Canada slow to turn to offshore wind

U.S. Energy Crunch disrupts fuel and power markets, driving natural gas price spikes, coal resurgence, utility mix shifts, supply chain strains for EV batteries, and inflation pressures, complicating climate policy, OPEC outreach and LNG trade

Key Points

Supply-demand gaps raise fuel costs, revive coal, strain EV materials, and complicate U.S. climate policy and plans.

✅ Natural gas spikes shift generation from gas to coal

✅ Supply chain shortages hit nickel, silicon, and chips

✅ Policy tensions between price relief and decarbonization

A global energy crunch is creating pain for people struggling to fill their tanks and heat their homes, as well as roiling the utility industry’s plans to change its mix of generation and complicating the Biden administration’s plans to tackle climate change.

The ripple effects of a surge in natural gas prices include a spike in coal use and emissions that counter clean energy targets. High fossil fuel prices also are translating into high prices and a supply crunch for key minerals like silicon used in clean energy projects. On a call with investors yesterday, a Tesla Inc. executive said the company is having a hard time finding enough nickel for batteries.

The crisis could pose political problems for the Biden administration, which spent the last few months fending off criticism about rising fuel prices and inflation (Energywire, Oct. 14).

“Energy issues at this moment are as salient to the American public as they have been in quite some time,” said Christopher Borick, who directs the Muhlenberg College Institute of Public Opinion in Pennsylvania, where Biden stopped yesterday to pitch his infrastructure plan.

While gasoline prices have gotten headlines all summer, natural gas prices have risen faster than motor fuels, more than doubling from an average $1.92 per thousand cubic feet in September 2020 to $5.16 last month. By comparison, gasoline prices have risen about 55 percent in the last year, to $3.36 per gallon nationwide this week, according to AAA.

The roots of the problem go back to the beginning of the pandemic and the recession in 2020. Oil and gas prices fell so fast then that many producers, particularly in the U.S., simply stopped drilling.

Oil companies began predicting a few months later that the abrupt shutdown would eventually lead to shortages and price spikes when the economy recovered. Those predictions turned out to be accurate.

With the economy beginning to recover, demand for gas has gone up, but there’s not enough supply to go around.

While the U.S. energy crunch isn’t as severe as Europe’s energy crisis today, and analysts predict that gas prices will gradually fall next year, consumers could be in for a rough couple of months.

Here’s four ways the global energy crisis is impacting the United States, from the electricity sector to the political landscape:

What are the political repercussions?
For the Biden administration, the energy price hikes come amid fears of rising inflation and persistent supply bottlenecks at the nation’s ports as its climate ambitions face headwinds in Congress.

“The confluence of energy prices, logistical challenges and the need to move on climate have raised this to the top tier,” said Borick, who in the past has polled on energy and environmental issues in Pennsylvania.

Borick noted the administration is facing counterpressures: Even as it pushes to decarbonize the nation’s electric system, it wants to keep gas prices in check. High gasoline prices have been linked to declining political approval ratings, including for presidents, even if much of the price hikes are beyond their control.

White House press secretary Jen Psaki said earlier this month that the administration can take steps to address what it called “short-term supply issues,” but also needs to focus on the long term — and climate.

In hopes of capping prices, the White House has spoken with members of OPEC about increasing oil production — though OPEC has little control over natural gas prices. And earlier this month, the administration talked to U.S. oil and gas producers about helping to bring down prices.

That comes even as environmentalists have pushed Biden to ban federal fossil fuel leasing and drilling and stop new projects.

The moves to curb prices have prompted ridicule from Republicans, who have accused Biden of declaring war on U.S. energy by canceling the Keystone XL pipeline.

“The Biden administration won’t say it out loud, yet let’s admit it: There is a crisis,” Sen. John Barrasso (R-Wyo.) said this week on the Senate floor. “It is one that Joe Biden and his administration has created. It is a crisis of Joe Biden’s own making.”

The situation has also resurfaced comparisons to former President Carter, who struggled politically in the 1970s with gasoline shortages and other energy pressures. Some political scientists say, though, the comparison between the two isn’t apples to apples.

"In 1979, the crisis began with the Iranian Revolution, producing a supply shortage. In the USA, some states rationed the supply. That’s not occurring now. Oil prices were also regulated, another difference, “ said Terry Madonna, a senior fellow in residence for political affairs at Millersville University.

