grow over the next 20 to 30 years, you know, that's what we're doing now, you know, in terms of planning, but we're also we're also working to secure new capacity and leveraging our existing assets. So that is through our very thorough resource adequacy framework, which was put in place that outlines our strategy to get that new supply in the short, medium and long term. A key piece of this is competitive procurements and the processes that have been used to date including the annual capacity auction, and but you know, there's also work being done that we're leveraging by our energy efficiency and demand response programs that that get back to what individuals and what individual businesses can do to support decarbonisation. We've got market renewal going on. We've got medium and long term procurements. So lots of action underway. All of them no regret that can that can be continued to to meet this demand. 

Daniel Seguin:

Now Lesley, with electricity supply expected to grow the next 20 to 30 years, what is the IESO doing to secure new capacity? And how is it leveraging existing assets?

Lesley Gallinger:

Yeah, great question. So in terms of generating new supply or acquiring new supply, that's really our resource adequacy framework. It outlines, you know, the work we're doing both in the short, medium and long term to competitively procure new resources. We've recently done the procurements for batteries and for natural gas, upgrades and expansions. We'll be launching our next procurement very shortly and designing the one after that. So it's that layer cake approach that I mentioned. We've also, you know, can can anchor back in the strides we've taken in the current procurements to secure we've had great resources come to bear and participate in those procurements, so we're very hopeful that future procurements will also be very successful

Daniel Seguin:

Now hoping you can help demystify this next one for our listeners. What is the Hydrogen Energy fund? What is special about hydrogen, and how do you think it will support Ontario's reliability needs and decarbonisation?

Lesley Gallinger:

Yeah, it is, it is a new word and a new way of thinking for for a lot of folks. So let me dig into that. But the goal of our hydrogen Innovation Fund is to investigate, evaluate and demonstrate how low carbon hydrogen technologies could be integrated into the grid. The new program will enable the IESO to test the ability of hydrogen to support grid reliability and affordability, but also the role it can play in broader decarbonisation. Hydrogen has the potential to reduce electricity sector emissions, but it could also be used as a replacement fuel in other more fossil fuel intensive industries such as transportation.  From the electricity sector's perspective, hydrogen has the potential to provide several essential services, it can smooth the output from renewable resources such as wind and solar, it can be blended into natural gas to reduce total emissions and could be used to offer several services such as peaking generation, grid efficiency and storage. But all that being said, it's not an ultimate solution. While hydrogen can be used to generate electricity producing it also requires electricity. So the integration of hydrogen like all new resources will require a balanced approach, one that can make more efficient use of our existing electricity system assets which the Hydrogen Innovation Fund will help with the interest in the fund has been very high. The IESO has received more than 25 applications. The projects are in flight now are undergoing review right now. And we should be in a position to announce the successful projects in September.

Daniel Seguin:

Lesley. Let's now look globally, what are other countries doing right, that Canada should consider emulating or even adopting? 

Lesley Gallinger:

Yeah, I think I think this is, you know, very important. We very much focused on on Canada or in you know, in our case, Ontario for answers. And the IESO is just one of many electricity system operators worldwide. And I certainly am always keeping an eye on what other countries are doing. However, every jurisdiction has unique circumstances, which include laws, regulations, geography and politics that can sometimes make comparisons difficult. In North America, specifically, Ontario is a leader in many ways and the pathways report is a very well thought out approach. And so I think that's an area of interests that others have looked to us, that, coupled with our experience of phasing out coal fired generation, we're in a good position really to set examples for other jurisdictions looking to do similar work, and certainly in conversations with my IESO counterparts around North America, we're having robust discussions and learning from each other. 

Daniel Seguin:

Well, looking to the future of this industry and Canada's approach, what is giving you hope?

Lesley Gallinger:

Well, electricity is being looked at to support decarbonisation of other sectors and to support economic growth. That's hugely exciting to see the broad impact our industry is having on society. And as we engage with broader audience, the collaborative spirit across the sector, across the province and across the country, we're seeing... certainly gives me hope that Ontario can achieve decarbonisation through an orderly transition that balances that decarbonisation desire with reliability and affordability that are at the heart of our mandate. 

Daniel Seguin:

Lastly, Lesley, we always end our interviews with some rapid fire questions. Are you ready? 

Lesley Gallinger:

I'm ready. These were some of the more difficult questions, Dan. So I'm certainly ready for these. 

Daniel Seguin:

Okay. What are you reading right now? 

Lesley Gallinger:

So I just finished reading a really great book, how big things get done by bent flyvbjerg. And I think it's making the rounds really good book on large projects, and what we can learn from past failures in large projects, which will be important information for Ontario. 

Daniel Seguin:

Cool. Thanks for sharing. Now, what would you name your boat if you had one? Or do you have one? 

Lesley Gallinger:

Well, I have a very, very small boat, and I have yet to name it. But now now that you've got me thinking about that the wheels are turning. At the moment, it's new, so I'm just learning to park it. And when I say park, my my partner rolls his eyes and says "you mean dock" and I say no, Park. So next time we speak Dan, I'll have a name for the boat. 

Daniel Seguin:

Very good. Who is someone that you truly admire? 

Lesley Gallinger:

I think this was the most difficult question. There are people I admire in many aspects of my life. And I certainly wouldn't want to single out anyone or miss out on another person. But if I can be a bit general, given the role I'm in, I'd have to say it's the people who have the vision and foresight to see what's coming in the future and to plan and build those large projects and large infrastructure investments needed to get there. 

Daniel Seguin:

What is the closest thing to real magic that you've witnessed?

Lesley Gallinger:

Well, I am a lover of being outdoors, so perhaps for me it would be on the morning after a deep snowfall on the trails around my friend's property being the first snow shoes out on the trails on a Sunday morning. It's so quiet and so beautiful and it just feels magical. 

Daniel Seguin:

Now what has been the biggest challenge to you personally, since the pandemic began?

Lesley Gallinger:

I think for me, it would be helping my mom stay connected to to our community as as an elderly widow in her own home. It was a lot of one on one contact for me with her and making sure that I could connect her to a broader social network. So she didn't feel so isolated. And I think that was, you know, well worth the challenge. But it was a it was a challenge. 

Daniel Seguin:

Okay. We've all been watching just a little bit more TV or even Netflix lately. What is your favorite show? 

Lesley Gallinger:

So I spend very little time watching TV and when I do or, or Netflix, and when I do, it's mostly documentaries. I want to give a call out for a course I'm taking right now online, which is the closest thing to TV, I'm taking the University of Alberta's indigenous Canada course, which has been for me tremendous value in helping me understand indigenous worldviews and perspectives. But I did just watch a Netflix series on the Tour de France, which was a fascinating look at the teams and tactics as well as the effort that the athletes endure over that 21 days. 

Daniel Seguin:

Okay, cool. Now, lastly, what is exciting you about your industry right now? 

Lesley Gallinger:

Oh, my goodness. My teams have heard me use this before everything everywhere all at once. We have an opportunity as an industry right now to guide generational change and to have an impact on the environment and the economy far past our working lives. And that is incredibly exciting. 

Daniel Seguin:

Well, Lesley, this is it. We've reached the end of another episode of the Think Energy podcast. Thank you so much for joining us today. If our listeners wanted to learn more about you, or your organization, how can they connect? 

Lesley Gallinger:

Thank you. Yes. www.ieso.ca. Our website has a wealth of resources to help listeners become more energy literate. And to understand the work we do. And you can find me on LinkedIn at Lesley Gallinger. 

Daniel Seguin:

Again, thank you so much for joining us today. I hope you had a lot of fun. Cheers. 

Lesley Gallinger:

I did! The questions were tough, but very interesting and they certainly got to the heart of the work that we do at the IESO. Thank you, Dan, for for your interest in our work and for asking those questions that allow me to speak and highlight the work of the incredible professionals that work at the IESO.

Daniel Seguin: Thanks for tuning in for another episode of the Think Energy podcast. Don't forget to subscribe and leave us a review wherever you're listening. And to find out more about today's guest or previous episodes, visit think energy podcast.com. I hope you will join us again next time as we spark even more conversations about the energy of tomorrow.

 

Electricity Canada’s President and CEO, Francis Bradley, joins thinkenergy in episode 140. Hear about the shift to sustainable electricity, including the difficulties navigating provincial and federal policies, climate change directives, and funding gaps. Plus how Electricity Canada evolved from a technical exchange club into a national advocate for sustainable energy. From challenges to leading the charge, learn how governments and private sectors are working towards a clean, efficient electricity system.

Related links:  

Francis Bradley on LinkedIn: https://www.linkedin.com/in/francis-bradley-3617802a/

Electricity Canada: https://www.electricity.ca/

The state of the Canadian electricity industry 2024 Getting to Yes report: https://www.electricity.ca/advocacy/getting-to-yes-the-state-of-the-canadian-electricity-industry-2024/

Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

Hydro Ottawa: https://hydroottawa.com/en   

To subscribe using Apple Podcasts: https://podcasts.apple.com/us/podcast/thinkenergy/id1465129405  

To subscribe using Spotify: https://open.spotify.com/show/7wFz7rdR8Gq3f2WOafjxpl

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Transcript:

Trevor Freeman  00:07
Welcome to think energy, a podcast that dives into the fast changing world of energy through conversations with industry leaders, innovators, and people on the frontlines of the energy transition. Join me Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at think energy at hydro ottawa.com. Hi, everyone, welcome back. On the show before we have talked about how energy is primarily a provincial jurisdiction in Canada, so that means that provinces and provincial governments set energy policy provincial grids are structured both in a regulatory sense as well as a physical infrastructure sense. at the provincial level, we've gone into some detail about Ontario's grid and talked about how it's kind of a distributed grid meeting most electricity customers in Ontario get their electricity from a local distribution company. Not every province is the same in any of those senses. Some are a little bit more vertically integrated, meaning there are you know, maybe a single entity that gets you all the way from generation to distribution. There's different regulatory frameworks. The point is there's a lot of diversity across the country. Now, as much as that is a provincial jurisdiction, there is a role for the federal government to play here at that national level. There are some national policy directions that are important and that impacts energy policy. Climate change is a great example. So the federal government has jurisdiction to set targets and come up with strategies to address climate change for the country. Things that the federal government is doing currently is enacting a clean electricity standard with the goals of decarbonizing electricity generation in the country, so making sure that we stop using fossil fuels to generate electricity on a large scale. The federal government also supports decarbonisation efforts for buildings and for transportation, and they put money into those things. And those efforts impact electricity grids and impact markets. The federal government also has a role to play when it comes to major projects and providing approvals for those projects to move forward. And that includes energy projects. So new generation or new transmission, you know, things that are using land or moving across land, there's a role for the federal government to play there. So enter electricity Canada, the national voice for electricity utilities in Canada. Now, we've talked before about the sort of provincial equivalent that advocates on behalf of energy utilities. This is the national voice here for electricity, utilities, electricity, Canada has been around for over 130 years now. And their focus, at least in the last while has been on federal advocacy. I'm not going to tell you too much about electricity, Canada, because my guest today is going to talk a little bit about that. But just as a primer. So they have recently published their 2024 state of the industry report, which looks at the need to accelerate some of these major initiatives in the electricity sector to keep up with the energy transition that, as we've talked about many times is already underway. It's already happening. And we are just trying to keep up really. So my guest today is actually making his second appearance on the podcast as Francis Bradley, who is the president and CEO of electricity Canada, and has held a number of different roles within electricity Canada as well prior to becoming the president CEO. He also has a number of key positions on national committees and working groups, which are focused on infrastructure, energy and electricity and other related topics. And most interestingly, he also hosts his own podcast, the flux capacitor, which I highly recommend you check out. Francis, welcome back to the show.
 
Francis Bradley  04:01
Delighted to be here. Thanks for the invitation, Trevor.
 
Trevor Freeman  04:03
So I know you've kind of given us the background before but electricity Canada has been around for over 130 years now, which is older than our kind of modern, interconnected grid, at least here in Canada. Can you just remind us of the role and the mandate that your organization plays in the electricity sector?
 
Francis Bradley  04:20
Sure. Absolutely. In fact, somewhere we have a photograph of like the first meeting of what at the time was the Canadian electrical Association at Niagara Falls in 1891.
 
Trevor Freeman  04:32
Wow.
 
Francis Bradley  04:32
But yeah, you know, where, where we're at today. So basically, you know, if you turn a light switch on pretty much anywhere in Canada, any province, any territory, everything it took to generate, transmit and distribute the electricity to turn that light on was probably done by by one of one of our 42 members. They're in every single province, every single territory to use the official the official definition you know, Our mandate is to be the national voice for sustainable electricity for our members and the customers they serve. We do this through advocacy through sharing best practices, and, and education of stakeholders and the government. But yeah, our our members are basically the, you know, the 40 odd, biggest companies that generate transmit distributed coast to coast to coast.
 
Trevor Freeman  05:22
And has that mandate changed over the course of the 130 years, or is it pretty consistent?
 
Francis Bradley  05:27
No, it's It's actually that's that's an interesting question. It has changed a lot. And it's changed over the time since I've been at the association even and then aimless changed, that this is the third name. I'm on since since I joined the organization. Yeah, when it was first established. As you say, there was a letter A long time ago, 133 years, it was basically a little club for these people that were in this nascent industry who, who would, you know, swap stories about, about what they're doing and how it's working. And even at the time, there was still, you know, debates about should we be doing AC or DC and, you know, the whole, the whole, you know, battle between, between Westinghouse and, and, and, and the other folks, but so, you know, it was initially a technical information exchange organization, when I joined the organization, it was still very much technically focused, would do a big annual conference, we actually had a technical research division, and we do a couple of million dollars of research a year, back then. We then evolved, we, we evolved from the Canadian electrical association to the Canadian electricity Association. And our mandate began to shift away from Duke First off, where we stopped doing technical research and moved away from technical detailed technical information exchange, and increasingly our mandate began to focus on advocacy and and what the what the industry needs and what they what the members require, from an advocacy standpoint. And then in the 1990s, mid 1990s, we moved up into Ottawa because prior to that we'd been in Montreal, we've been in Montreal since the 1930s. Before that, we were in Toronto. So in the 90s, given that the focus had shifted pretty significantly to advocacy, and the principal government that we were seeking to advocate with was the federal government, the office moved up to Ottawa. And then three years ago, the name of the organization was changed from the Canadian electricity Association, to simply electricity, Canada.
 
Trevor Freeman  07:42
So that's that switch from technical to the more advocacy and policy work. It's really interesting and actually kind of ties into this. This next question, I want to ask you, we've talked on the show before about, you know, how the Ontario electricity sector is structured. And it's complex, to say the least, but that's one of many in Canada, different provinces have different regulatory structures. Energy Policy is primarily provincial jurisdiction. But as you mentioned, the federal government has a say in that as well, especially when it comes to climate change recently. So I'm curious, how do you navigate all those differences and kind of speak with a common voice when you're dealing with so many different regulatory bodies? So many different governmental bodies? What's How do you find that common voice?
 
Francis Bradley  08:31
Yeah, well, and you know, that that is that is that the fundamental challenge of, frankly, any organization in Canada that's attempting to, to operate at a national level, in a in a sort of domain that's principally principally provincial, but it's kind of even more so with electricity because of the differences in different jurisdictions. And, you know, you've noted that Ontario is complex in terms of the industry structure, it was more complex. When I when I first started in the sector, there were 300 and more than 350 local distribution companies, you know, so there's been a little bit of consolidation,
 
Trevor Freeman  09:11
we have a paltry 60 something now.
 
