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Navigating the Redesign of our Energy Delivery System

The last decade has seen rapid technological innovation around the world. In Canada, we have experienced this firsthand as we can see how technology has altered the way we live our lives, in everything from how we work to how we communicate.

The energy sector has not been immune to these vast changes in technology. Where people can really see innovation is in how we manage and use energy, and in our ability to produce energy ourselves. 

The Energy System is Already Changing 

Policies to reduce carbon emissions and the need for new ways of managing energy, are two key drivers of  change in the energy system. Cost is another. Since 2009, the costs for wind have declined by 66%, and solar costs have seen a drop of 70%. Energy users are making economic decisions to move to new energy technologies.

The redesign of the conventional energy delivery system to cleaner energy is not only inevitable, but is underway. While the system will look mostly the same to the average Canadian, the rules and players may be vastly different and we have a lot to learn about how Canadians will be impacted by this transformation.

“The redesign of the conventional energy delivery system to cleaner energy is not only inevitable, but is underway.”

Energy users now have more choices in how they acquire, consume or even generate energy. As a result, utilities that previously held a near-virtual monopoly over energy services need to adapt. While utilities are trying to adapt at different speeds across the country, it is clear that our policies and regulations are falling behind. 

Pollution Probe and QUEST recently produced a report – Canada’s Energy Transformation – Evolution or Revolution? – that looks at how we can manage risk and create opportunities as we build low-emission energy systems. The report was made possible through funding support from Natural Resources Canada.

Local utilities in Canada are regulated companies, which means that public utility regulators, such as the Ontario Energy Board or the Alberta Utilities Commission, maintain control over what utilities can do. Regulation was introduced for a very good reason: energy is crucial and we have to ensure that affordable and reliable energy is available to all. Given this importance, any transformation must continue to ensure that access and reliability is maintained.

Talking to the Experts 

Pollution Probe and QUEST interviewed 46 energy experts in governments, utilities and regulatory bodies in every jurisdiction in Canada as well as select international jurisdictions to help us understand what is happening already in this space, and what we can do to move towards a low-carbon energy system. 

The experts interviewed all agreed that there were great benefits coming from innovation, but they also saw dangers. We need to be better prepared for the innovation coming, and we need to ensure that everyone benefits. 

After speaking with the experts, four key messages were identified: 

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Climate change policy drives energy policy: Unlike past energy transformations, policy on climate change is a key driver of this transformation.

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Where you stand depends on where you sit: Canada is a diverse country with plentiful energy resources in many forms. Different jurisdictions will experience this transformation differently.

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The pace of innovation has accelerated: Technology is rapidly altering the economics of energy, and energy users are moving fast in response. Policymakers, utilities and regulators need to avoid falling behind.

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We need to understand the implications now: Our laws and regulatory systems were not designed for the changes underway. We need to consider how to change them in a practical and sensible way. We need places where collaboration and innovation can flourish so everyone can benefit.

So What Do We Do? 

From these principles the report identified five areas of action: 

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Build a long-term vision: We cannot know what to do next unless we have a destination in mind.

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Anticipate, learn and respond faster: Change is coming, and we have to keep up to date.

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Address obsolescence risks: We want to ensure that we get all the value from all our energy infrastructure.

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Enhance efficiency but also plan for increased demand: Promote conservation, but anticipate that energy will also increase.

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Build a new balance between central and distributed power systems: Energy users will invest in new energy systems, such as smaller solar PV and even electric vehicles. We need policies to ensure that everyone can benefit from the new technology.

The experts we talked to agreed that it was not useful or necessary to throw out the current model of regulated utilities, which has worked for decades to provide affordable and reliable energy to Canadians.

What we do need is greater collaboration from everyone – industry, government and individuals. The future direction of our energy systems needs to be decided by all.

Stay Tuned 

This work has been the first step in documenting the energy transition taking place in Canada and our vision for supporting its evolution. Stay tuned for the next phase of this research from Pollution Probe and QUEST.

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Richard Carlson

Richard Carlson

Director of Energy Policy and Energy Exchange

Richard Carlson joined Pollution Probe in 2017 as Director of Energy Policy and Energy Exchange. Richard is a recognized expert on energy policy and engagement. Richard is a co-author on the joint Pollution Probe and QUEST Discussion Paper – Canada’s Energy Transformation – Evolution or Revolution? and works closely with QUEST on a number of other projects.

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