A Morning Consult poll released yesterday carried warning signs for Democrats with worries about the economy on the rise across the political spectrum.

Voters, however, were evenly split on how Biden is handling energy. Forty-two percent of respondents approve of Biden’s energy policy, compared with 45 percent who disapproved. The margin of error is 2 percentage points.

Will the electricity mix change?
Higher gas prices are giving coal a boost in some markets.

Atlanta-based Southern Co. told CNBC earlier this week, for instance, that coal was about 17 percent of the company’s power mix last year. That has changed in 2021.

“The unintended consequence of high gas prices is that coal becomes more economic, and so my sense is … our coal production has bumped up above 20 percent,” Southern CEO Tom Fanning said. “Now, how long that’ll persist, I don’t know.”

Fanning said “what we’re seeing right now, and the real challenge in America, is this notion of energy in transition.”

But the U.S. power sector has been evolving for years, with more renewables and less coal on the grid, and experts say the current energy crunch won’t change long-term utility trends in the industry.

“In general, I wouldn’t place too much emphasis on short-term fluctuations,” Jay Apt, a professor at Carnegie Mellon University, said in an email. “There is still a robust supply chain for most components needed for low-pollution power, including renewables.”

In fact, elevated fossil fuel prices, and high natural gas prices in particular, could accelerate the move toward wind, solar and batteries in some areas. That’s because power plants that run on coal and natural gas can be affected by rising and volatile fuel prices, as illustrated by the recent move in commodities globally. That means higher costs to run the facilities, even if power prices often climb along with gas prices.

“If I were a utility planner, this would cause me to double down on new generation from [wind] and solar and storage as opposed to building additional natural gas plants where, you know, I could be having these super high and volatile operating costs,” said Bri-Mathias Hodge, an associate professor in the Department of Electrical, Computer and Energy Engineering at the University of Colorado, Boulder.

Ed Hirs, an energy fellow at the University of Houston, said the current global situation doesn’t change the U.S. power sector’s overall move toward generation with lower operating costs.

For example, he said nuclear and coal plants can require hundreds of employees, and both have fuel costs. Hirs said a gas facility also needs fuel and may need dozens of employees. Wind and solar facilities often need a smaller number of workers and don’t require fuel in their operations, he noted.

“Eventually the cheap wins out,” Hirs said.

That isn’t even factoring in climate change — the reason world leaders are seeking to slash greenhouse gas emissions. Indeed, lowering emissions remains a priority among many states and big companies in the U.S.

Over the next 10 to 15 years, Hirs said, a key question will be whether battery technology can compete economically in terms of backing up renewables. He said a national carbon price, if enacted, would aid renewables and enhance returns on batteries.

“The real battle is going to be between natural gas and battery storage,” Hirs said.

Apt and M. Granger Morgan, who’s also a Carnegie Mellon professor, noted in a Hill piece last month that the U.S. gets about 40 percent of its power from carbon-free sources, including nuclear.

“Modelers and many power system operators agree that it is possible that renewables can cost-effectively make up roughly 80% of electricity generation,” the professors wrote, adding that other sources could include “storage and gas turbines powered with hydrogen, synfuels, or natural gas with carbon capture.”

What about EVs and renewables?
As for electric vehicles, executives with Tesla said on a call yesterday that supply-chain problems are the major brake on production for both vehicles and batteries.

Chief Financial Officer Zachary Kirkhorn said that the company’s factories aren’t running at full capacity because of an ongoing shortage of semiconductor chips. Customers are waiting longer for vehicles, he said, and wait lists are growing.

The challenges extend to raw materials. In batteries, Kirkhorn said, the company is having trouble finding enough nickel, and in vehicles, it is scrounging for aluminum. He said the problem is "not small," and that prices may rise as supply contracts come up for renewal.

The supply problems are creating "cost headwinds," he said, and so are rising labor costs. Tesla is not immune from the worker shortages that are plaguing the entire U.S. economy.

The production woes aren’t limited to Tesla: Automakers around the world have have had their output crimped by the chip shortage that accompanied the economic rebound after pandemic lockdowns. Unlike many other automakers, Tesla hasn’t been forced to pause its factory lines.

Tesla said it is poised to greatly expand its production of batteries for the electric grid — with a caveat.