Francis Bradley  09:13
Yeah, well, that's right. Yeah, we're down into only double digits. But at the same time, you know, we also saw, you know, municipal municipal amalgamations that's taken place that have driven some of that, but, you know, so we've seen an evolution here in Ontario. But, you know, there are no two jurisdictions in this country that are the same. So you know, there isn't a like an electricity system in Canada, each province and territory is different, different types of ownership. You know, in some, it's like a private, privately run companies and in other jurisdictions, it's a Crown Corporation. In some like Ontario, it's a hybrid of a mix of different types of ownership. But, you know, there's there are there are crowns, there are municipally owned there are privately owned companies as part of the value chain. And so you know, It results in a pretty disparate system, both in terms of how the sector is structured, and also how its regulated. Because the regulations are different in each and every one of those jurisdictions. And so, you know, this presents us with a huge problem, frankly, and we see it now, in particular, with respect to all of the politics around climate change, because electricity is a provincial responsibility, but we have one level of government, the federal government, providing direction in this space. And then we have another level of government, that the provincial level, you know, reacting to what those national objectives are, we've got multiple regulators across the country offering their own interpretations on what can and cannot be done in this space. And it proves to be a problem, you know, with respect to the challenge to build the infrastructure that's going to be needed to meet our, our, our aspirations, our future aspirations, this complexity makes it very difficult to get things moving and get things done. And, you know, in addition to that, honestly, in the past year, you know, if you look at the relationship between federal government, the federal government and provincial governments, in some parts of this country, it's starting to smell and feel like just raw geopolitics, right. You know, all sides, frankly, on some of these files have have demonstrated the sort of dogmatic posturing that you'd expect between countries, not necessarily between provinces, and a central government and in a confederation. But, you know, the thing is, and I keep going back to this, if you sort of strip out the posturing that we see, the fact is, we actually agree on much more than than the areas where we disagree. And here's an example. You know, if you look at the, the,the provincial opposition in a number of provinces to the Government of Canada's clean electricity regulations, you would think that, you know, we're on completely different pages here. But, you know, if you ignore some of the, you know, saber rattling, and the point scoring, you actually can see that there is general agreement provincially. And federally, that electrification is going to be, you know, the long term solution to our climate crisis. In fact, the only thing that's in dispute is sort of the deadline and the methods that we're getting there. So, you know, there, there are expressions in some provincial capitals, about the clean electricity regulations as the method and you know, and dispute as to whether or not it should be 2035, or a different time frame, but everybody is on the same page of, you know, an aspiration to have a non omitting sort of a clean system throughout the economy by 2050. And so, you know, that's the starting point that we work from, is that, oh, yes, there are certainly disparate views on some of the methods and some of the policies, but objectively, we are all attempting to head essentially in the same direction. We're all heading towards, like this net zero future. It's just a question of, how are we going to get there and, and with the time you're going to be,
 
Trevor Freeman  13:18
it's interesting to hear you say that, because that's, you know, a couple episodes back, I talked to David Caletto, from abacus, and he was talking about just the general populations opinion on things, and it mirrors that exactly. So it's not just our sort of various jurisdictions and levels of government that kind of agree, where we need to get to, they just don't know how we're gonna get there. They don't agree and how we're gonna get there.
 
Francis Bradley  13:40
Yep.
 
Trevor Freeman  13:41
Your average Canadian also agrees with that. Canadians feel that a an electrified energy sector energy system is better than a fossil fuel one.
 
Francis Bradley  13:50
Yep.
 
Trevor Freeman  13:51
We just don't agree on how we're going to get there. So yeah, that's great. Great to hear. And that leaves you guys to sort of thread that needle and find the common points and amplify that I imagine.
 
Francis Bradley  14:00
Absolutely. And, you know, and, and attempt to come up with solutions. You know, given that our principal role is, is is in advocacy, you know, that that means that we're in the public policy, loop solutions business, and trying to attempt to find ways to to, as you say, thread that thread that needle, but also, you know, figure out ways that that we can make sure that we have policies that are supportive of that future that, you know, as you said, even even the polling work that the David Caletto discussed with you. They agree that that's the destination as well. So, like, what's one of the public policy specific initiatives apart from the overall objective that we should be seeking to, you know, seeking to pursue?
 
Trevor Freeman  14:51
So if I could pick on one of those specific issues, you know, keeping on this theme of regional differences and regional challenges, we have different relationships with the fossil fuel industry in Canada. And that includes both our electricity generation, some of our provinces have predominantly carbon free generation and some don't. And in terms of our economy, so I mean, West fossil fuel is weaved into the economy and a pretty integrated way. How can we navigate this move to cleaner electricity, collectively as a country, knowing that different areas of the country have to do different things to get there, and it's going to impact them in different ways?
 
Francis Bradley  15:31
Yeah, and it isn't surprising that different parts of the country have a different approach to this, and they're coming from a different starting point. You know, it's kind of the luck of the draw, when, you know, when, when the geography prior to, you know, it prior to prior to anything like this, it was all determined by geography, if you happen to be in a jurisdiction today, that has a lot of water and a lot of different elevations so that the water is falling, you know, you're starting it certainly in a in a in a better place. That, you know, that the challenge overall is to is to really try and figure out how we we make this work across the country? You know, you're you're absolutely right, there are some parts of this country that have historically been very reliant on fossil fuels for the production of electricity. Why? Well, because they didn't have any falling water, or they're relatively flat. And so you know, that that was the certainly the case. And it continues to be the case and the challenge for some jurisdictions, so, you know, take the example of the draft clean electricity regulations that, you know, we've been, we've been talking about, and we're spending a lot of time focused on they, they hit different jurisdictions very differently, this objective to try and reach a netzero grid by 2035 is not a huge stretch, if you happen to be, you know, in in, in Quebec, or in British Columbia, or in Manitoba, it's a lift, but it's not a huge lift. You know, however, if you're, if you're elsewhere, it, it can be quite challenging. So the problem that we have there is, but you know, when the government of Canada began putting together their work on the clean electricity regulations, they use modeling that looked at the national average, and, you know, nationally, they were 84%, non emitting as a country. That's great.
 
Trevor Freeman  17:31
Right.
 
Francis Bradley  17:32
But, you know, they really should have taken a hard look at what the differences were between different jurisdictions in the country. And they should have done their modeling that was much more local. You know, Canada is a big, diverse country. And, you know, you hinted at that. So, you know, exactly nowhere in Canada is average. Right, and so we shouldn't be modeling nowhere. Because then that simply doesn't work. You know, and, and the, the simple illustration, I will often say is, if you've got two lobsters, and one of them is in the freezer, and the other one is in the pod on your stove, on average, the temperature is pretty good for the lobsters. But it isn't for either of them, right? Yeah. So, you know, listen, why does this matter? Well, if we get the modeling wrong, and if we don't understand the differences between the different regions of the country, we're going to be making decisions on how to allocate because, you know, we talk about 2050, and what is Net Zero 2050 Looks like, looks like it's going to be, you know, trillions of dollars worth of investments are going to be required. And if they're leaning on models that are not right, that becomes problematic. It's a huge bet that we're making, you know, if the models we base our decision making on and where we're going to be putting our investments aren't accurate. If the regulations are wrong, you know, these clean electricity regulations, because they didn't take into consideration the regional differences. Compliance is going to be expensive. It could in some jurisdictions, you know, make blackouts or brownouts more common with bigger impacts, and it might have disproportionately more significant impact on on the rates in most jurisdictions. So, you know, the reality is, it's four provinces in, in in Canada, that have a starting point with respect to decarbonisation, that's substantially lower than then the rest of the country. They've got much more significant lift if you happen to be in Alberta, Saskatchewan, Nova Scotia and New Brunswick. That's just the reality. So you know, we need to move forward with the with decarbonisation, but we need to be realistic that moving us from what we have today and 84% carbon free system to 100% is going to be far far more complicated than it's assumed. Again, looking at it on a national average, it seems like only a small numbers, you know, we're at 84%. It's not a stretch to 100. Except if you're in a jurisdiction where it's, you know, 10%. Yeah, then it's a problem.
 
Trevor Freeman  20:09
Okay, so 11 years, we got our work cut out for us. And we'll kind of see how we move forward. A big part of what we're going to talk about today is electricity, Canada's recent report that you've called Getting to Yes. The 2024 state of the Canadian electricity industry. So in the very first lines of the report, you talk about how there's this culture of No. Which is creating these major obstacles to progress. The report highlights that there have been all these funding pledges from the federal government. But projects are not getting off the ground. They're hitting barriers. Can you elaborate on what some of those barriers are?
 
Francis Bradley  20:48
Sure, absolutely. Happy to. This is, this is something that we've been very focused on since we released a report earlier this year, is is an initiative we do each year, we try and kind of sum up what we see as the most significant challenge for the sector. And, yeah, the challenge for this sector is we need to, we need to figure out how to how to get to yes. This year, earlier this year, we saw the release of RBC, the RBC climate action Institute report that charted this massive growth for electricity, particularly with the rise of electric vehicles, and home heating. But the reports word of the year for the electricity sector is moratorium that because that was, you know, such a significant event, in the past year 2023 was a difficult year, frankly, you know, we've seen some projects that were halted temporarily like that six month moratorium, the pause on renewables in Alberta, we saw some projects, you know, like the Atlantic loop in the Maritimes, that were halted in indefinitely. And, you know, what's moving forward now is, is a piece of what would have been the Atlantic loop, but the Atlantic loop just just hasn't moved forward. So, you know, there, there is a very significant challenge, right now, with respect to being able to ensure that we have the policy frameworks in place. So that we can can get beyond these challenges with respect to moving through the regulatory frameworks. And at the same time, we need to make sure that we get the financing and the financials in place. I mentioned that RBC report, the title of the report, this year was double or treble, they estimate that we should be investing to be able to meet our aspirations, we should be investing at a rate of about $60 billion a year, in clean energy on an annual basis, were investing at a rate of barely 20 billion a year. So we need to more than double, almost triple the investment that we're putting in place to be able to meet those those targets. It's interesting, it's very consistent with the recent plan that Hydro Quebec came up with, to meet its 2035 objectives,  it's estimating that it's going to close, you know, close to triple its capital investment to be able to to meet those. So we're well below what needs to be invested. And part of the problem is, is this, you know, we had a culture of, of no, you know, we we kind of have the technology to be able to do this. And we have, you know, the the financing, there are people who were are willing to invest in this space, because this is a good space to invest in. We have, you know, commitments and agreements in terms of what the overall target is that just that we seem to have set ourselves up with, you know, overall regulatory frameworks, that that slow things down. And by the same token, you know, we're waiting on final details for, you know, some of the financial incentives the Government of Canada has promised, like the investment tax credits, we're still waiting for the final details on that. And, and this is stuff that was promised almost two years ago.
 
Trevor Freeman  24:12
Yeah. And I mean, these projects are not quick projects, they're not short projects, they take a long time to get off the ground. So every absolutely moment that's lost as an impact. There's a lot to pick apart and what you just said, and I there's a few things I want to pull on that maybe to start with, is anybody getting it right, right now in Canada? That's like a Canada just specifically, is this going well, anywhere in terms of getting projects up and running and off the ground?
 
Francis Bradley  24:36
Well, our our focus as it associations is at the national level. And so at the national level, no, we're not getting it. Right. You know, there's a number of things that we need to do to be able to improve this and some things that we've been, we've been asking for so you know, like in terms of some some concrete steps at a national level. We need to coordinate federal impact assessments and project permitting through a central federal office. Again, this is something that that has been proposed, but isn't there. Second, we need to build capacity of regulators to deliver on our netzero goals and their decisions. They need to do prompt to so promptly they need to do it effectively. And third, you know, there was a one project, one assessment framework that the federal government promised in budget 2023. And then it promised that again, in budget 2024, that would be great to see that coming forward, like in this year's Federal Budget, it was teased, that, you know, many of the things that we would like to see are going to be addressed. But, you know, how long is it going to take? And, you know, are we actually going to be able to, to see some of those things implemented and implemented in a timely manner are open questions. And I've been I've been in front of parliamentary committees trying to get some of the move forward, some of the budget implementation details like the investment tax credits, move forward, but they we don't have all of the investment tax credit details yet in front of us much less moving them forward. And, and the clock is ticking, you know, that we keep getting closer and closer to to our targets, and we haven't made it any easier to get projects built.
 
Trevor Freeman  26:32
You mentioned regulatory hurdles as one of those obstacles. What are you talking about when it comes to regulatory hurdles? I mean, like you said, you kind of focus at the national level, there's the provincial level. Talk us through what some of those hurdles are.
 
Francis Bradley  26:44
Sure. Okay. Well, let me let me let me start with the the Impact Assessment Act, it's it's one of the biggest examples, frankly, of what up until now has been a culture of No, and this isn't a knock on the the individuals involved. It's just how the legislation is structured and how it works. Electricity, infrastructure projects are logistically complex, they require long lead times, they can take years to design to build construct. And that's even outside of the government approval process. At the current rate of regulatory approvals, new projects may take as much as 10 or more years to complete the, you know, the Federal provincial and territorial impact assessment processes, and obtain those relevant regulatory permits from various governments and regulators, you know, in Florida to have like, fully decarbonize, and, you know, double it grid capacity in a little over 25 years. This is going to be a challenge if it's going to take us a decade to get through these these processes. So when we were researching our state of the industry this year, we did a search of the open applications on the impact assessment act's website, what we found is that six projects, including electricity projects have been suspended indefinitely, because the information gathering effort to proceed with the federal Impact Assessment were enough to force a pause on the process. So it's possible that some proponents might reengage with the process, but what we found was that the paper exercise associated just the paper exercise with the impact assessment was enough of a deterrent to cancel or you know, otherwise viable projects, including, you know, in one case building a natural gas and hydrogen fueled electricity generating facilities and hydroelectric facilities. If just the time to go through the Paperchase is so long. This is problematic and something that needs to be addressed now, we're we have a revisions and amendments that have been introduced to the Impact Assessment Act as a result of the Supreme Court decision. I have appeared before parliamentary committee a couple of weeks ago, to speak specifically about that, and in hopes that we're actually going to see this move forward in a more of a timely fashion. But it was made clear by one of the other representatives that was giving evidence to the committee that that their expectation, this is from another province, their expectation is that they will once again be challenging this version of the Impact Assessment Act. So So even that creates further uncertainty. And just the uncertainty, the last thing that the business wants to be able to make generational investments is, you know, a stable, uncertain environment within which to operate.
 
Trevor Freeman  29:41
So, on that topic of investment, you talk about the need for major investment in both transmission and distribution infrastructure. And just as a reminder for our listeners, that's the poles and the wires and the transformers. That's the real hardware of the electricity system. Those are already really big buckets. So help us understand I got a couple questions around this, you know, what kind of investment are we talking about? Is it building more of those poles and wires? Is there something else in there? What size of investment? I mean, you mentioned $60 billion and clean energy. And who should be making this investment? Who are we looking to hear to be making this investment?
 
Francis Bradley  30:20
Yeah, I mean, that these are these, these are great questions in terms of what the investments are going to look like. And so, you know, we're looking at, as I said, earlier, doubling, doubling the grid, we're going to need at least two times more kilowatt hours when we get to the future. So you know, that's the level of investment that we need to be thinking about. There have been different organizations that have tried to kind of get a scope and scale of what that actually looks like, again, I mentioned the the RBC climate Institute. Last year, it had a study that came out, and I believe they, they paid this, I think it was $2 trillion, was the was the amount that they expected this to cost. Where's the money coming from? Well, you know, that's a really good question. And it's one that we've been engaging in for a number of years now. And, you know, not to be a little too much. I'll try. I'll try not to be like totally pedantic on this. But, you know, if you, if you consider, from a public policy standpoint, if if we believe that expanding the electricity system is necessary to decarbonize the Canadian economy, then essentially, what you're saying is that expanding the electricity system is a public good. from a, from an economic theory standpoint, if it's a public good, well, then it is something that should be borne by that taxpayer, not the ratepayer. Right. And so, you know, part of this discussion is, who needs to bear the costs for building out a clean non emitting electricity system, so that the rest of the economy can decarbonize? Should it be the electricity customer? Or are there parts of this, this core infrastructure that, that are regarded as a public good, and it's something that is paid for by the taxpayer, you know, and we see this in, in, in other sectors, other sectors as well, where, you know, certain things are perceived to be public good, and they're taxpayer supported. And we saw a bit of a recognition and a realization that this made sense to a degree in the federal government's budget in 2023, where, you know, they essentially pledged, one in every $8, in new spending was going to go to clean electricity projects through a variety of needs, you know, the investment tax credits, the candidate infrastructure bank, a number of funding mechanisms. So I mean, that those kinds of dollars from the federal government was a commitment to building infrastructure that that really is unheard of, at a national level since the Second World War. So you know, it really kind of moved clean energy and electrification into the category of well, I guess it's a public good, because, you know, there's a recognition that if the federal government wants to achieve these policy objectives, it needs to put some federal dollars in there. So, you know, that determination is, and whether it's a public good or not, as has been made in favor of the taxpayer versus the rate payer. Now, again, you know, you could easily say, Well, hang on a second, the rate payer, the taxpayer, the same person, except that it doesn't quite work the same way. We, you know, do do we want to attach to the customers bills, every single customer, that the cost of, you know, this, this expansion of our infrastructure or not, and, you know, electricity bills, are not something that, that, that fall, as taxes do disproportionately on those that are more wealthy. Right. And so, it's a little more fair. Now, you know, in terms of the specific investments, you know, I think, I think exactly how this is going to happen, and how it's going to roll out, those details are still being worked out by by some of our members, but I do want to highlight that, you know, the, the approach here, that we're seeing from the government, which we appreciate, is, you know, a one that is so far technology agnostic, which we think is the right way to go. So, you know, there isn't like a right way or a wrong way to generate electricity. So, you know, the future that we see is going to be an all of the above future, that will encompass wind and solar and nuclear and traditional hydro and, and, and hydrogen and carbon capture and storage. And more, not only does that give us, you know, the greatest flexibility and gives us the ability to to balance different types of generation of dispatchable versus non dispatchable. But it also gives us you know, overall, a far more flexible system. So, you know, That's the what the future is going to look like. So to, you know, to, to give you the short answer, it'll be all of the above, and it'll be probably $2 trillion.
 
