Hitting Net Zero will depend on storing more energy

by Justin Rangooni
December, 2022


(view the original article at
The Innovation Platform, Issue 12, December 2022, P. 188-190)


When we talk about decarbonising Canadian electricity, we tend to focus on how it is generated. How can we cost-effectively expand hydropower capacity? Where are solar panels and wind turbines best located? How can we fully capture the potential of new fuels such as hydrogen and ammonia?

All vital questions, to be sure.

But only increasing the generation of clean electricity is not enough, either to meet the growing demands of the system or the net zero goals Canada has set. We must also knit the system together, through the large-scale build-out of diverse forms of energy storage, which can optimise generation assets and help to advance Canada on its path to carbon neutrality.

Closing the gap

Our recent white paper, Energy Storage: A Key Pathway to Net Zero, quantifies, for the first time

in Canada, the scope of the build-out needed, providing a province-by-province estimate of the installed capacity required to optimally supplement Canada's grid as more green electricity sources are added. It is a significant amount - in the range of 8 to 12 gigawatts nationally by 2035.

Even at the low end, that is equivalent to Manitoba's entire installed generating capacity as of 2020. While energy storage is already on a healthy growth trajectory with recent announcements in Ontario and Nova Scotia, national installed capacity today is less than one gigawatt, meaning we have a big gap to close.

But we need to close it if we are going to successfully realise the dual imperatives of meeting more of our energy end-use needs with electricity, and of enlarging the proportion of the electricity that comes from renewables and other non-emitting resources.

Each province has its own unique electricity supply mix and will follow its own path to net zero. But the versatility of energy storage technologies will play a critical role in meeting electricity needs in all provinces, through maximising the efficiency and ability of existing and new generation, transmission, and distribution infrastructure. In addition, it could provide significant cost savings for customers.

For example, energy storage systems can be used to level out supply to urban centres and capacity­constrained areas, without incurring the cost of transmission systems upgrades. Additionally, energy storage will be instrumental in addressing the intermittent nature of wind and solar generation. And when paired with nuclear generation, energy storage can allow for more consistent and cost-effective production, decoupled from the vagaries of hour-by-­hour demand.

Versatility of energy storage technologies

Energy storage resources are a versatile, reliable, and evolving group of technologies that offer a range of stability-enhancing services to electricity systems, extending beyond the core attribute of technology's flexible capacity. But to fully unlock the value that energy storage can provide, policymakers and government agencies need to co-ordinate a revamp of the entire regulatory and legislative framework to include and accommodate energy storage.

Essential as energy storage is to our net-zero future, it simply was not a consideration in the relatively distant past when our electricity regulatory frameworks were created.

Currently, we lack even basic regulatory definitions of energy storage in some provinces, as well as clear expectations and processes relating to the crucial issues of project siting and inter-connections with electricity grids. System planning and procurement approaches need to evolve to ensure pricing and investment incentives reflect the reality of storage deployment and the scope of the savings and other benefits energy storage can provide.

Yet, a few key changes, if implemented by policymakers, could better enable energy storage's participation in Canada's electricity markets, with (of course) consideration for the distinct characteristics of each individual province, and ensure Canada reaches its net zero goals.

The first, and perhaps most essential, is to ensure the recognition of the unique capabilities of energy storage resources to act as both load and generation, which requires separate participation models to integrate them effectively into system planning, wholesale markets and real-time operations.

The variety of technologies represented by the term energy storage is reflected in the diversity of services these resources can provide to the grid if appropriate policy and planning are in place. Additionally, it is important this variability be considered when looking to site and connect these assets to the grid.

Different energy storage technologies - chemical, electrical, mechanical, thermal, industrial - and different durations, whether short or long, require different space and environmental considerations that need to be clearly delineated to ensure the resources are optimally placed, with full consideration of the diverse ways each asset can participate in the system.

The unique contributions energy storage resources can provide through energy arbitrage - shifting excess energy from low-demand hours to high­demand hours - needs to have an appropriate compensation mechanism as well. In wholesale markets, like Alberta and Ontario, there are real­time prices that can be used to determine the value, but this becomes more challenging in jurisdictions with vertically integrated utilities where there is no price signal to provide incentive to invest in energy storage.

Similarly, the unique value provided by long-duration energy storage, whereby assets can serve as direct capacity replacement for carbon-emitting resources, needs to be given consideration in terms of what alternate legislation or regulation may be required to ensure its participation compared to short- or medium-duration resources.

Energy storage resources sited in constrained areas can also defer or avoid new transmission or distribution investments. Using energy storage resources as non-wires alternatives (NWAs) increases the efficiency of existing networks, and the value-stacking capability of offering system peaking capacity and local system relief is critical to optimising all of Canada's electricity systems.

Canada's energy storage future

In short, the ambitious goals Canada has set to achieve a net-zero electricity system by 2035 are going to depend on more than additional electricity generation assets. Canada needs the versatility and reliability of all types of energy storage resources.

While each province has its own unique supply mix, in every province, energy storage can play a critical role in meeting the needs of every system and maximising the effectiveness of new and existing generation, transmission and distribution assets.

A co-ordinated effort between policymakers and government agencies can make this happen and we are excited to see what a net-zero electricity system with energy storage is going to look like in Canada.

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