Last month, Tesla broke ground on a new California factory to make Megapack, its 3 megawatt-per-hour lithium-ion batteries for use by power companies. That future factory’s capacity, 40 gigawatt per hour a year, is vastly more than the 3 GWh it made in the last calendar year.

However, today’s supply-chain problems are braking the making of both Megapack and Powerwall, Tesla’s battery for homes, Kirkhorn said. He added that production will increase "as soon as parts allow us."

Other advocates for EVs and renewable power expressed little concern about the supply crunch’s meaning for their industries, noting that higher prices alone don’t automatically trigger a broader green revolution on their own.

Those problems likely wouldn’t change the immediate course of the energy transition, researchers said.

"Short-term trends, week to week or even month to month, don’t matter much for investors or policy makers," wrote John Graham, a former budget official with the Bush administration and professor at Indiana University’s O’Neill School of Public and Environmental Affairs, in an email to E&E News.

The crunch may give policymakers a glimpse of the future, however, according to one minerals analyst.

"This isn’t going to be an outlier. I think increasingly you’re going to see pockets of the world start to feel these strains," said Andrew Miller, product director at Benchmark Mineral Intelligence, which focuses its research on battery minerals and battery supply chains.

The U.S. and its allies are only now beginning to develop their own supply chains for batteries and other key clean energy technologies, he noted. "The issue you’re facing, and this is one coming over time, is to have the platform in place. You have to have the supply chain of raw materials," he said.

"I think you’re going to see the most turbulence over the coming decade. … It’s not going to be a smooth transition,” added Miller.

How long will gas prices stay high?
The gap between natural gas demand and supply has led to severe price spikes in Europe, where utilities and other gas buyers have to compete against China for cargoes of liquefied natural gas, according to a research note from IHS Markit Ltd.

Here in the U.S., the causes are the same, but the results aren’t as extreme. Less than 10 percent of domestic gas production is exported as LNG, so American customers don’t have to compete as much against overseas buyers.

Instead, gas-hungry sectors of the economy have run into another problem, IHS analyst Matthew Palmer said in an interview. Gas producers have been cautious about increasing their output, largely because of pressure from investors to limit their spending.

“That theme has really put a governor on production,” he said.

The disconnect will likely mean higher home gas bills and higher electric prices this winter, although deep freeze events or warm weather could disrupt the trend, he said. The U.S. Energy Information Administration is predicting that average heating bills for homes that use gas furnaces will rise 30 percent this winter.

This comes as U.S. gas supply remains high, according to a biennial assessment from the Potential Gas Committee, a group of volunteer geoscientists, engineers and other experts.

Including reserves, future gas supply in the U.S. stands at a record 3,863 trillion cubic feet, up 25 tcf from levels reported in 2019, the group said Tuesday at an event co-hosted with the American Gas Association.

Of that total, so-called technically recoverable resources — or those in the ground but not yet recovered — are 3,368 tcf, the PGC said, down less than 0.2 percent from the last assessment.

The amount of technically recoverable gas went relatively unchanged from year-end 2018 for several reasons, including a lack of company activity in exploration efforts last year due to COVID, said Alexei Milkov, the group’s executive director.

Another factor is that basins mature and shale plays “cannot increase in resources forever,” said Milkov, also a professor of geology and geological engineering at the Colorado School of Mines.

Still, Milkov added, “We cannot tell you right now if we are on a new plateau, or if we are going to start seeing more growth in gas resources again, right, because it’s a complex issue.”

The EIA predicts that gas production will increase and prices will begin to drop in 2022.

David Flaherty, CEO of the Republican polling firm Magellan Strategies in Colorado, said prices could particularly hit seniors. But he said he expected the energy crunch to ease in the U.S. well before the election.

“By early summer, this is likely to be behind us,” he said.

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Texas Electricity Prices are shifting as deregulation matures, with competitive market shopping lowering residential rates, narrowing gaps with regulated areas, and EIA data showing long term declines versus national averages across most Texans.

Key Points

Texas Electricity Prices are average residential rates in deregulated and regulated markets across the state.

✅ Deregulated areas saw 17.4% residential price declines since 2006

✅ Regulated zones experienced a 5.5% increase over the same period

✅ Competitive shopping narrowed the gap; Texas averaged below US

Shopping for electricity is becoming cheaper for most Texans, according to a new study from the Texas Coalition for Affordable Power. But for those who live in an area with only one electricity provider, prices have increased in a recent 10-year period, the study says.