Trevor Freeman  35:08
What's the role of private equity and all of this?
 
Francis Bradley  35:10
Oh, I mean, it's going to have, it's going to have to play a significant role, that there's no doubt about it. And in fact, that's one of the things that are BC has pointed their finger at when they when they identify the lack of investment right now, in this space, they note that the vast majority of it is public money. And the vast majority of that public money right now is federal public money. And so what they have said is they expect that there's going to have to be significantly more dollars coming from different levels of government, but also from private private investment and private investors as well. And this kind of a, you know, this is good news and bad news on that. I mean, the good news is, you know, their sense is that if we get the economics and the policy environment, right, that it won't be a problem, attracting capital. On the one hand, on the other hand, man, we're competing, you know, we're not an island here, and like, even now, where it's been taking us such a very long time to get the investment tax credit regime in place, and it's not in place yet. Whereas south of the border, the inflation Reduction Act, was developed and rolled out in short order. And what I'm concerned about is that, you know, people that want to invest in clean energy projects, I mean, I don't want to hear the sucking sound of those investment dollars flowing from Canada into the United States. But, you know, there has been more private investment in this space in the US than in Canada, because they've already established the regime that this is going to discuss, you know, production tax credits and, and, and other mechanisms. And we're still working out the details on ours. But yeah, you know, everything that we've heard is, there's a great deal of appetite, so long as we get things sorted out, as long as we get it, right. And that's why, by the way, one of the other things that's interesting for us as an association, is because our members are of, you know, a wide variety of types, a number of my members are investor owned companies. And so, you know, some Canadian companies that have become international players and international leaders, so, you know, Nova Scotia Power, it's now under a holding company called Amera, that is a major player, there's all of the Fortis companies, for US companies are our major players internationally. Afco is one of our members, and they're a big international player, you know, Transalta, again, you know, there's these are very significant players, capital power. So these are all all members of our organization. But it also gives us an ability to kind of get some insight into, into what the business looks like, for private investors as well. And, yeah, you know, what, what we're seeing and what we're hearing us, we need to get the policy, environment and the regulatory environment, right, because that right now is proving to be a barrier. And it's not just not just not not just us saying, you know, they'll see that reflected in other reports, including the RBC report where they talk about these the same sorts of things. And, you know, there's a recent reliability report by the North American Electric Reliability corporation that they've mentioned, as well, you know, one of the risks it sees over the longer term is, is a risk with respect to policy, and lack of policy and bow policy alignment.
 
Trevor Freeman  38:40
I think I mean, you bring up the inflation Reduction Act, that highlights the value of policy in the setting of the stage to allow for the types of investment and the types of projects that we need going forward and the critical role that governments and policymakers can play there. And actually, my previous guests, and I talked quite a bit about policy. So that's timely. When we talk about these major investments, and you start talking about these major dollar values. You know, you're no stranger to this, I'm sure, electricity prices, the cost of electricity is a sensitive subject and has been for some time now across the country in many different jurisdictions. We often look at as a distribution company, Hydro Ottawa, we look at what we call our social licence. And that's not a term that's unique to the electricity sector, to essentially the the permission our customers give us to operate our business. As we look at these investments, as we look at the amount of dollars that have to be invested in our in our sector and our industry. We know that there's an affordability crisis in Canada right now, lots of people are struggling with cost of living. And those two things can seem at odds. So I want to get your thoughts on how do we continue to hold on to that social licence that we have and in fact grow it and build it because electricity as we know it and your utility as you know it are going to be Change. And how do we get people on board with that, while still making the level of investment that we're talking about here?
 
Francis Bradley  40:06
Okay. All right. So, you know, I kind of touched on this a couple of times. But know, first and foremost, the energy transition, if you will, as I noted earlier, can't be paid exclusively by the ratepayers right? At be, you know, this is this is an overall objective that we have. And so, you know, the the infrastructure built is so large, that it needs to be certainly parts of it need to be paid through the tax system, and that that is progressive in a way that, that that rates are not progressive to begin with them, you know, but boy addressing vulnerable customers absolutely critical. You know, there's a variety of things that that could be tried, you know, in the United States that there's a Low Income Home Energy Assistance Program, that it helps keep families safe and healthy through initiatives that assist families with energy costs this, I think they call it the LIHEAP provides federally funded assistance, to reduce the costs associated with home energy bills, energy crises, weatherization, and minor energy related home repairs. So you know, a similar initiative in Canada, could be there to assist the the most vulnerable, you know, as as, as you're aware that, you know, your your, your most vulnerable customers are the ones that have the least capacity to do things like weatherization. And so, you know, there's an example of a national program that we could look at as a model. You know, one of the other is let's, let's try not do dumb things at the same time from a public policy standpoint. And one of the areas that we've been lobbying and has been something called the excessive interest and financing expenses limitation, we call it Eifel. And now it is not going to impact your customers, but in some jurisdictions of this country, it is actually going to bite the customer. So this is a this is a change in financial rules that will limit the amount of interest paid interest expenses that can be deducted from taxable income for existing and new borrowings. Now, it sounds complex, but basically every dollar that is denied interest, it winds up getting passed on to the customers, and it increases the cost of capital. Now, it only affects a smaller number of jurisdictions in this country. But you know, in the US and the UK and other countries, they have exemptions for this role. So they don't apply to utilities, but it will apply to to utilities here in Canada. And so like, right now, the only exemption offered to this is for investments in rental housing, which, you know, we see, but you know, that that's a, that is a program that some of your listeners though, not the hydro Ottawa customers will will likely be aware of, but you know, there's also an important role for energy efficiency and conservation programs in this space, right? You know, energy equity programs, thermostat installations, insulation rebates, and direct install for low income customers, they all help people to reduce their energy costs consumption and, and help them reduce their energy bills. But you know, you're absolutely right, we need to make sure that we keep our eye on the most vulnerable as we go through this transition. And there are ways that we can do that. And there, there are examples like that program I talked about in the US, even at a national at a federal level, where there are programs that we could put in place.
 
Trevor Freeman  43:39
Yeah, we do have I mean, there's, like you say, there's national programs that could be rolled out, we do have more local programs and Ontario, there are some assistance for low income customers that that we can support on the electricity bills. Federally, we've seen that investment in kind of on let's call it the supply side, helping helping homeowners access capital for low carbonization upgrades. So whether that's weatherization or putting heat pumps in, you know, the current program is oversubscribed and pause as a result, but seeing more of that and more directed to electricity specifically, I think would be would be great. When it comes to emerging technologies, so things like energy storage, smart grids, shaping the future of our sector, and let's break that apart a little bit. Let's talk about that at the macro level first. So kind of the grid level, and then we'll talk about it maybe on a behind the meter on the customer side of things. What do you see the role is for these new emerging technologies?
 
Francis Bradley  44:40
Right. Well, you know, I mean, you know, as I said, as I said earlier, I think the the future is going to be an all of the above approach. And emerging technologies absolutely are going to be a critical part of this. But you know, we need to be realistic too. So you know, there's technologies that that may be able to replace fuel base generation but they're not yet commercially available, and they're dependent upon supply chains that are not yet at scale. So, you know, there's a lot of reasons to be optimistic, for example, about the role that small modular reactors are going to play or the battery storage will play in our electricity nicks out to 2050. But is it realistic to assume that they'll be deployed on a large scale between now and 2035? You know, we need to look at both the the medium term and the long term solutions. And so I think a lot of these technologies hold a great deal of promise, when talking about a 2050 timeframe, the 2035 timeframe is a little bit more more challenging, you know, one of the emerging technologies I mentioned in a minute ago, small modular reactors. And so, you know, we we see, Ontario Power Generation moving very aggressively hoping to complete their build by 2028. Get to grid by 2029. But, you know, if you happen to be Saskatchewan, and you're hoping that small modular reactors will be your solution over the longer term, you may not be in the 2035 timeframe. So, you know, that's, that's the challenge there. So I have a great deal of confidence in our ability to develop those technologies. And I think there's going to be some huge advantages as well, right? I look back, because I've been around the sector long enough to, you know, the early days of, you know, candu and the build out of the CANDU reactors, principally in Ontario, but although, you know, we have a plant operating in New Brunswick, and we did have one in Quebec for a time, but we built an ecosystem to support that as well. And, you know, I'm very bullish on our ability to develop these new technologies, hopefully develop them here in Canada, and develop the ecosystems and the supply chains here in Canada, not only to the benefit of sort of Canadians and Canadian customers, but I think, you know, much like can do this could be technology that we'd be able to, to market around the world. So small modular reactors, carbon capture, you know, this is there's so much work that's being done in this space, that, that, that I'm confident that they will be important technologies, and they will be important for our supply in the future. We just need to be realistic about when we can rely on them. Because you know, that the one thing that that we can never sacrifice, of course, is the reliability of the system that's customer will never accept that.
 
Trevor Freeman  47:35
Yeah, of course, we're so intertwined. I mean, everybody that's listening knows this. This isn't any kind of insight, but we're so intertwined that yeah, we can't sacrifice that reliability. And it does, it touches on this idea that we have the technology that we need today, in the in the sort of near and medium term to get going on this stuff. And we're already going on this stuff. And then there are these nascent technologies that some of them may succeed, some of them may not, but we, we do need to invest in those. And we need to figure out which one of those is going to help us in that sort of medium to long term to get over that last 5, 10, 15%. Who knows what, but help us get there? What about on the sort of smaller scale behind the meter side of things when we talk about these emerging technologies? So distributed energy resources, you know, solar storage at the home level? Do you see that playing a big role in how we move forward here?
 
Francis Bradley  48:32
Yeah. Like not tomorrow or next week? But you know, when you when you're looking over the longer term? Absolutely, I mean, I think, you know, we're already seeing changes in terms of how the customer interacts with the, with the supplier, in some jurisdictions, where, you know, you'll look at, you'll look at Hawaii, you'll look at Australia, where we see massive penetration of rooftop solar, for example. But what what that's given us is, it's given us the ability to get insights in terms of how that change in the relationship between the supplier and the customer that's going to evolve. Absolutely, and it is clearly something that, you know, as we've seen, in in, in those jurisdictions, that there is a, there's a significant amount of interest in, in in pursuing this. And there's a great deal of interest when the opportunity arises on the part of customers to be able to access technologies that allow them to feel like they they have more agency, sort of in the relationship and how they relate to electricity. So yeah, absolutely. When you when you go out to, you know, the longer term, distributed generation rooftop solar mine, I'm a, you know, an EV driver now, but like 10 years from now, you know, hopefully we will have figured out how to use vehicle to grid. You know, again, you know, when I talk about it you're going to need two to three times more kilowatt hours. I'm not saying we necessarily need two to three times more generation, because a lot of these technologies are going to give us the ability to have a more flexible, and more efficient electricity system. And a number of those are at the customer level. So you know, if you think of an electric vehicle, that is probably charging 2% of the time, or 4%, of the time, and the rest of the time when it's not being driven, it's plugged in. And that's a I've got an 82 kilowatt hour battery, that, you know, at some time in the future, me and all of my neighbors will have 82 kilowatt hour batteries. And so like how many megawatts on my block that that we could tap into, that can not only give the customer the ability to, as I say, have more agency in the relationship, but man the kind of flexibility we'd get for the distribution system operators, to be able to tap into that the greater resilience that we would have. So you know, that's just one example of a technology that that I think holds a huge amount of promise and that one aint pie in the sky, because I'm driving around with with a 82 kilowatt hour battery today.
 
Trevor Freeman  51:11
Yeah. And I mean, the other side of that is also happening, the utilities are getting ready for that, and putting in the foundation and the building blocks that we need now, to do what you just described, to be able to look out there in our service territory and say, what are all the assets that I can use not just the incoming power from the grid, not just our switches and transformers? But what are all the assets that I can call on? And how do I incentivize this customer to do this behavior? You know, a couple episodes ago, we talked about what's our grid modernization roadmap, and it is designed very much around that, that capability. So I mean, that was a bit of a loaded question. I'm, that's kind of the answer I was expecting. For sure. But yeah, that's something that we're super keen on and super interested in. So Francis, as we kind of wrap up today, you know, maybe sum up some of the major steps that you want to see us take nationally in terms of policy to get out of this culture of No, as you call it. And into the you know, getting to yes, that towards the name of your report.
 
Francis Bradley  52:15
Sure. Okay. So to get to that place, we would have that one project, one assessment framework that's been promised in two consecutive federal budgets, we'd have it and we'd have it up and running, we have significant changes to the Impact Assessment Act, we would have a clean electricity strategy. That's been one of the things that, that we've been asking of the federal government for the past several years, you know, we have similar strategies, we've got a national strategy for hydrogen, we've got a national strategy for minerals, we've got, you know, national strategies in a whole bunch of areas. We had a commitment last year by the federal government to have a national strategy for for clean electricity. So we're hoping to see that this year, we would engage indigenous communities at the start of a process and we'd work to split equally in favorable ways like Hydro One, and for desync have done in Ontario. And we would have collaboration at all levels of government, federal, provincial, indigenous, as well as regulators. That would be that would be my wish list.
 
Trevor Freeman  53:11
That's, that's no small list. Well, Francis, it was really great talking to you today. We do always end our interviews with a series of questions. So if you're ready, I'll dive right into that
 
Francis Bradley  53:22
A series of questions. Uh oh. Okay
 
Trevor Freeman  53:24
We'll see how you do here. What is a book that you've read that you think everybody should read?
 
Francis Bradley  53:30
Okay, well, it is a book that I have not read yet. I've just begun reading it because somebody pointed me in this direction. So I just got it. It's called the parrot and the igloo. And that the subtitle is climate and the science of denial. It is a it is a sofar, a very, very interesting book by the author David Lipski. So, I've just started reading this, but so far, it's proving to be a really great read.
 
Trevor Freeman  54:03
If our listeners can hear me typing here, every once in a while, actually, you know, maybe half the time I hear about a book that I haven't come across yet. So I'm taking notes here. That's a good one.
 
Francis Bradley  54:12
There you go. Yeah, the parent and the igloo.
 
Trevor Freeman  54:15
So same question, but what's a movie or a show that you would recommend?
 
Francis Bradley  54:19
Oh, okay. Well has nothing to do with energy or electricity or climate change. But But Mad Man. the I think the greatest the greatest series that they did ever been produced and television. Love it. Yeah. I wish I would have been there. They just seem to be such weird and creative meetings that they that they wind up in terms of figuring out the advertising back in the 1960s.
 
Trevor Freeman  54:42
Yeah, totally. There's, there's no shows out there that you can go back to several times, if not indefinitely, and that's, that's certainly one of them
 
Francis Bradley  54:49
that's one of the ones for me.
 
Trevor Freeman  54:50
Yeah. If somebody offered you a free round trip flight anywhere in the world, where would you go, if you could offset the carbon
 
Francis Bradley  54:59
I would I would, I would go to Ireland, I had been planning a trip to Ireland in April 2020. With with two of my kids. It never happened that we've never been so, you know, one one side of our family the roots go back there. But I have never been so it would absolutely be to Ireland.
 
Trevor Freeman  55:22
Very cool. It is amazing how many times I hear that sort of there's those 2020 2021 trips that were planned that never happened. Yeah. are on the list for everybody. That's great. Who is someone that you admire?
 
Francis Bradley  55:36
Niko Tesla. Yeah, Tesla, who is I think one of the real unsung heroes of the of the past, you know, people know all about, you know, Edison and Westinghouse. But very few people know about Tesla. And and I think I think he had significantly more patents than either either of those two guys. Everybody knows the car, but very few people know the man.
 
Trevor Freeman  56:03
Okay, so last question, what is something that you are excited about when it comes to the energy sector and its future?
 
Francis Bradley  56:10
Everything
 
Trevor Freeman  56:11
Great  The future is bright. I mean, I wouldn't want to be anywhere else right now. Specifically, you asked about the energy sector, but specifically electricity, I'm, I'm really looking forward to the future. You know, I talk a lot about, you know, we're going to have to build in the next 25, 26 years, a system that is twice as large as the system we had, you know, 120, 130 years ago. But if you look at how much a society has changed, because of electrification in the past century, society is well is going to change even more significantly, in the next 25 years. As we move forward. And we double, I'm really, you know, it's just like everything about what's going to happen in the sector. And, and, and our utilization and the new technologies that will, we'll have access to is, I find it endlessly fascinating to see what that future is going to look like I'd listened 15 years ago, nobody had iPhones and iPads, and all of these new technologies. And we used to have to watch TV shows when they were scheduled. And, and, you know, when I started working back in the day, if you if you wanted money, it would be cash, and you'd have to go to the bank. And if you didn't get there by Friday afternoon, you were stuck for the weekend. So yeah, you know, now I pay everything with my with my watch, right? Yeah, it's not even a tap. I just, I just use the watch. And so like, what's going to change in the next 25 years? It's going to be endlessly fascinating.  It does feel like it, you know, and I've been in this industry a little while now. And it seems like the rate of change, specifically on climate on the energy transition on decarbonizing feels like it's picking up speed and getting momentum, and people are kind of getting behind it, not to say we've solved all the problems, but Right. That's the optimistic piece for me that I look at and say, Yes, stuff is happening. And this is a really cool spot to be I agree.
 
Francis Bradley  58:16
Absolutely.
 
Trevor Freeman  58:16
Well, Francis, this is a fantastic conversation. I really appreciate you taking the time and sharing your insights with us. And this was number two on the podcast, so I'm sure there'll be a third at some point.
 
Francis Bradley  58:25
Excellent. Thanks a lot, Trevor. It was great to chat with you take care.
 
Trevor Freeman  58:28
Yeah. Thanks.
 
Francis Bradley  58:29
Cheers.
 
Trevor Freeman  58:31
Thanks for tuning in to another episode of The think energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps us spread the word. As always, we would love to hear from you. Whether it's feedback, comments, or an idea for a show or guests. You can always reach us at think energy at hydro ottawa.com

 

Get to the bottom of how policy is ushering along the energy transition. In part two of the series, Associate Professor Nicholas Rivers shares how energy policies are helping shape the actions taken to address climate change. From decarbonizing buildings and transportation to the hard-to-tackle parts of Canada’s economy and its major industries. Plus policy’s role in supporting distributed energy and resources. Dive back into the conversation in episode 139 of thinkenergy.

Related links

 

●       Listen to part one: https://thinkenergypodcast.com/episodes/energy-policy-deep-dive-with-nicholas-rivers-part-1/

●       More about Nicholas Rivers: https://uniweb.uottawa.ca/members/969

●       uOttawa Institute of the Environment: https://www.uottawa.ca/research-innovation/environment

●       The Canadian Climate Institute: https://climateinstitute.ca/

●       Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

●       Hydro Ottawa: https://hydroottawa.com/en 

 

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Transcrpit:

Trevor Freeman  00:07

Welcome to think energy, a podcast that dives into the fast changing world of energy through conversations with industry leaders, innovators and people on the frontlines of the energy transition. Join me Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at think energy at hydro ottawa.com. Hi, everyone, welcome back. Okay, so this is part two of my conversation with Nicholas rivers about policy, and specifically how policy is and will in the future, shaping the different solutions and different actions that we can take to address climate change and to usher along the energy transition that has already started. As a refresher, Nicholas rivers is a Professor of Public Policy and International Affairs from the University of Ottawa. And his area of focus is really the sort of research into an evaluation of environmental policies. So this is a great conversation. And if you haven't listened to the previous episode with Nicolas, I really encourage you to do that it kind of lays the groundwork and really helps feed into this part of the conversation. On today's episode, we're going to talk about decarbonizing buildings, decarbonizing transportation, about some of those hard to tackle parts of our economy, kind of those major industries, as well as the role of policy and supporting distributed energy resources. So solar panels and batteries and things like that. So it's really a great conversation, start with the previous episode, if you haven't already. And then thanks for joining us here for this one. And happy listening. Okay, so we've talked about generation at the grid level, but let's talk about what we call distributed energy resources. And for our listeners, just a reminder, this is things like rooftop solar behind the meter storage, so having batteries at homes or businesses, which we are going to need a lot more of in the future. And we're going to see a lot more of on our grid in the future. What policy tools are out there that could help ramp up the implementation of these resources? Is it as simple as you know, incentives to lower the upfront cost?

 

Nicholas Rivers  02:21

Okay, good question. Maybe I'll just start out by giving some broader perspective about why we why we might want to go down the distributed energy route. So as you mentioned, a distributed energy resources are things like rooftop solar, right on the kind of residential building or a battery pack in the garage of your residential building. And this is a different approach than the way we normally approach the electricity sector, where our generation and storage infrastructure to the extent we have any is centralized, right. So in a centralized system, if it's solar, it would be a big utility scale solar project in a field somewhere, or now we're starting to see the ISO just approved a bunch of battery storage projects that are going to be you know, big centralized resources, really big batteries, or it could be pumped hydro, or you know, compressed air storage that that are not in someone's garage, they're, you know, these big sites that are that are well away from people's homes typically. So why would we want to change the paradigm and, and go towards this kind of decentralized type of approach where the where the resources are in people's homes or on people's homes? I'd say there was a couple of reasons we might want to go that route. One is that the distributed resources if they're in people's homes, well, they're close to the demand. Right? So if people you know, ultimately, the reason we have electricity generation is to meet people's and industries demands for electricity. And putting those resources right at the source of demand means that we don't need so many wires to connect the resources to the to the demand centers, and potentially that there's less congestion on the wires and, and less losses getting from the source of supply to the source of demand. So that's one reason. Another big reason I think, that will become more important in some areas of the world and more important as we scale up decarbonisation is land use, and then, you know, we got all these rooftops that are just sitting there. And putting solar panels on those, basically wasted surfaces is a way of conserving land as opposed to to putting new solar panels in a field that has other uses. So I see that as being a potentially really important reason why we might go down that decentralized route. It's important to say that land use constraints are not binding in Ontario today for for, especially for zero carbon resources, right? There's we're lucky in Ontario that we've got a fair amount of land per person. And we've also not got that many solar or wind or battery resources currently. And so the pressure that we're putting on our land from those types of centralized resources are pretty small. But certainly as we try to go further on that decarbonisation route, thinking about land constraints is going to be important. I would say that there is a downside to going the decentralized route. And that's that it's more costly. So generating electricity at a home, is storage of storing electricity at home is typically quite a bit more expensive than doing it at a utility scale, in a in a kind of centralized manner. And that's just because, you know, a solar panel cost what a solar panel costs. So you're getting, I think, the same basic solar panel, solar module, and a centralized system, compared to a decentralized system. But all the side costs, the cost of planning and installing, and all the racking that has to go for solar panels, same with batteries, is a lot more expensive, when it's done kind of on these boutique, individual roof projects, compared to what it's done in a centralized approach. And so what we're gonna do as we think about, you know, do we go down this more decentralized route or more centralized route? So we've got to think, are these land benefits and the benefits we get from having the resources close to the demand? Are they outweighing the extra cost that we're paying from, from going this more decentralized route?

 

Trevor Freeman  02:25

Yeah, so it's kind of an economies of scale question of obviously, investing in the infrastructure for a large scale solar installation gives you that, you know, more bang for your buck on a kilowatt hour basis, then each individual rooftop project, but I guess there's that aspect of, you know, customer control and customer preference of, you know, I like the idea of having my own power generated on my roof, it gives me some control, it gives me some redundancy. It also kind of protects and let me know what your thoughts on this it. It locks me into cost for energy, at least for a portion of my energy for the life of that equipment, rather than sort of being at the whim of rising utility costs over time. Is that a fair assessment?

 

Nicholas Rivers  07:15

Yeah, I think that's right. Solar panels and batteries, both have a free long lifetime. So once you've paid for them, you know, what you paid, and you're going to be able to amortize them over the length of the investment. Of course, that assumes that you're going to be living in the same house for the 20 or 30 years of the investment.

 

Trevor Freeman  07:31

Exactly. Yeah.

 

Nicholas Rivers  07:32

So I think there is still a risk there. But I do agree with you that it does put more control in individuals hands more, it gives people an ability to kind of choose their own destiny with respect to energy, it allows them to make a zero carbon investment that, you know, they maybe feel really strongly about, and that isn't being made on their behalf at the central level. So I think you're right that it does give more autonomy to households.

 

Trevor Freeman  07:58

Yeah. And the current way that we I guess, sort of funder incentivize, if you will, on rooftop solar, for example, is just through the rates, so you're offsetting your rates. And that is how you get your payback on your panels. I know you and I have chatted previously about the model in Australia. Can you tell us a little bit about how they've approached this?

 

Nicholas Rivers  08:20

Yeah. So, South Australia also uses this net metering approach. So basically, net metering means when you're consuming electricity, you can think of like an old analog meter, the meters running one direction. And then when you generate electricity, and return it to the grid, when you're not using as much as you're generating, the analog meter runs the opposite direction. Of course, these meters aren't analog anymore. They're digital, but they're allowing you to kind of reverse the meter at times when you're generating.

 

Trevor Freeman  08:50

Yep.

 

Nicholas Rivers  08:51

South Australia has been a real leader in getting solar on people's rooftops. Now, you might think, oh, it's super sunny in South Australia, and it is super sunny in South Australia. So it makes sense to have solar in people's rooftops. But there are lots of areas in the world that are super sunny, that have had not nearly the success that South Australia has had in putting solar on rooftops. And I would think one of the big reasons is, is program design. So they have designed a program that makes it really easy to access the program and access the incentives that are part of the program, and that lets household navigate it pretty seamlessly. So my understanding of the program is it's an incentive, which is the typical way we we kind of provide incentives for people to to undertake these novel technologies. It provides households with a you know, an upfront payment for for putting solar on the roofs. But I think that the real trick is that it's not provided to the household. And there's not an onerous application process that happens. It's provided to the to the companies that install solar panels on people's roofs and they pass through the incentive. Have to the household. So all of the paperwork and the planning is undertaken by the company. And the household, basically, just, as my understanding just says, Yeah, I want some solar panels on my roof. And, you know, tomorrow the solar panels are on the roof. And they don't have to go through the kind of extensive paperwork and the qualifying and the waiting for the, the incentive to be paid. It's all done upfront. And it's all done with a minimum of paperwork.

 

Trevor Freeman  10:23

Yeah, so from a homeowner perspective, in Canada versus in South Australia, South Australia is just seeking a much cheaper cost for solar, they don't have to jump through the hoops. That's all kind of done taken on by the government and by the the industry.

 

Nicholas Rivers  10:39

Yeah, and we do have incentives for solar here. In some provinces anyway, and there have been incentives federally, but they're there, they're more onerous to apply for. And they put the homeowner in the position of having to pay for the system upfront, and then waiting for the rebate. And it's a big outlay for homeowners and the rebate is uncertain, right? You can put the paperwork in. And of course, you think you're gonna get it back. But there's always that chance that something went wrong, and you didn't do it quite right. You don't get the rebate. Yeah, there's a risk there. So I think this this kind of upfront payments program that's processed by the company is as a real, you know, something we could learn from in Canada.

 

Trevor Freeman  11:16

Right. So that's potentially a key role. And this may be applies to other programs, as well of, of government have policies to take on that administrative burden take on that risk, if you will, away from the end user to make it seamless and streamlined for the end user and easier to do

 

Nicholas Rivers  11:33

People have better things to do than think about energy. And so I think that

 

Trevor Freeman  11:38

Or fill out paperwork,

 

Nicholas Rivers  11:39

yeah, fill out paperwork, and just, you know, they don't want to spend their time, you know, trying to figure out if the incentive is going to cover their net metering benefits they wants to be they want to be added be as easy as possible.

 

Trevor Freeman  11:52

Okay. Yeah, that makes a lot of sense. Okay, moving along, then to transportation. This is something of course, that Canadians will be pretty familiar with. We've seen a big move toward electrifying personal vehicles, there are more EVs out there today than ever before, you know, going back into even recent memory, it seemed like a rare thing to see an EV on the road. And now it's not at all, but there's still a long way to go. As much as we've got a lot more, we still are overwhelmingly using fossil fuels for our personal transportation. What kinds of approaches will help speed that transition up? We have a federal rebate when it comes to buying electric vehicle. Is that enough? Or are there other tools that we can use to speed up that transition?

 

Nicholas Rivers  12:36

Yeah, we're at about 11% of new cars that are sold are electric these days, and about one and a half percent of our fleet, because it takes our fleet a long time to turnover, right. So even if we get to 100% sales, we could still be waiting another 20 years before we get to 100% of our fleet be electric. So this is not going to be something that resolves itself really quickly. Because it does take a long time to turnover and longtime for car manufacturers to change the kind of vehicles they're making. I'm convinced we're on the transition, and that it is underway no matter what we do in this sector, that that these cars will be eventually be as cheap or cheaper than internal combustion engine cars, and will deliver the range that we want and the performance that we want. We're not there yet. So So what do we do in the meantime, I would say one of the things we should be doing as governments is fixing kind of the chicken and the egg problem of electric vehicles and governments are very active in this area. But the chicken and egg problem is who wants to build a charging station if there's no electric vehicles, and who wants to buy an electric vehicle if there's no charging stations. And so I think government has been playing an active role there, although arguably, it's still behind where we want it to be. People still experienced troubles with charging electric vehicles. And reliability of chargers is an issue. It turns out that the economics of operating a charging station don't look very good. And so perhaps there needs to be more of a public role in figuring out how to get these systems up and running more of the time. I'm not exactly sure what that would look like. But, but I do think the problem isn't going to solve itself entirely on its own, especially in more remote or Northern or rural areas. This probably along a lot of role for government support for charging. In terms of a policy approach. I really like the zero emission vehicle standard. This is just a standard that says okay, manufacturers, it's targeted. The manufacturer is not a retailer or not customers. And it says manufacturers you have to sell a certain proportion of the fleet you sell is zero by zero emission by this year and a bigger percentage by this year. And that's something that Quebec and BC and California and a number of other places have implemented zero emission vehicle standard, and the Canadian federal government has announced that it's going to go the same route.

 

Trevor Freeman  15:05

Gotcha.

 

Nicholas Rivers  15:06

And so what that says is, in 2026, in Canada, major vehicle manufacturers will have to sell 20% of their fleets as electric vehicles. Were at about 11% today. And that number will ramp up every year until it hits 100% by 2035. Now, again, I think this transition is happening anyway. So I think that that will help speed up the transition. But at it, it's not dramatically different from kind of what we expect, even without that kind of policy. And so I do think that's a that's a really nice policy, because it gives automakers a target, it gives them some certainty. And it helps to ensure that they make vehicles available to Canadians where they want them.

 

Trevor Freeman  15:48

Yeah, I think, I mean, we've all heard those stories of people that wanted to buy an electric vehicle on it wasn't ready, or the price point wasn't there. And I think by requiring more stock, requiring those targets to be hit, it's going to help move people along in the direction that a lot of people already want to go. And we're seeing that as those numbers tick up.