About 85 percent of Texans can purchase electricity from a number of providers in a deregulated marketplace, while the remaining 15 percent must buy power from a single provider, often an electric cooperative, in their area.

The report from the Texas Coalition for Affordable Power, which advocates for cities and local governments and negotiates their power contracts, pulls information from the U.S. Energy Information Administration to compare prices for Texans in the two models. Most Texans could begin choosing their electricity provider in 2002.

Buying power tends to be more expensive for Texans who live in a part of the state with a deregulated electricity market. But that gap is continuing to shrink as Texans become more willing to shop for power, even as electricity complaints have periodically risen. In 2015, the gap “was the smallest since the beginning of deregulation,” according to the report.

Between 2006 and 2015, the last year for which data is available, average residential electric prices for Texans in a competitive market decreased by 17.4 percent, while average prices increased by 5.5 percent in the regulated areas, even as the Texas power grid has periodically faced stress.

“These residential price declines are promising, and show the retail electric market is maturing,” Jay Doegey, executive director for the Texas Coalition for Affordable Power, said in a statement. “We’re encouraged by the price declines, but more progress is needed.”

The study attributes the decline to the prevalence of “low-priced individual deals” in the competitive areas, while policymakers consider market reforms to bolster reliability.

Overall, the average price of electricity in Texas (which produces and consumes the most electricity in the U.S.) — including the price in the deregulated marketplace, for the third time in four years — was below the national average in 2015.

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COVID-19 Impact on US Renewable Energy disrupts solar and wind projects, dries up tax equity financing, strains supply chains, delays construction, and slows jobs growth amid limited federal stimulus and uncertain investor appetite.

Key Points

COVID-19 has slowed US clean energy growth by curbing tax equity, disrupting supply chains, and delaying projects.

✅ Tax equity dries up as investor profits fall

✅ Supply chain and construction face pandemic delays

✅ Policy aid and credit extensions sought by industry

Swinerton Renewable Energy had everything it needed to build a promising new solar farm in Texas. It lined up more than 2,000 acres for the $109 million project estimated to generate 400 jobs while under construction. By its completion date, the solar farm was expected to produce 200 megawatts of energy — enough to power about 25,000 homes — and generate big tax breaks for its investors as part of a government program to incentivize clean energy.

But the coronavirus pandemic put everything on hold. The solar farm’s backers aren’t sure they will make enough money from other investments during the pandemic-fueled downturn for those tax breaks to be worth it. So the project has been delayed at least six months.

“This is not a shortage of materials. It is not a pricing issue,” said George Hershman, president of Swinerton Renewable Energy. “Everything was pointing to successful projects.”

The coronavirus crisis is not only battering the oil and gas industry. It’s drying up capital and disrupting supply chains for businesses trying to move the country toward cleaner sources of energy.

While President Trump has promised lifelines for airlines and oil companies struggling with a drastic decrease in demand as Americans remain under stay-at-home orders, there is little focus in Washington on economic relief for this sector, despite a power coalition's call for action to address the pandemic — unlike during the Great Recession a decade ago, when Congress and the Obama administration earmarked an unprecedented sum for renewable energy and more efficient automobiles in a stimulus bill.

“We don’t want to lose our great oil companies,” Trump said during an April 1 news briefing. He so far has not made a similar promise to help wind and solar firms, and none of the four economic rescue and stimulus packages that Congress has passed to respond to the coronavirus crisis set aside any money for renewable energy specifically.

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The impact of the crisis is already clear: About 106,000 clean-energy workers have already filed for unemployment in March alone, according to an analysis of Bureau of Labor Statistics data by Environmental Entrepreneurs, an advocacy group.

The layoffs are a blow to a sector that has prided itself on official projections that solar installers and wind turbine technicians would be the two fastest growing occupations over the next decade.

The job losses include not just wind and solar construction workers, but also those assembling electric cars and installing energy-efficient appliances, lighting, heating and air conditioning.

“These aren’t left-wing coastal hippies,” said Bob Keefe, executive director of Environmental Entrepreneurs. “These are construction workers who get up every day and lace up their boots and pull on their gloves and go to work putting insulation in our attics.”

Despite the economic turmoil, climate experts say the coronavirus pandemic could be an opportunity to make drastic shifts in the energy landscape, with green investments potentially driving a robust recovery. They say governments around the world should help fund renewable energy and use the turmoil in energy markets to remake the industry and slash carbon dioxide emissions, which will tumble 8 percent this year, according to the International Energy Agency.

The agency said that while global energy demand fell 3.8 percent in the first quarter, renewables were the only source to post an increase in demand, rising 1.5 percent thanks to new renewable power plants, low operating costs and priority on some electricity grids.

But many investors, who rely on a broad mix of investments, are spooked. “Everything is quiet because people want to see where we land with the current crisis, and people are holding on to cash,” said Daniel Klier, the global head of sustainable finance at HSBC bank. “As soon as people have a bit of confidence that the market is recovering, they can get projects going.”

Social distancing and the country’s stay-at-home orders are also having a deep effect on daily operations. The areas hardest hit are installing solar panels on rooftops and adding energy-efficiency measures inside homes — work that often requires face-to-face interactions. Sungevity, once one of the nation’s leading solar-installation companies, laid off 377 workers, most of its workforce, in late March, according to filings with California’s Employment Development Department. The company, which had emerged from a 2017 bankruptcy, cited economic conditions.

The push to promote a more fuel-efficient automobile fleet has also veered off track. The electric car maker Tesla was forced to shut down its factory in Fremont, Calif., just as it was turning up production on its new crossover vehicle, the Model Y.

Lockdown orders across the country led Tesla’s outspoken chief executive, Elon Musk, to launch into an expletive-laden rant during an earnings call last week in which Tesla posted a lukewarm profit of $16 million.

“To say that they cannot leave their house and they will be arrested if they do,” Musk said, “this is fascist.”

Sungevity and Tesla represent only a sliver of the economic pain in this sector across the country. The Solar Energy Industries Association had anticipated a growth in solar jobs, from 250,000 to 300,000, over the course of the year, said the group’s president, Abigail Ross Hopper. Now, she said, half the workforce is at risk.

“Shelter in place puts limitations on how people can work,” she said. “Literally, people don’t want other people inside their houses to fix electrical boxes. And there are no door-to-door sales.”

Bigger projects are also grappling with the pandemic economy, though not as severely. Hopper said the industry was geared up to increase the number of new solar farms, in part to take advantage of federal tax credits. “We were on track to do almost 20 gigawatts, which would have been the highest year yet,” Hopper said. That would have been enough to power about 3.7 million homes. Now she expects new projects will come closer to last year’s 13.27 gigawatts’ worth of new construction, after a report on utility-scale solar delays warned of widespread slowdowns, enough to run approximately 2.5 million homes.

Wind energy companies, too, are bracing for lost progress unless the federal government steps in. The American Wind Energy Association said projects that would add 25 gigawatts of wind power to the U.S. grid are at risk of being scaled back or canceled outright over the next two years because of the pandemic. Altogether, that work represents about 35,000 jobs.

“2019 was a good year for the wind industry,” said Tom Kiernan, the association’s chief executive. “We were expecting 2020 to be an even stronger year.”

One project put on the back burner: an enormous 9 gigawatt offshore wind venture led by the New York State Energy Research and Development Authority set to be completed by 2035.

With New York City besieged by coronavirus cases, the authority said it would comply with an executive order from Gov. Andrew M. Cuomo (D), “pausing” all on-site work on clean-energy projects until at least May 15. Michigan, New Jersey and Pennsylvania also delayed wind turbine projects by deeming construction on them nonessential.

The Danish offshore wind firm Orsted said that plans for offshore U.S. wind installations would move “at a slower pace than originally expected due to a combination of the Bureau of Ocean Energy Management’s prolonged analysis of the cumulative impacts from the build-out of US offshore wind projects, and now also COVID-19 effects.” The company told investors it expects delays on projects off the coasts of New York, New Jersey and Rhode Island totaling almost 3 gigawatts.

The supply chains have also taken a hit during the pandemic: Even if contractors can get the money to erect wind turbines or lay solar arrays, that doesn’t mean they will have the parts. At least two factories that make wind turbine parts — one in North Dakota and another in Iowa — were forced to pause production because of coronavirus outbreaks. Factory shutdowns in China have constrained solar supplies, too.

The key reason for delaying most big solar and wind projects is the use of tax credits known as “tax equity.” These allow investors, such as banks, to use the credits to directly offset their overall tax burdens. But if an investor doesn’t have enough profit to offset the credits, the tax equity could become worthless.