 

Nicholas Rivers  16:08

Yeah. Let me say a little bit more about this policy, because I think it's cool. It's one of those examples, which is a regulatory policy, which has a market based or carbon pricing kind of component to it. So it's regulatory, right? I just described that manufacturers have to hit, let's say, a 20% target in the year 2026. So the rule is, if you sell a lot of vehicles in Canada, 20% of them have to be electric by 2026. But then it's got this kind of hybrid component, not a hybrid car hybrid policy. So the it's kind of, it's got a carbon price kind of built in, which says, Hey, if you can't do it, well, you can trade with some other company that can. So maybe it's going to be gonna make up some names here, maybe it's going to be that company X says, oh, you know, we're really, you know, we really don't want to make the transition quite so quickly, we're going to sell internal combustion engine cars for a few more years. And Company Y says, Well, we're actually way ahead of that curve, it's going to be able to sell some of its credits, Company Y is going to sell some credits to Company X. And so Company X could keep doing what it's doing. But pay a penalty, that company y can get a benefit from being ahead of the curve.

 

Trevor Freeman  17:17

Gotcha. And to the consumer, the overall stock of options is still where the government wants it to be. There's still enough electric vehicles out there that we can purchase.

 

Nicholas Rivers  17:27

That's right. I think I mean, the the availability is less of a concern now than it was when supply chains were all snared up during the pandemic. I think if you went out and you had the money, and you were willing to, you wanted to go buy an electric car, you would get one relatively quickly today.

 

Trevor Freeman  17:42

Yeah

 

Nicholas Rivers  17:43

That's, that's I think that was that's a legacy problem that fortunately, we don't have so much anymore.

 

Trevor Freeman  17:47

So I mean, that's personal transportation, we're also seeing a move to make public transportation more carbon free and more electric here in Ottawa, where I'm based where we're both based. We've seen our city make that transition to electric buses, we're bringing on you know, a portion of the fleet in the next couple of years is going to be electric buses, we've seen our new LRT system is at least partially electrified, what are some of the policies out there that are helping municipalities or operators and public transit systems make this shift from traditional fossil fuel systems?

 

Nicholas Rivers  18:27

Yeah, so this is a procurement policy. So it's government saying, we're going to create a new market for this technology that doesn't really exist yet. And help to drive drive technology along right. So this is something we talked about a little while ago. And I think that this will help, you know, these these vehicles, big vehicles with heavy duty cycles. There's certainly parallels in kind of goods transport. So having some of that kind of exposure to new deployment in the public sector, I think will help with decarbonizing goods transport later on. So this is one of the cases where governments kind of creating this niche role for each policy or niche, I guess, nice role for this technology to be deployed first. And it's accepting the higher cost of these policies of these technologies initially, and will help drive down the costs as they get some experience with these technologies. Okay, so what's it what's it doing in Ottawa? Ottawa has promised to not buy any more fossil fuel buses, it's gonna slowly transition its bus fleet to electric. And I guess that's a procurement policy. It's supported by funds from the federal government. So the Canadian infrastructure bank supports this policy. And so the way that it works is the federal government's pay the additional cost that the electric bus costs relative to a normal diesel bus, and the city just pays the same as it would for the normal diesel boss with the feds picking up the rest of the tab.

 

Trevor Freeman  19:58

Right

 

Nicholas Rivers  19:58

The city's original expense. response has been really positive, it's found that maintenance costs are lower that fuel costs are lower, and the performance is at least as good in the electric buses compared to the, to the diesel buses. So it's experiencing a cost savings. And at least in the initial reporting, this seems like a really positive experience.

 

Trevor Freeman  20:17

So it's essentially the policy there is helping buy down that initial upfront jumping costs. So that, you know, yeah, municipal budgets can remain the same.

 

Nicholas Rivers  20:26

Exactly.

 

Trevor Freeman  20:26

But we get that better technology, and we're moving forward on our emissions reduction.

 

Nicholas Rivers  20:30

Yeah. So this is really a federal and and city policy.

 

Trevor Freeman  20:33

Gotcha. Okay, so let's talk about buildings, which are a major source of emissions, especially here in Canada, primarily because we are a cold climate, and we have to heat those buildings, or else they wouldn't be comfortable. And traditionally, this has been done with fossil fuels, you know, we burn natural gas, to heat our buildings is a large majority of Canadians. That's how they heat their space. In Canada buildings account for over 100 million tons of GHG emissions a year. So this is definitely a sector that we need to see some transition in how we approach them. What is the role of policymakers to help us decarbonize our buildings? And I want to split this question into two pieces, the first being residential buildings. And then we'll talk about commercial and institutional after because I think they're they're kind of different cases here. So let's talk about residential first.

 

Nicholas Rivers  21:25

Okay, residential buildings, I think heard at some of this is going to apply to both residential and commercial but of residential buildings, you're totally right to say that the big source of emissions is natural gas. And we do have other fuel uses as well like oil and propane, but the the big one is gas. And I think a special challenge for residential buildings. And it applies to commercial buildings as well, but especially residential is that they last a really long time. And then, so it's not like cars where you know, after we have got all the new cars to be zero emission, you got to wait maybe 10 or 15, or maximum 20 years, and the entire fleet is zero emission. Because cars only last 15 or 20 years buildings last, we don't even know how long they last hundreds of years. 100 years.

 

Trevor Freeman  22:14

Yeah, exactly.

 

Nicholas Rivers  22:15

And so we don't just have to tackle new buildings and then wait for them to kind of percolate through in the same way as we do for light bulbs or cars or something, we have to figure out a way to decarbonize existing buildings. And this turns out to be difficult. But let me start by saying the first thing we should do is make sure that the new buildings that we're building are not producing carbon emissions, that's the easiest thing to do. Getting a tackling a building or decarbonizing building, once it's already built, and part of the building stock is relatively difficult compared to taking a new building and designing to be zero carbon from the outset. And my view is that the best thing we can do there is to not connect new homes to the natural gas network, or at least pass the full costs of the natural gas network onto these new homes as they're built so that homeowners can make and developers can make an informed decision about the most effective way to produce those new homes.

 

Trevor Freeman  23:13

Yeah, I think like even that concept is something we talk about, you know, when we're working with our customers on equipment choices, as well, as you know, the decision you're making today on, you know, let's say your boiler will last with you for the life and that equipment. And in the case of a boiler, let's say that's 25 years, but to your point, in the case of a home, deciding to start down that path of fossil fuels, that building is going to live with us for you know, who knows how long and we will then have to get off those fossil fuels later. So I think for that new construction piece, yeah, that makes a lot of sense of making sure we're making the right decisions today, because we know we have to electrify

 

Nicholas Rivers  23:50

Right. Yeah, we do not what we don't want to do is build a gas home. And then 10 years later say, oh, let's actually make this home an electric home.

 

Trevor Freeman  23:58

Yeah, totally.

 

Nicholas Rivers  23:59

Because now we've spent twice on on one thing. So if we know we're gonna go zero emission, then we should be building new homes as zero emission homes. And we'll save money doing it.

 

Trevor Freeman  24:08

Yeah, and we know how to do that today.

 

Nicholas Rivers  24:10

We know how to do it. The harder problem is existing homes. And that's, you know, most of the homes that are around today that are part of our housing stock today will still be part of our housing stock in 2050. So we don't get to do over. We've got to tackle these existing homes. And it's relatively difficult compared to other sectors. Because if you want to take an existing home and decarbonize it, you really have to do it on a home by home basis. You have to invite you know, an auditor in and figure out what's wrong with it, or the cheapest way to decarbonize that home is most effective way to decarbonize at home, maybe get some engineers to help figure out what the interventions look like maybe gotta consultant in to put some new windows or doors or insulation or air sealing into the home and so but I adds up to a lot, a lot of people being touching the home, it's not something where we can go to a factory typically and pull out an identical component that, you know, might get cheaper over time, and strap it to the home. So I think that's part of what makes this challenge difficult. Luckily, we do have some kind of economies of scale in homes when it comes to heating systems. And this is heat pumps that can be adapted to most homes as a replacement for a furnace, or even a boiler. And Heat pumps are a technology that I think people have heard a lot more about over the last couple of years, they're basically an air conditioner that can run in reverse. So we can move heat out of a house and also move heat into a house. And these are getting more common for a cold climate, like we're in. And getting cheaper and contractors are getting more experienced with them. And so I think that we will start seeing more penetration of heat pumps in residential sector. Having said that, it's not a it's not a slam dunk. Right now, heat pumps, in some cases are cost effective compared to gas. But they're right at the margin, right? So you don't save a whole bunch of money by switching a gas furnace to heat pump. In, for example, in Ontario. Now that'll change. If our carbon price keeps going up every year, eventually, it'll it'll become something where the carbon price makes heat pumps make easy financial sense that it becomes a more straightforward decision. But right now, they're kind of similar cost to operate compared to a natural gas furnace. And so we're not seeing a whole bunch of penetration of them in Ontario.

 

Trevor Freeman  26:50

Yeah, I mean, I think that even even just that fact that actually, coincidentally, the previous episode on this, we actually talked about heat pumps and went through a bit of a case study with with someone that installed one, but you're right, like right now, you're kind of comparable, and your energy costs, maybe you save a little bit of kind of depends on on the rest of your context as well. But that highlights the value of the role in policy of helping to drive down that upfront cost. And by helping get more of them out there. And letting as we've talked about already, in this conversation, letting the market forces drive down the cost of heat pumps, because we're going to be putting more of them out there in the manual manufacturing process, the supply chain process, that's all going to find those efficiencies so that putting that heat pump in becomes comparable on an upfront cost basis to a furnace, for example, which today it's not.

 

Nicholas Rivers  27:44

Yeah, I would say the other challenge is that the whole HVAC or heating ventilation air conditioning ecosystem is set up around natural gas furnaces and natural gas water heaters in Ontario. And so the contractors are used to it, people are used to it. And it's it makes it kind of when your furnace or your hot water heater fails, and you panic a little bit because it's the winter and you don't want to get cold the next day, the easiest thing to do is to call your company and get them to put in the same thing as you've already had it's safe, you know it works. And by doing that, you've locked yourself into another 20 or 25 years of heating with natural gas. And so I think one of the things is just kind of the human dimension of this problem that heat pumps remain kind of is unconventional technology. They work really well they've been demonstrated to work really well in Ontario, but it's not widely known. And certainly the supply chain isn't there in the same way as it is for furnaces, and the contractors are, I think less comfortable with installing them as they are for furnaces. And so people get guided towards furnaces at the time of furnace failure or water heater failure. And it's only like this kind of, I think if the people that really want heat pumps that end up going towards that route right now. Because you really have to you have to want them for that to be the outcome. It's not something that's going to happen on its own. And unfortunately, in this moment of panic, you don't get the time to kind of reflect on on what you might want over the next couple of decades.

 

Trevor Freeman  29:25

Yeah, totally. And I've I've thought about this a little anecdote on this show before my own experience with having a furnace die in January as I was starting my research into heat pumps and ended up being able to get a heat pump but not in the manner that I wanted, not the system that I really wanted. And, and yeah, I ended up because of that, having to do all the research myself and being someone that works in the energy space. That's, you know, that's what the reality was.

 

Nicholas Rivers  29:50

I would say the other thing is I heat pump provides both air conditioning and heating. And it turns out that heat pump is basically cost competitive with a new furnace, and a new air conditioner. So if you if you, if you take a new house, and you either decide to put in a furnace and an air conditioner or heat pump, it's a wash, you'll pay the same for both. But very rarely does a house have a furnace and an air conditioner fail at exactly the same moment. So that they're making this kind of apples to apples comparison of a system that can provide both heating and cooling with another system that could provide both heating and cooling. And so this is like this coordination problem that heat pumps provide. And so I think when we're thinking about public policy, we should be thinking about not this kind of rational decision maker that's weighing the pros and cons of these two systems. But really, the person who's in a panic because their furnace failed in the middle of the night. And we got to think about how to make the Low Carbon solution, the easy solution for that person.

 

Trevor Freeman  30:50

Yeah, 100%. I mean, this goes back to the, I guess, the intro of what will be part one of this conversation that I gave and talking about, you know, the policy piece is kind of that foundation, that bedrock upon which the technological solutions the societal solutions are built, and exactly what we talked about with solar. How can we use policy to make this an easy path, make it the easiest path so that when someone doesn't want to think about it, when their furnace dies in the middle of the winter. This is the logical and easy and the path that they're going to choose.

 

Nicholas Rivers  31:23

Yeah, I think in many cases, choices are problematic, right? I'm a believer that that's not that's not universally true that more choices are often better. But also that we can get paralyzed by choices. So having to choose between a heat pump and a furnace is difficult for most people. Most people don't want to spend your time thinking about that. And I think, eventually, I'm of the view that we want to take a regulatory approach that we don't want to just allow everyone to be kind of deliberating especially at a panic about this choice themselves. Probably eventually, when heat pumps become good enough universally, that we want to have that be the regulated solution.

 

Trevor Freeman  32:02

Yeah, gotcha. Especially when to your point. It is the it becomes that clear, best choice. It's the most efficient.

 

Nicholas Rivers  32:09

Exactly, yeah.

 

Trevor Freeman  32:10

And we're working towards that we're getting

 

Nicholas Rivers  32:12

we're not quite there yet. There are places where heat pumps are not as effective as furnaces. And so I think that's why we haven't seen regulation in this space yet. But I think that should be an end goal.

 

Trevor Freeman  32:23

Gotcha. Okay, so that was residential buildings. As I said, commercial and institutional are kind of a different beast altogether. These are bigger buildings systems are bigger and obviously, more expensive ownership structure can be complicated. You have owners of buildings and tenants, you have investment companies that are sort of investing in the building as an asset as a way to make money. Help us tackle this beast, what is the role of policy and helping commercial buildings decarbonize here in Canada?

 

Nicholas Rivers  32:56

Yeah, good question. Again, I wouldn't say this kind of tenant and owner issue also applies if the residential sector, right, so there are renters that want to have a more efficient building, and that don't have any power to make investments in their building. So similar dynamic there, I think. I won't talk about specific technologies in the commercial sector, although there are lots of places that are experimenting with innovative new heating and cooling technologies, again, heating and cooling as the big greenhouse gas source in the commercial building sector, like it isn't residential. But I will just say that, I think the the types of decisions that are made and the way that they're made, it is quite different in the commercial sector to the residential sector. In a bigger commercial building, there'll be a building manager that's responsible for making decisions about, about heating and cooling investments in that. In that building, there'll be lots of tools that they have access to building management software, that that kind of optimizes building energy use, and costs, and helps them to make these kinds of decisions. So whereas the residential consumer doesn't necessarily want to think about what their what types of investments they should make to maximize their comfort and minimize their energy costs. That's what this building manager in a building is paid to do. And so they are going to be really thinking about this, these decisions carefully, and they're not going to be you know, they are going to be highly engaged in these decisions about what what types of energy to be using in the building. And as a result, I would say that carbon pricing can be quite effective in this sector, that policies that shift the relative costs of heating with gas compared to heating with electricity. They're going to hit the bottom line in that building manager for that building manager really quickly and allow them to kind of pivot if there are technologies available that can help them reoptimize in response to these changing prices, I will say that it's important to think about designing rebates for that carbon price. So we don't end up digging, our commercial buildings say we've we've designed rebates for, for residential households and for big industry. But I do think that this kind of pricing tool can be effective, probably more effective in the commercial sector than it can be in the residential sector. Because because there are people whose job it is to pay attention to building energy costs.

 

Trevor Freeman  35:31

Yeah, and I mean, you talk about rebates, I think, if there's a way to direct those rebates or direct that reinvestment into the types of solutions that are going to help people double down on the savings, and reduce their carbon consumption, and you know, then the next time around, it's even better and even better, I think that's definitely impactful.

 

Nicholas Rivers  35:51

Right? Yeah. So combinations of incentives and a kind of carrots and sticks approach. I agree.

 

Trevor Freeman  35:57

I do want to mention, and partly this is a bit of a plug here on the hydro Ottawa side of, you know, one of the initiatives that the federal government's taken on in terms of deep retrofits for commercial buildings is something they call their deep retrofit accelerator initiative. It's a program that hydro Ottawa is a part of two builds, build support services for commercial customers to identify pathways to decarbonize. So this isn't, you know, going out and paying for boilers or electric boilers or things like that, but it's helping building owners create a plan to tackle these complex, these complex retrofits. And that's something that the federal government is investing in. So I mean, for our listeners in our area, definitely keep your eyes and ears open for more information coming on that because it's early days yet. Okay, so my last question for you, Nick. And just looking at the time, I know we've we've taken a lot of time here chatting, it's been great. But I do want to touch on quickly before we wrap up, kind of what might be one of the trickiest areas, which is this idea of kind of heavy industry resource heavy industry, things like you know, the manufacturing of steel and chemicals and cement. There's a lot of emissions associated with this. They have kind of pretty unique demands in terms of high heat, high temperatures, things that are easily achieved with burning fossil fuels, maybe not so easily achieved with an electric option. What are we doing in that sense? What is the government doing to try and help those industries pursue decarbonisation?

 

Nicholas Rivers  37:28

Yeah, so we've kind of I'm in the the climate world climate policy world. And we have called these sectors for a long time, in quotes, the hard to decarbonize sectors, so, so it's been something where it's the kind of prevailing idea has been, let's all work on the stuff that's relatively easy today, like buildings and electricity, and vehicles. And eventually we'll find solutions for these hard to decarbonize sectors. And these are decarbonize sectors are things like cement, and steel, like you pointed out are chemicals, for example of pulp and paper, these big industrial sources, and it's not just that they require a lot of heat, or a lot of energy. In many cases, it's that carbon is released as part of the process for producing these materials. So for example, when you produce cement, I'm not a chemist here, but my understanding is you take limestone and turn it into lime as part of the cement making process. And the chemical reaction releases co2. Same thing with the typical way for making steel. You're reducing iron ore, and the reduction process that takes place in a blast furnace takes the poles the I'm gonna get in trouble here. I don't quite know what the reaction is. It releases co2 from the iron ore reduction process, in concert with coal. So they do require a lot of heat, but they're also releasing co2, just as part of the kind of process of producing these materials. So no matter how efficient they get that co2 is still coming out. And so that's part of the reason they're referred to as these hard to decarbonize sectors, I would say, Well, let me say that the thought that we've had as a community thinking about how to transition the economy is that it should be possible to do a lot of this easy stuff, almost 100% Man company easy, almost in quotes, here. decarbonizing buildings will be talked about is not actually easy. It's hard. It's easy relative to these hard to decarbonize sectors. So if we can get the easy sectors more or less decarbonized. One approach to dealing with these hard to decarbonize sectors would be to use, carbon capture and storage. So it would be to take the co2 that's coming out of these fixed processes, and capture it before it goes into the atmosphere and try The sequester it permanently, let's say in a depleted oil and gas reservoir. So that's one approach, we're also seeing a lot of a lot of innovation in this sector, away from some of these fixed process emissions. And so I'll give you an example. In Ontario, the federal and provincial governments recently put big investments into some of the steel facilities in Ontario. And these are our biggest point sources of co2 emissions in the province. These steel facilities, they're especially scattered around Southern Ontario around Hamilton. And, and they use this reduction process to to turn iron ore into steel. And then the big investments the province and federal government have put in how they are transitioning some of these steel producing facilities from from electric RBO blast furnaces to electric arc furnaces. So it will take the coal out of the process basically. And the these, these facilities when they're up and running, will produce big savings and greenhouse gas emissions. By eliminating this kind of important source of co2. We're seeing lots of innovation in the cement sector as well. So using different materials, in as part of this, the cement production. We're seeing a big project, for example, underway in Edmonton, it's a big cement facility that will have a lot of efficiencies built into it. But we'll also have CCS carbon capture and storage, it will be adapted for carbon capture and storage so that the co2 that's produced from this facility won't be released from to the atmosphere, it will be it will be sequestered underground. So I would say the role for government and these nascent, I would say projects is a direct support role to help these industries demonstrate the viability of some of these alternate pathways for producing basic materials with less carbon. And what we're seeing is government supporting these through either direct subsidies, or tax credits. And in some cases, we're seeing when these projects are starting to be produced materials, we're seeing government potentially have a role in procurement saying we're gonna buy lower carbon cement for this new set of government buildings, we're not going to source it from usual suppliers, we're going to reach out and try to create a niche market for this new cement or this new steel. So I think that's the right role. We're not at the stage yet where we can mandate these kinds of innovative technologies, because we're really just at the demonstration phase. But I would say that over the last decade, we're moving from thinking of these sectors as hard to decarbonize, to thinking maybe, to, you know, possible to decarbonize, so it initially seemed like there wasn't really a pathway and we're starting to see some light in the tunnel. Now some potential pathway for decarbonizing these sectors.

 

Trevor Freeman  42:58

Gotcha. Yeah, I mean, similar to how we have most, if not all the answers we need. Now, for some of those other industries, we talked about personal transportation, buildings, etc. There may come a day when we look back and say, yeah, now we've got all the answers we need for the heavy industry. It's just a matter of deploying them. But we're not there yet.

 

Nicholas Rivers  43:18

Exactly. We're not there yet. You know, it may turn out that these are not the hard sectors. Right, that if these technologies come along, there's only I don't know exactly the number. But let's say on the order of a dozen cement factories in Canada. So if we can figure out the technology, rolling it out to a dozen factories, institutionally is maybe not as hard a problem as rolling out building retrofits to 15 million buildings. So So right now, this seems like the hard to decarbonize sector, but maybe we'll be surprised.

 

Trevor Freeman  43:47

And to your point, I mean, pretty good bang for buck, maybe when we talk about just the amount of emissions from single points from these from these industries.

 

Nicholas Rivers  43:56

Yeah, I think the steel sector numbers in Ontario, these two facilities are we're gonna see a 3 million tonne per year greenhouse gas reduction, well, from the investments that Ontario and the feds have made in and converting them to electric arc furnace.

 

Trevor Freeman  44:11

Great. Well, Nick, I think that's the list of questions I had for you. So thanks very much. I really appreciate the time and your thoughts on these matters. It was great to having this conversation with you. We do always end our conversations with a series of questions that I asked all of our guests. So as long as you're ready to go, I'll jump into those.

 

Nicholas Rivers  44:30

Let's do it.

 

Trevor Freeman  44:31

What is a book that you've read that you think everyone should read?

 

Nicholas Rivers  44:34

This year, I read fire weather by John Vaillant. I've read a number of his books in the past. I love the way he writes. He's a Canadian author. He writes both nonfiction and fiction. This is about the big fire that took place in Fort McMurray in 2016. And it's a nonfiction book, but it's gripping. He's such a good writer. And it's such an important thing for us to understand exactly what's happening again, this year we've seen Fort McMurray threatened just last week by wildfires. So I really recommend this book. It sounds dry. It's about forest fires, but it's not at all. It's really good.

 

Trevor Freeman  45:09

Yeah. Okay, great. That's a good one. Same question, but for a movie or for a show.

 

Nicholas Rivers  45:14

I am. I'm a pretty slow TV watcher. I don't get a ton of time. But I am watching Showgun right now and loving it. Don't tell me the end, because I'm not through. But it's excellent show.

 

Trevor Freeman  45:26

Yeah, so I haven't started it yet, because I read that book as a teenager and haven't read it since. So I'm rereading it right now. And then I'm gonna watch the show after

 

Nicholas Rivers  45:35

I didn't read it. So I'm my wish with fresh eyes.

 

Trevor Freeman  45:39

I remember liking it, but I can't remember kind of how it ends. So I'm as excited as you are to see the end of that. If someone was to offer you a free round trip flight anywhere in the world, where would you go?

 

Nicholas Rivers  45:52

Well, I am a little sensitive about flying long ways, just because of the nature of this conversation but my kids, I have a 13 year old and a 10 year old. And they're super into comics and Nintendo and really want to go to Japan. So I would go to Japan for for a few weeks with them.

 

Trevor Freeman  46:13

Who is someone that you admire?

 

Nicholas Rivers  46:15

This was hard. I set out you gave me these questions a couple of days ago. And I sat out on the front porch and the first nice day we had in a while with my wife and my kids. And I was telling them about this. And I said I was stuck on the Who do I admire? And they said, You should admire us. So I admire my kids. They're really optimistic. They're super fun. They're loving life. And I think it's a great set of characteristics.

 

Trevor Freeman  46:41

Yeah, that mean, that is never a bad answer. That's a great answer, and good for them for self awareness to call you out. Finally, what is something that you are excited about when it comes to the energy sector or this transition that we're in what excites you about the future where we're going?

 

Nicholas Rivers  47:00

Well, let me give a two pronged answer here. I'll start by saying that I'm nervous.

 

Trevor Freeman  47:04

Yeah

 

Nicholas Rivers  47:04

I think the stakes are high. We're learning more and more as a society about, you know, what climate change looks like. And it's not pretty. And the I think the big thing that we have to keep in mind, and the thing that keeps me optimistic is that we still have a lot of role to play in determining where we ended up here. And, and we're seeing really dramatic changes in Technologies, and in people's engagement and policymakers engagement on on this file. So we've talked about how fast some of the technologies have moved over the last couple of decades or decade in particular, solar and vehicles and batteries and all these things. We're also seeing policy change really dramatically, right? It would have been inconceivable to say that we would have a high carbon price and a mandate for zero emission vehicles and phase out of coal fired power and potential clean electricity regulation and an oil gas cap, and all this stuff on the books 10 years ago, and and now we're there. So I feel like not only is technology changing quickly, but the policies are also changing quite quickly. And and it looks like they're all changing in the right direction.

 

Trevor Freeman  48:19

Yeah, I definitely can relate to that. As someone who's been in this industry, this sector for a little while, at least, it feels like there's momentum now it feels like the pace of change is finally starting to really pick up and not where we need it to be. There's lots of work to do, as you say, but yeah, maybe we're starting to see things move a little faster

 

Nicholas Rivers  48:42

Yeah, exactly. So there's certainly reason for optimism. That's that's kind of guarded optimism.

 

Trevor Freeman  48:47

Yeah, that's a that's a fair point to end on. I think that's a good space then. Nick rivers. Thanks very much. I really appreciate you coming on the show and chatting with us today. And I've really enjoyed our conversation.

 

Nicholas Rivers  48:59

Thank you so much for having me. I enjoyed it, too.

 

Trevor Freeman  49:00

All right. Take care. Thanks for tuning in to another episode of The think energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps us spread the word. As always, we would love to hear from you. Whether it's feedback, comments or an idea for a show or guests. You can always reach us at think energy at hydro ottawa.com

 

In this first of a two-part series, we unpack the vital role of policy in driving the energy transition with Nicholas Rivers, Associate Professor at the Graduate School of Public and International Affairs and the Institute of the Environment at the University of Ottawa. Join us as we explore the layers of policy implementation, the interplay of social and technological solutions, and the challenge of designing policies that balance data with public opinion and emotion.

Related links

 

• More about Nicholas Rivers: https://uniweb.uottawa.ca/members/969

• uOttawa Institute of the Environment: https://www.uottawa.ca/research-innovation/environment

• The Canadian Climate Institute: https://climateinstitute.ca/

• Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-cem-leed-ap-8b612114/

• Hydro Ottawa: https://hydroottawa.com/en  

 

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Transcript:

Energy Policy Deep Dive with Nicholas Rivers (Part 1)

 

Fri, May 24, 2024 11:55AM • 52:17

SUMMARY KEYWORDS

emissions, policy, carbon, price, work, canada, carbon pricing, technology, government, cost, climate change, electricity, big, emitters, action, ontario, regulations, podcast, climate, energy

SPEAKERS

Nicholas Rivers, Trevor Freeman

 

Trevor Freeman  00:07

Welcome to think energy, a podcast that dives into the fast changing world of energy through conversations with industry leaders, innovators, and people on the frontlines of the energy transition. Join me Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at think energy at hydro ottawa.com. Hi, everyone. Welcome back. We've talked a lot on the podcast about how climate change is a big complex problem. And the entity transition that is already underway is also a big complex undertaking. These things require complex solutions to address them, it's not a single thing that's going to solve this for us. You know, we often think about solutions as being some kind of technology, either an existing technology or something that we're going to innovate on or invent in the future. And we talk about a lot of those on the podcasts, everything from heat pumps, to renewable generation to grid modernization. But technology doesn't just exist and grow in a bubble. And we can't just rely on technological solutions on their own to solve climate change or to help continue the energy transition. There is also a need for other approaches, for example, Social approaches, you know, we need to educate people on what climate change is and how it works and what we need to do to change it. We need to motivate people, we need to rile up people to create that desire for change, and create the political and social will to go behind that. What are the key drivers to help advance all of these different moving parts, if you will, is policy our policy solutions, you can really think of policy as the foundation or the bedrock upon which all these other things are built. And when we talk about policy, we're talking about all different levels. So from the federal government, to provincial governments, who are municipal governments, and you know, this is the Canadian context, we're in Canada speaking about this. So if you're listening from a different country, you know, slot in your various levels of government there. Our policy solutions are what push or pull certain actions. And I'm sure we're all familiar with the sort of carrot and stick analogy. Carrots being those things dangled in front of us to help us move towards some more desirable action or desirable state sticks being you know, the sort of prod or push that are going to, you know, help push us into something or away from something else. These policy solutions are really designed to make a desirable action easier and more likely, and to make an undesirable action harder and less likely. So in the context of climate change, for example, the desirable action might be the adoption of cleaner technologies, like EVs or renewable generation, or speeding up the development and adoption of new technologies, where the undesirable action might be just the status quo like doing things, the way we've always done them, we know we need to change that's an important piece, or the undesirable action might be just the continued use of fossil fuels, we need to move away from that that's the undesirable action that's not going to help us solve climate change. And so we're going to talk about policy today. And I'll talk about our guests in a minute. But I think it's important to also remember this next piece, and that is that policy is tough. It is tough to know what will work and what won't work. It's tough to know what the thing is, that's going to really create the desired action you want, that people are going to get behind. policy can be uncomfortable, as I've said, policy prioritizes certain actions over others. And we've talked about this before Canadians and more broadly, people, we are not homogenous in the way that we think or care about things we don't always care equally about the same things. We all have different pressures and drivers in our lives. We all have different contexts in our lives, and so naturally, our priorities aren't always going to line up. And when you have a policy that is designed to prioritize certain actions over others, some portion of the population is going to disagree that that's the right priority. And in practical terms, it's usually a bunch of different portions of the population that agree or disagree in varying amounts. Policy is often designed and applied in what you might call a scientific way. So certain policy tools have expected outcomes that can be measured. There are, you know, metrics that go behind these things. But policy is often received by the general public in a very decidedly non-scientific way. In fact, we typically receive policy in a more emotional way, how we feel about some new policy really is what drives our opinion and our action around that policy. And that's more so than maybe the data will drive our opinion in our actions. In fact, the way that we look at that data is often influenced by sort of our emotion around how we feel about something. And I'm not saying that's wrong. That's kind of just human nature. And we all do it no matter what your I guess political leaning is where you fall in the spectrum. We all do this with, with policy, with the direction that our government is taking. But knowing that is helpful, and it lets us check in with ourselves against that, you know, are we really looking at things just based on the merits based on the data, or what is the emotion that we're feeling about certain things, I think that's important. So with that preamble, my guest today is here to help us pull apart the suite of policy tools that are already playing a role in helping us decarbonize and tackle climate change and some of the things that might be upcoming, or other options that are out there. And I'm gonna say off the bat that there's a lot to talk about here. This is quite a long conversation. So we're actually going to split this into two pieces. We'll have part one and part two, and kind of break it up into two different episodes so that they're a little bit easier to get through. But I'll say in advance, I appreciate you sticking through. I think this is an important topic of conversation and, and my guest today knows a lot about it. So I'm happy to have Nicholas Rivers on the podcast today. Nicholas Rivers is a Professor of Public and International Affairs from the University of Ottawa. His research focuses on the economic evaluation of environmental policies. He is a member of the Canadian climate Institute and served as a co editor of the Journal of Environmental Economics and Management, and was previously a Canada Research Chair in climate and energy policy. Nick regularly provides advice on energy and climate policies to federal and provincial governments, as well as nongovernmental organizations. So Nicholas, welcome to the show.

 

Nicholas Rivers  07:32

Thanks for having me on, Trevor.

 

Trevor Freeman  07:34

So let's start with a little bit of background, can you give us a sense of how you got to where you are today, and really specifically how you came to be passionate about environmental policy?