“If your profitability is going down, you don’t have the same appetite,” Hopper said.

Solar and wind industry leaders are pressing Congress and the Trump administration to extend the eligibility period for tax credits that are due to expire, with senators urging support for clean energy in relief packages, and to make the tax credits refundable, meaning the government would issue a check to investors who do not have enough profit to justify their investments.

Currently, big wind turbines get a 1.5 cents per kilowatt hour tax credit if construction begins before the end of this year. Tax credits for residential renewable energy — solar panels and small wind — phase out by the end of 2021, and debate over a potential solar ITC extension continues to shape expectations in the wind market.

The lack of attention to renewables in Congress’s relief efforts so far is in stark contrast to 2009, when the United States spent $112 billion to boost “green” energy, according to the World Resources Institute. The government’s package then provided a mixture of grants and loans for a variety of renewable energy ventures — including a $465 million loan Tesla used to get its Fremont factory off the ground.

This year, a handful of clean-energy firms, including a Connecticut-based manufacturer of fuel cells and an Ohio-based maker of energy-efficient lighting systems, took money from a federal small-business lending program, before funds ran dry in the middle of last month. Broadwind Energy, a maker of steel wind energy towers based outside Chicago, received $9.5 million in small-business loans, one of the biggest totals in the program.

So far, the Trump administration has shown far more eagerness to help American petroleum producers that the president said were “ravaged” by a sharp drop in energy demand. Last month, Trump met with oil executives at the White House, and Energy Secretary Dan Brouillette has floated the idea of bridge loans for struggling oil firms.

During negotiations for the last relief package, congressional Democrats tried to strike a deal to refill the nation’s Strategic Petroleum Reserve in exchange for extending the clean-energy incentives, but Senate Majority Leader Mitch McConnell (R-Ky.) rebuffed those calls.

“Democrats won’t let us fund hospitals or save small businesses unless they get to dust off the Green New Deal,” McConnell said in March.

Already, Democrats are signaling they will make a push again in the next round of stimulus spending.

“Relief and recovery legislation will shape our society for years to come,” said Rep. A. Donald McEachin (D-Va.), vice chair of the House Sustainable Energy and Environment Coalition, a caucus that supports renewable energy resources. “We must use these bills to build in a climate-smart way.”

But it remains unclear how much appetite the GOP will have for a deal. “I just don’t know how to handicap that at this point,” said Grant Carlisle, an analyst at the Natural Resources Defense Council, a major environmental group.

Kiernan, the head of the American Wind Energy Association, said his group has “gotten a very good reception with the administration and with the Hill” when it comes to coronavirus relief, but he declined to go into specifics.

In other parts of the world, governments have been providing support for renewables. The European Union has its own Green New Deal, and China is expected to support wind and solar to get the economy moving more quickly.

Some energy analysts note that big oil companies don’t have to wait for government stimulus. The price of oil is so low that they would be better off investing in wind and solar, they say.

“For all these oil companies, the returns on these renewable projects are better than what they can do in the oil and gas industry,” said Sarah Ladislaw, director of the energy program at the Center for Strategic and International Studies. “Now is a good time to do that and tell their investors.”

This fits in with their broader goals, analysts contend. After all, Royal Dutch Shell recently matched BP’s earlier promise to aim to be net-zero for carbon emissions by 2050.

Shell’s chief executive Ben van Beurden has said the company would try to protect its low-carbon Integrated Gas and New Energies division from the largest spending cuts as it sought to weather the pandemic. “We must maintain focus on the long term,” he said in a video message. “Society expects nothing less.”

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BC Hydro COVID-19 Bill Relief offers pandemic support with bill credits, rate cuts, and deferred payments for residential, small business, and industrial customers across B.C., easing utilities costs during COVID-19 economic hardship.

Key Points

COVID-19 bill credits, a rate cut, and deferred payments for eligible B.C. homes, small businesses, and industrial customers.

✅ Non-repayable credits equal to 3 months of average bills.

✅ Small businesses closed can skip bills for three months.

✅ Large industry may defer 50% of electricity costs.

B.C. residents who have lost their jobs or had their wages cut will get a three-month break on BC Hydro bills, while small businesses, amid commercial consumption plummets during COVID-19, are also eligible to apply for similar relief.

Premier John Horgan said Wednesday the credit for residential customers will be three times a household’s average monthly bill over the past year and does not have to be repaid as part of the government’s support package during the COVID-19 pandemic, as BC Hydro demand down 10% highlights the wider market pressures.