 

Nicholas Rivers  07:44

Okay, well, this is something where, you know, maybe it's easy to look back and paint a linear trajectory. But certainly, this is not, this was not the aim. From a young age, I didn't have career goals, I would say leaving high school had no idea. I had been pretty good at math and, you know, a tinkerer. I liked playing with capsula, which was this cool, mechanical toy, and Lego, and that kind of thing. And so I did engineering, without really an end goal in mind. I did mechanical engineering. And at that time, you know, when I was in my late teens, early 20s, I started reading books about kind of nascent books about climate change books about energy, I had friends that were really active in the kind of energy and environmental movements, and started to realize that that's maybe where I wanted to focus, my energy, my own energy. And so in my mechanical engineering degree, I wanted to start working on renewable energy, which was really at the beginning at the time, this was the late 1990s. So at the time, there was one wind turbine in Ontario. I went to visit it during my mechanical engineering degree, the Pickering one, right. It was up. No, it was up on the Europe like you're on the Peninsula, Brisbane and so Okay, gotcha, right by the British nuclear station. It was a test one, it wasn't a big commercial wind facility. So I was just like, digging around trying to find interesting stuff. And wind turbines look really interesting because they were big, and they were in moved and they you could see something they were doing. I didn't end up working in wind facilities. I ended up getting some jobs and hydrogen worked with Ballard and Hydrogenics as a co-op engineer. So that was my kind of foot in the in the renewable world. And I have to say, I didn't really like it all that much. I was doing, you know, I was in the field that I kind of wanted to be in the engineering field. And it's working on renewables, but the jobs I was doing didn't appeal to me. So they were really kind of small bits of the renewable energy picture and I was reading the books at the time by Amory Levin's and if you come across him or Paul Hodgkin and they were talking about big system transformations. And that's what I wanted to get into. And here I was figuring out the right radius to bend a pipe that transferred humidity from one stream to another. And it just wasn't jiving with the big picture that I was interested in. And so I ended up going back to university after my undergraduate degree, to study resource and environmental management with Mark Jackered, at Simon Fraser University. And Mark is one of the people that's been really central in thinking about energy policy and environmental policy in Canada over the last, I guess, like four decades now. And I think exposure to the way he was thinking and the way I was taught to think in that program really got me interested in and working on energy and environmental policy on a kind of as a career, and expose me to the possibility that you could work on this right, as a high school student leaving high school, you don't think that there's jobs working on energy policy, so it wasn't something I had in mind from for a long time. I'll also say, I grew up in a family that I don't know if they were environmentalist, but certainly fought a lot about the environment, you know, bird watching, and hiking, and that kind of thing. I was outside a lot when I was young, and I still like to be outside all the time. So I think there's, I've always had that kind of affinity for the environment. But this was a way that I could kind of blend some of my math skills or some of my interests and tinkering with, with some of those kinds of environmental affinity.

 

Trevor Freeman  11:31

Yeah, I mean, this is definitely not an episode where I need to give my backstory, but there's so much of what you said that, that I relate to from drawing a connection between playing with Lego as a kid and ending up in engineering school, that's totally my pathway as well, and being you know, good at math, getting into engineering school, and then realizing, hey, there might be something else out here through a project. And so I did my fourth year design project, just on a whim on a green roof for one of our university buildings 

 

Nicholas Rivers  11:59

Ah cool.

 

Trevor Freeman  12:00

I would say that's kind of a point where it pushed me into this more sustainability focused career. So great to hear that. Thanks for sharing that. And certainly, I can appreciate the lack of linearity and a lot of careers in this space, and really the 

 

Nicholas Rivers  12:14

Exactly, yeah 

 

Trevor Freeman  12:15

everything. So. Okay, so the topic here, we're talking about today's policy. So I want to have you help us understand what is the history of decarbonisation policy in Canada? You know, we're at a point today, and we'll talk about maybe where we need to go moving forward. But what has come before this? When did we start seeing policies focused on reducing carbon in Canada, give us a bit of a crash course on our history so far.

 

Nicholas Rivers  12:45

Sure, I'll do my best. It's not that new. Right. We've known about this for a long time. In fact, I teach a course on climate. And, you know, in digging around for that course, we have studied climate change for over a century. The first, I think, relatively modern looking predictions about climate change came in the 1800s, the late 1800s. And so we have had a pretty good sense of where we're going for a long time. The first real government assessment of the severity of climate change came in the 1960s. This was a US government and national assessment, National Science Assessment. And it pretty much got the contours of the problem right, in the sense that we haven't, haven't changed our understanding of the science of climate change all that dramatically since the 1960s. The projections from that time still hold out today. In Canada, we didn't act quickly after the 1960s reports in the US, although we certainly followed them. The first thing Canada did, I would say, was hold a big international conference on climate change in the late 1980s, in Toronto. And this is a period, you know, when we were holding a number of these big international conferences on sustainable development, for example, or on climate for the first time, and Canada did its part in Toronto in '88 by holding this conference called the World Conference On The Changing Atmosphere. And at that conference, it was recognized that we can't keep going the way we are on climate. It's not sustainable, we're going to end up with more of a warmer world than we want. And we promised at the time, to reduce emissions by 20%. From those levels in the 80s. By the beginning of the century, by the beginning of a new millennium, which we didn't do. We didn't do it. Of course, yeah, this is gonna be a kind of recurring theme. It didn't do much in the way of policy, you know. So I think something we've learned is that just saying, we're going to do something doesn't amount all that much. But we've done that a number of times, and we started doing it in the 1980s. We didn't really start following up with proper policies, and by proper policies, I mean, policies that compel emitters, anyone who emits emissions to change their behavior in some way, either by replacing a technology or, or changing their actions. Until I would say the middle of the first century, or the first decade after the new millennium, so around 2005. And at the time, it wasn't the federal government that was really in the driver's seat on climate policy. It was the provincial governments. And so we saw at the time, British Columbia's government started experimenting with a carbon tax. We saw Alberta's government implement some restrictions on industrial emissions, we saw the Quebec government implement some, some transport industrial policies. We saw Ontario phase out coal fired power starting in 2007. And so it was really the provincial governments that were in the driver's seat, the federal government, you know, it was starting to tinker. But the federal government didn't really begin to take a really strong position, policy wise on climate change until around 2015. And that was the point when the federal government convened the provinces to get agreement that they should all move forward on implementing carbon pricing. All the provinces agreed except for one at the time. And so they all brought in a carbon price, either it was the federal carbon price that was imposed, or the provinces imposed their own carbon price. And that was the beginning really, of a whole slew of other policies and regulations. So since that 2015 period, I would say the federal government has really been more in the driver's seat on climate policy, and has implemented things like regulations on methane emissions, as has required the phase out of coal fired power, which is actually by 2030 of the requirement, but it's actually proceeding quite a bit quicker than the federal requirement. It's also got this carbon price in place, it's bringing in policies to require a complete cleaning of the electricity grid, a cap on oil and gas emissions and regulations on zero emission vehicles. And so really kind of multifaceted regulations coupled with this carbon price. And increasingly over the last couple of years, we're also seeing them coupled with pretty big subsidies for structural transformation of the economy. So you're seeing this play out in Ontario with battery plant investments, for example. And so I would say that's the policy kind of history, we're seeing a pretty slow start. We've known about the problem a lot longer than we've been acting on the problem. We saw ramp up provincially, after the millennium, and that we've seen the transition from the provinces to the federal government taking leadership on this file for the last decade or so.

 

Trevor Freeman  18:01

And as you said, like, slower than fast, but more to come. We're not done where we are today is not where we need to be. Yeah. So there's lots to talk about. 

 

Nicholas Rivers  18:11

Yeah, exactly. Good point. So we, we've our admissions, not surprisingly, in the absence of any policies kept on growing up until about 2005, when we started bringing in policy. Until that point, it was like, received wisdom, that anytime the economy grew, which it mostly does every year, greenhouse gas emissions would grow with it. And that that held for a long time, like maybe even a century leading up to around 2005. And then policy really started to break that chain. And so we've seen a decoupling of economic growth and greenhouse gas emissions in Canada, as well as most other rich countries over the past decade and a half or so. But emissions aren't falling fast. In fact, they hardly even fall. They're falling from where they would have been, but they're not, they're more or less flat lines in Canada are beginning a very slow decline. Yeah. And we've got a maybe it's worth saying, one of the things that we've learned from the climate scientists is that emissions have to go to zero. There's not, you know, we can't solve this problem with modest cuts in emissions, which is where we're at right now that you can think of this as like filling up a bathtub with a tap, and the bathtub is going to keep filling until the tap comes off until the tap turns off completely. And so the goal, the end goal here, if we want to stop the world from heating up is stopping all emissions. And I think that's something that it took me a long time to appreciate. But it's something that I think is transformative and thinking about environmental policy. 

 

Trevor Freeman  19:45

Yeah, that's a great point. And I think that really underpins the conversation today of seeing the role in policy to start decoupling what else is happening in our society with our emissions levels, and I think we're going to pick apart some of those Pacific examples during our conversation. So you brought up carbon pricing. I think everybody listening to this podcast, probably would agree that's, you know, at least the most public if not the signature national decarbonisation policy in Canada today, it's the one that certainly gets the most notice and the most discussion. So I want to start there, I want to pick it apart a little bit. I mean, to say that it's a divisive issue would be kind of an understatement. Help us understand how carbon pricing works in Canada today? What is our current scheme that we have in this country? 

 

Nicholas Rivers  20:37

Good question. Okay, let me start out by saying what's the point of carbon pricing? Because I think it's not evident for lots of people, it seems like a crazy idea. The basic idea is that we live in a market economy. And a market economy is one where the market responds to the cost of producing something and the desire of people to buy something. And so the market sets the prices, and the market determines how much gets produced in response to the prices and how much people buy in response to the prices. It's not directed by some other entity, as a market economy tends to work best when the prices of things reflect their costs. So if I want to go buy some bread, the idea in a market economy is that the price of the bread that I buy should reflect the cost to produce the bread, right, the cost of the grains that are used to make it and the cost of labor, and the machines that are required to make it. And if that does reflect the cost, and there's a motivation for the bread maker to make the bread for me, and, and so it'll be there when I want to buy it. And the idea that behind this carbon pricing is that there is a cost to me producing carbon emissions. Right? So the cost is it makes the world a little warmer. And there's a cost in lives and livelihoods, and wellbeing, from climate change. But I don't pay a price, right, I don't pay the cost, I'm not required to pay the cost because this is a non market good. No one's producing climate change at the public good. And so the idea behind carbon pricing is, hey, the market doesn't work for this kind of good. One way we can fix it is by attaching a price to carbon emission. So it's just like bread when people use it, they have to pay the price to reflect the cost. And so that's the kind of basic fundamental and the, the idea that economists have had for a long time, is that if we properly price carbon emissions, people are going to use an awful lot less of them, because now their actions reflect the costs. Okay, so that's the kind of basic idea behind carbon pricing. Canada has brought in a carbon price federally in 2019 provinces implemented carbon prices, some of them much before that. So Alberta brought in an industrial carbon price in 2007. BC, brought in a carbon price throughout all emit for all emitters in 2008, and Quebec, as well. So, so the federal carbon price now is kind of the law of the land, in the sense that, in that 2016 meeting that I mentioned, where the federal and provincial governments agreed about carbon pricing, the agreement was we should all have a carbon price, let's make this a level playing field, let's all do our piece. And the federal government kind of took that message back and developed a federal carbon pricing benchmark, which said, Hey, provinces, you can do your own carbon price, as long as it's at least, you know, this certain level of stringency. But if you don't do it, we'll bring in our own federal carbon price in its stead. Okay, so provinces have the ability to do something on their own. And if they don't do anything, the federal government will, will bring in a carbon price. And so what we've got now is a kind of a system that's a bit piecemeal, where some provinces have their own carbon price and other provinces have not implemented a carbon price. And the federal government has brought one in and put in their place, the Federal carbon price as two parts. One is a consumer facing part. So for people like you and me, and for people or for institutions that are not giant emitters, like a university or hospital or a mall, for example. They all are subject to what the federal government calls a fuel Levy, and what the rest of us call a carbon tax. Big industrial emitters, like a pulp and paper plant or a steel plant, or a big electricity generator, are subjected to a different scheme. It's still a carbon price. But the way it works is a little different. And it's called an output based performance standard. So I'll speak briefly, on the industry side, the way it works is that each facility that produces a lot of emissions gets a target, then it's usually the same target for everyone in the sector. So at the target could be like, the target is for a steel sector, you have to produce steel with a carbon intensity of less than, say, one tonne of carbon per tonne of steel that you produce. So they get that target and if they managed to get their facility emissions below the target, they get a reward in terms of a carbon price, and if they their emissions are above the target, they have to pay a carbon price

 

Trevor Freeman  25:38

A financial reward. So they get some sort of incentive to be below that benchmark.

 

Nicholas Rivers  25:42

They basically get carbon credits, which have a financial value that you can trade them for dollars. So that's the way it works on the industry side. On the smaller emitter side, like you and me, it works a little differently. There's a levy on fuels. So any fuel that we might buy, like natural gas, or gasoline or diesel that contains carbon, or releases carbon, when it's combusted, is imposed in proportion to the amount of carbon that's released from that fuel when it's done. But, you and I are required to pay that fee. Now we don't pay it directly to the government, it's imposed at the retail level. So, you know, the gasoline station will pay the fee on our behalf, but then it'll raise the price of gasoline in the amount of the fee. 

 

Trevor Freeman  26:33

Gotcha. 

 

Nicholas Rivers  26:34

That's the main part of the system. The other thing with respect to this consumer carbon price, is that all that revenue that the government collects, is put into a pot. And then it's rebated back to us that, and you've probably heard about this, if you check your bank account, there'll be a Canada carbon rebate in your bank account, or at least each household will get one not each person. 

 

Trevor Freeman  26:55

That's right. 

 

Nicholas Rivers  26:55

So it depends on who to file their taxes First, each household who gets the rebate. So you want to be the first in your household to get your taxes done. But the money basically is raised from consumers in proportion to how much fuel they burn. And then the government collects it up, and rebates it back to consumers equally for all households. Okay, so a lot of people are confused about these parts, like why would they go to this trouble? Why would they raise money and then rebate it back? And this is an important point. This isn't a traditional tax, right? And then traditional tax governments implement the tax to raise revenue to, you know, buy or build a bridge or to fund a school or something like that. That's not what's going on here. The point of this fuel levy or carbon tax is to provide incentives for people to change their behavior. And in particular, it's to fix this market failure we talked about earlier with the cost of carbon emissions not reflected in their price. And so when the carbon price gets high, it will make a lot more sense for us as individuals to choose the low carbon action, as opposed to the high carbon action and save money doing it. And on the rebate side, the rebate is designed so that we don't get punished, we don't lose our you know, we don't become lower income as a result of this. And so it goes back to each of us equally. So no matter whether I do this, you know, whether I take the low carbon action, or I don't take the low carpet action, I get the same amount of rebate back regardless.

 

Trevor Freeman  28:26

So it opens the door, then to give people a little bit of control to work within the system to their own economic benefits. 

 

Nicholas Rivers  28:35

Exactly. 

 

Trevor Freeman  28:36

So if I can reduce my emissions and reduce my costs, I'm still gonna get the same amount back, but I'm going to be paying less of it. 

 

Nicholas Rivers  28:42

You'll come out ahead. 

 

Trevor Freeman  28:43

Yeah, it incentivizes me to do lower carbon things. So I pay less of that. 

 

Nicholas Rivers  28:48

Exactly. That's the idea. 

 

Trevor Freeman  28:49

Great. So I mean, the big question mark around all this. There's a lot of questions, obviously. But one of the big ones is, is it working? I mean, it's been in place, as you said since 2019. And in various forms across the country. Are we seeing the impact or the results that we as a society, or specifically the government intended to see from this? Are we reducing our fossil fuel consumption?

 

Nicholas Rivers  29:12

Yeah, I gotta give a two part answer. 

 

Trevor Freeman  29:15

Sure. Yeah. 

 

Nicholas Rivers  29:16

The first answer is, yes, it's working. So we've got dozens of studies that have looked at carbon prices in various jurisdictions around the world and use the data that we are able to gather to ascertain that yeah, carbon prices worldwide are definitely reducing emissions. Now, they're, they're not cutting emissions to zero, which is our goal, right? There's nowhere in the world that has implemented a carbon price and got emissions to go to zero. And you can see that in Canada emissions are basically flatlining. And so is it working? Yes, it's cutting emissions relatively where they would have been otherwise. But where it's not putting us yet on a trajectory towards getting to zero emissions. So emissions, carbon prices are still relatively low, worldwide and in Canada, and we don't really know what will happen when they ramp up to levels that might be commensurate with getting to zero emissions. But the initial forays into carbon pricing that we've seen around the world have suggested that this is definitely cutting emissions. Let me answer part two. 

 

Trevor Freeman  30:22

Sure. Yeah.

 

Nicholas Rivers  30:23

And to part two is we don't really know that we don't really know because Canada implemented a carbon price nationwide in 2019. And so we don't have another Canada that didn't implement a carbon price in 2019. But everything else was exactly the same. To compare to, that's what we want to know, if we want to know that the carbon price worked, we would really want to have two Canada's and put a carbon price in one and not put a carbon price in the other, and then compare the two. And we don't have that. And in that sense, this is the same problem as we have for any big economic policy, or any big social policy or any big policy of any kind. We don't really know, for example, if single payer health care works, and then we don't have another candidate without single payer health care, but uh, we can, you know, have some proxies to think about whether it works, we can look at other jurisdictions that don't have single payer health care and try to make some comparisons. But we don't really know what would happen in Canada if we took away single payer health care, because we don't have another candidate without single payer health care. And so there are lots of studies that suggest that carbon prices are working. But we don't have, you know, that rock solid evidence, that of exactly what emissions are being cut by this, this carbon price in this context. 

 

Trevor Freeman  31:39

Yeah, and I think that's partly why I talk about this a lot on the podcast with different guests on different topics. And it applies at the macro level with something like national policy, but also down to the micro level with, you know, what, what are individual utilities trying to do to meet the demands of the future, there really is not likely to be a single strategy that is going to get us where we need to be. It's not like we can pick that one. Policy, that one piece of technology. That's, that is the answer. That's really going to get us there. And I think that probably applies to carbon pricing as well. It's a tool in the toolbox. 

 

Nicholas Rivers  32:16

Oh, absolutely. But I mean, I mean, let's just say that that's not what's what's happening. There were no governments, either provincially or federally, that have said, Okay, we're all in on carbon pricing. Now, we're done with our climate policy. 

 

Trevor Freeman  32:29

Yeah

 

Nicholas Rivers  32:29

That's not at all the picture in Canada. So let's not, I don't want to paint that as, as the picture because as I opened up this podcast saying, you know, Canada's done a ton in the last decade on climate policy, including things like vehicle standards and coal phase out and electricity and low carbon fuel standards, and I could the list goes really, on and on.

 

Trevor Freeman  32:51

Yeah, and I will definitely pull apart some of that, I think. So my next question on this is, as I mentioned, this is a divisive topic, there are differing ideas around carbon pricing, whether we should have when how it should apply. And the nature and the beauty and the frustration of our open democratic society is that we could very well pick a different direction. In the near future, we may have a different government next time around, that government could choose to do something different. What are other options out there? That might still factor in the fact that there is a cost to emitting carbon, but be a different strategy than the existing carbon pricing? Or is there another strategy out there? Or is there not?

 

Nicholas Rivers  33:39

Yeah, for sure, you can reduce emissions without a carbon price. The carbon price is one way of reducing emissions and it does have its appealing parts. It's appealing because it allows people some flexibility to respond in the way that suits them best, you know, I can either pay the carbon price or I can reduce emissions and not pay the carbon price. And, and for that reason, it's seen as a relatively economically efficient approach to reducing emissions. But there are other ways I would say the two big other ways are regulatory approaches, and incentive based approaches. So let me go through what those look like. In a regulatory approach. We don't say, here's the financial penalty for carbon emissions. Now figure out what you want to do, like a carbon price, we say here's exactly what you should do or what you have to do. And so a regulatory example would be we've got lots of these nationally, and provincially. But a regulatory example might say you can't generate electricity with coal fired power anymore. Okay, that's a regulation or it might say, you have to cut your emissions by 10% this year and every year going forward as silver it. So certainly regulatory approaches can work, they often seem to be less flexible than a carbon price, because you don't give emitters the choice of how to respond to you imposing upon them. And so that requires the government to know quite a lot about you know, what's feasible and what's appropriate for different situations that it doesn't need to know, in the carbon price case, it didn't. So if I want to regulate you, Trevor, and to do it in a way, that's reasonable, I got to know a lot about your life to know like about what you're, you know, what possibilities you have to reduce your emissions, before I can choose some appropriate, you know, regulations to impose on you. So if I tell you, you have to use a heat pump, and then it turns out you live in a house that is not amenable to a heat pump. I've kind of made life difficult for you. Yeah. So regulations certainly have a lot of potential and, and they are being used in contexts where the kind of technology has become more clear. And I think they have a lot of, they can play a big role, they are playing a big role in driving down emissions. So again, in cases where technology is relatively clear, and there's less of that kind of work in that situation, this doesn't work in this other situation. Another approach to reduce emissions would be an incentive driven approach. So you could think of a carbon price as a disincentive, right, every time you produce emissions, I'm going to charge you. And an alternative approach would be anytime you do something that reduces emissions, I'm going to reward you. And so we have that happening here as well. So there's subsidies for heat pumps, for example, or electric vehicles. We're seeing subsidies for construction of electricity, electric, battery, battery, electric plants. So this is certainly part of that role as well. I feel like subsidies play a useful role in really nascent technologies, but driving decarbonisation with subsidies, it my view is going to be, we're not going to be able to afford the cost as a government, it's going to be too much for the government to try to replace everyone's heating system. With a subsidy. I think we're finding that out. In the case of the green Homes program, the government has pulled back here as a sight into fiscal cost.

 

Trevor Freeman  37:16

Exactly, yeah, it's popular because it helps, you know, those early adopters get that more expensive piece of technology. But to your point, we can't pay for every single one of those units, we can't provide that incentive. So it's creating more of an ecosystem that makes those make more sense. 

 

Nicholas Rivers  37:31

Yeah. 

 

Trevor Freeman  37:32

Okay. So that's great. Thanks very much, Nick, for enlightening us that we could probably spend an entire episode no question just talking about that. But I do want to push forward here on to some of these other questions. I want to dive into some specific sectors of our economy or some specific issues and understand from you the role of policy and help us drive the change that we often talk about on this show. So given the kind of where I work, and the nature of these podcasts, electricity is a big piece for us. So a constant theme on the show is how electricity is really one of the main tools that we have to decarbonize, we all know that a lot of aspects of our life that are not currently run by electricity, like our transportation and our heating, we are going to move to that fuel source as as our heating or transportation method. We're pretty fortunate in Ontario, that we have a really clean grid, it's a little bit over 90%, emissions free, meaning, you know, most of the generation of our electricity doesn't create GHG emissions. But there are other parts of the country that do rely more on fossil fuels. And to your earlier point, 90% is good, but it's not 100%, there is still that 10% that we need to decarbonize. So what are some of the tools in place now? Or something? Some things that are being considered that will help us move toward totally emissions free electricity generation in Canada?

 

Nicholas Rivers  39:02

All right, good question. So electricity is a big source of emissions on its own, producing about 10% of Canada's emissions. And as you point out, it is the central tool, which we're hoping to use to decarbonize all the other sectors. And that only works if the electricity industry is clean. And so I think you're right to point out, this is one of the first things we've got to tackle. Unfortunately, it is the big success story in Canada, emissions have been falling rapidly in electricity generation in Canada. And it's because of policy especially. One thing that we've done that's been really effective, and I mentioned it earlier, is an explicit policy to phase out coal fired power generation. coal generation produces about twice as much greenhouse gas per kilowatt hour generated as natural gas. It's very dirty. And so it's the first So you want to do what to tackle. And so Canada's federal government brought in a policy that said, by 2030, there shouldn't be any more coal generation on the grid. That's, it's a little late to the game. And that I mean, this is, I think, an important policy. But Ontario started phasing out coal in 2007. And I believe it was finished by phasing out coal in 2014. And that's why, to his credit, so clean right now, I learned as part of another project that Ontario had the biggest coal fired generation station in North America, which was one of the ones that was closed. As part of this, this coal phase out big local health improvements, as well as greenhouse gas improvements. 

 

Trevor Freeman  40:37

Yeah, that's important to say to you, there are other ancillary benefits here to policies.

 

Nicholas Rivers  40:42

I think, even if coal didn't produce greenhouse gas emissions, it would be worth closing it. And in fact that that was the reason for Ontario's coal phase out was a policy by the Canadian Association of Physicians for the environment that was worried about local health impacts, and they are dire, we lose about 10 million people worldwide every year from air pollution. So it is a sector that's really worth tackling on its own even without greenhouse gas issues. But it is a big greenhouse gas emitter. And that's the first thing we want to do. And we're being successful, there are some coal fired generating stations left in Canada, but they are many fewer than they were a decade ago. And, they will be phased out by 2030. I think before 2030, in most cases. Aster coal, which is the dirtiest fuel, we've got to tackle natural gas. Natural gas is going to be the main source of emissions in our electricity sector, once the coal is gone, and we're not yet in a position to get rid of natural gas from electricity grids. Natural gas is super useful, because it can ramp up and down really quickly. You can, I mean, I'm not an Electricity System Operator, but my understanding is you can basically flick the up switch and electricity, the gas turbine will go up, you know, in terms of power output pretty much right away. And then you can press the down switch and go down right away. That is not at all the case, for example, with a nuclear power station. 

 

Trevor Freeman  42:06

Exactly. Yep, exactly. 

 

Nicholas Rivers  42:08

And so gas is useful. And it becomes more useful when you put a lot of renewables on the grid, because renewables do fluctuate quite quickly. And, you know, if the sun goes behind the cloud, for example, or if the wind hits a gust, and so you want to be able to respond to those fluctuations with some other source that can go up and down quite quickly. And so we're using that natural gas for that role right now, that backup role. And, and there's not a, there's not a straightforward substitution for all of that gas capacity right now. I think in the near term, what we want to do is stop using or dramatically slow down using natural gas, for providing bulk energy. So bulk energy, I mean, not this kind of quick response function that natural gas plays, but the kind of 24/7 kind of energy that that we also need in society, we should be trying to displace gas's role in providing that, and we can do it relatively cost effectively. Now, with wind and solar electricity or nuclear power in Ontario. 

 

Trevor Freeman  43:11

Yeah, that's our base load is what we call that So absolutely, that that load that's always there, if we can make sure that load at least is completely carbon free, that's a big win for sure.

 

Nicholas Rivers  43:21

Exactly. And so I would say be looking for opportunities to get wind and solar, and maybe nuclear or geothermal to be providing that bulk energy and start retaining natural gas for uniquely that backup role. And we're starting to see regulations that are developed with that aim in mind. So Canada is currently consulting on what it calls its clean electricity regulation, which is designed to basically limit gas to a backup role by 2035. So it is a regulation that is intent on getting rid of gas as a provider of bulk energy, and limiting it to only providing, you know, a certain number of hours of year of backup capacity. So it's not saying you can't have gas on the grid, but it says you shouldn't be using gas to provide your main source of power. Gotcha. So that's a policy that's not implemented yet. It's being developed. It's being consulted on and we'll see what the final version of that policy looks like. But I think that's basically the right angle to be trying to limit gas to smaller contributions. And eventually, we're going to want to figure out another source of energy that can provide that kind of high frequency or high reliability backup power. And that's tricky to do. Because gas does play that unique role. And so it's not something we need to do right away, but it's something that we should be thinking about how to provide that in the future. 

 

Trevor Freeman  44:55

Yeah, I mean, that raises a great point and kind of leads into my Next question really well. There are certainly things we need to develop, things we need to figure out moving forward on, not just the policy side, but the technology side. In order to address what we have to do for climate change, what role does policy government play in supporting research and development of accelerating these new technological advances that we need, you know, in short order here? 

 

Nicholas Rivers  45:29

Another good question. Okay. Let me start by saying, for our short term climate goals, and our short term climate goal nationally, is to reduce emissions by 40%. By 2030, an ambitious goal, we have the technology we need. 

 

Trevor Freeman  45:44

Yeah

 

Nicholas Rivers  45:45

The IEA, the International Energy Agency, the Canadian climate Institute, have done reports that try to figure out, you know, what we might or what pathway we might follow to get emissions down to 40, or 50%. And the common assessment, and I think it's reasonable, is that we have what we need to cut emissions by half. So we don't need to invent anything new, right away. But to cut emissions to zero. And this is like a mid century 2050 kind of goal, we probably do need to invent some new technologies. Some things like I just mentioned, like figuring out ways to produce firm power. So that kind of firming role that natural gas plays that's clean, would be an example, or figuring out ways to provide zero carbon, long distance transport, or zero carbon, concrete or cement, for example, yet another example. So we do have things to figure out, by all means. I would say the government can play a really big role here. And the government does play a big role here. Maybe we're thinking about how technology gets better. Before we start thinking about what the government can do. technology gets better in two big ways. One is, like before it's ready to be sold on the market. technology gets better through a deliberate research and development process. And so this is firms, or universities or national labs, working on, you know, new types of renewable energy. There's lots of work, for example, new types of solar cells happening right now, or new types of batteries. And this is like the deliberate efforts to invent new technologies for research and development. But the other big way that technology can improve is through the deployment process. And in fact, I think most of the big cost improvements for new technologies happen on the latter side. So it's like we've left after we've invented the basic technology, the scale up process, the economies of scale, deliver big cost gains, and performance improvements. And what we call learning by doing. It's like this process of just getting better at doing something by doing it lots of times. And solar is a really good example of that. You guys have probably talked about how solar on this podcast is so important, but solar has fallen and cost 1000 fold over the last 40 years. Yeah, 1000 fold that's crazy. And much of the cost decline, adults, especially over the last 15 years, has been learning by doing has been us just getting really good at squeezing out all the inefficiencies in the manufacturing process and, and very small improvements, but continuous improvements in the efficiency process of like actually harvesting the solar energy in the cell, such that the cost has continuously fallen by by, well, I don't know exactly the number per year, we talked about a learning curve, falling per number of technologies deployed. So every time solar installations double, we tend to see about a 15 to 20% cost decline. 

 

Trevor Freeman  48:57

Gotcha. 

 

Nicholas Rivers  48:58

And so I would say that that learning process is important as well. And the government can play a big role in both of those processes. Right? It certainly supports basic research and development. And this can be academic or industry research. Candidates don't do a great job on this front, we have quite low return development, investments compared to poor countries, and so are kind of free riding on on r&d investments compared to more innovative countries. And then the other big role for the government would be in helping to deploy new technologies and spur along that learning by doing process. And so that could be like providing niche markets for new technologies or through government procurement. You know, government could might say even though this new technology is a little more expensive, we can see it has a long term future and we're gonna we're gonna we're going to commit to buying it for government purposes, and government itself is a really big market, so that can be a big incentive for them. For cost declines, and it can just, you know, spur deployment. So we're seeing that with electric cars right now, the government is providing subsidies for people to buy electric cars. And one of the reasons that it does that is to help improve the technology. 

 

Trevor Freeman  50:13

Yeah, and just for our listeners out there, you know, what, what Nicholas is describing is not unique to green technology to climate change technology. This is sort of a standard approach for technology development over the last, I don't know, centuries. Is that fair to say? 

 

Nicholas Rivers  50:31

Yeah, the early ones, the reports that I've seen on learning by doing came from airplane manufacturing, right. So when people were learning to make wide body airplanes, researchers observed the same kind of cost improvements in that process, as we're currently observing in, for example, batteries, or electrolyzers, or solar panels. 

 

Trevor Freeman  50:52

Yeah. And that's, that's encouraging, and that we kind of know as a society, how to help technology move along, if there's the political will. And then if ultimately the market decides, yeah, this is something we want, then that iterative process can happen to help get that cost down, as you said, learn by doing, figure out the installation cost, figuring out the manufacturing, supply chain issues, and really making a viable technology. 

 

Nicholas Rivers  51:17

Yeah. 

 

Trevor Freeman  51:18

Okay, so it's Trevor here, breaking into my own podcast. We're gonna pause there. As I said, at the beginning, this is really a long conversation. There's a lot to get through. And there's a lot more to that we talked about that Nicholas and I talked about, so we wanted to break it into two episodes. So this will be the end of Part One. Thanks for sticking with us and joining us today, and we look forward to having you back for part two that will be released at our next episode. So thanks very much, and we'll talk to you soon. Thanks for tuning in to another episode of The think energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps us spread the word. As always, we would love to hear from you. Whether it's feedback, comments, or an idea for a show or guests. You can always reach us at think energy at hydro ottawa.com