He said small businesses that are closed will not have to pay their power bills for three months, and in Ontario an Ontario COVID-19 hydro rebate complemented similar relief, and large industrial customers, including those operating mines and pulp mills, can opt to have 50 per cent of their electricity costs deferred, though a deferred costs report warned of long-term liabilities.

BC Hydro rates will be cut for all customers by one per cent as of April 1, a move similar to Ontario 2021 rate reductions that manufacturers supported lower rates at the time, after the B.C. Utilities Commission provided interim approval of an application the utility submitted last August.

Eligible residential customers can apply for bill relief starting next week and small business applications will be accepted as of April 14, while staying alert to BC Hydro scam attempts during this period, with the deadline for both categories set at June 30.

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UK Electricity Grid Investment underpins net zero, reinforcing transmission and distribution networks to integrate wind, solar, EV charging, and heat pumps, while Ofgem balances investor returns, debt risks, price controls, resilience, and consumer bills.

Key Points

Capital to reinforce grids for net zero, integrating wind, solar, EVs and heat pumps while balancing returns and bills.

✅ 170bn-210bn GBP by 2050 to reinforce cables, pylons, capacity.

✅ Ofgem to add investability metric while protecting consumers.

✅ Integrates wind, solar, EVs, heat pumps; manages grid resilience.

Prime Minister Sunak's recent upgrade to his home's electricity grid, designed to power his heated swimming pool, serves as a microcosm of a much larger challenge facing the UK: transforming the nation's entire electricity network for net zero emissions, amid Europe's electrification push across the continent.

This transition requires a monumental £170bn-£210bn investment by 2050, earmarked for reinforcing and expanding onshore cables and pylons that deliver electricity from power stations to homes and businesses. This overhaul is crucial to accommodate the planned switch from fossil fuels to clean energy sources - wind and solar farms - powering homes with electric cars, as EV demand on the grid rises, and heat pumps.

The UK government's Climate Change Committee warns of potentially doubled electricity demand by 2050, the target date for net zero, even though managing EV charging can ease local peaks. This translates to a significant financial burden for companies like National Grid, SSE, and Scottish Power who own the main transmission networks and some regional distribution networks.

Balancing investor needs for returns and ensuring affordable energy bills for consumers presents a delicate tightrope act for regulators like Ofgem. The National Audit Office criticized Ofgem in 2020 for allowing network owners excessive returns, prompting concerns about potential bill hikes, especially after lessons from 2021 reshaped market dynamics.

Think-tank Common Wealth reported that distribution networks paid out a staggering £3.6bn to their owners between 2017 and 2021, raising questions about the balance between profitability and affordability, amid UK EV affordability concerns among consumers.

However, Ofgem acknowledges the need for substantial investment to finance network upgrades, repairs, and the clean energy transition. To this end, they are considering incorporating an "investability" metric, recognizing how big battery rule changes can erode confidence elsewhere, in the next price controls for transmission networks, ensuring these entities remain attractive for equity fundraising without overburdening consumers.

This proposal, while welcomed by the industry, has drawn criticism from consumer advocacy groups like Citizens Advice, who fear it could contribute to unfairly high bills. With energy bills already hitting record highs, public trust in the net-zero transition hinges on ensuring affordability.

High debt levels and potential credit rating downgrades further complicate the picture, potentially impacting companies' ability to raise investment funds. Ofgem is exploring measures to address this, such as stricter debt structure reporting requirements for regional distribution companies.

Lawrence Slade, CEO of the Energy Networks Association, emphasizes the critical role of investment in achieving net zero. He highlights the need for "bold" policies and regulations that balance ambitious goals with investor confidence and ensure efficient resource allocation, drawing on B.C.'s power supply challenges as a cautionary example.

The challenge lies in striking a delicate balance between attracting investment, ensuring network resilience, and maintaining affordable energy bills. As Andy Manning from Citizens Advice warns, "Without public confidence, net zero won't be delivered."

The UK's journey to net zero hinges on navigating this complex landscape. By carefully calibrating regulations, fostering investor confidence, and prioritizing affordability, the country can ensure its electricity grid is not just robust enough to power heated swimming pools, but also a thriving green economy for all.

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BC Tidal Energy Micro-Grids harness predictable tidal currents to replace diesel in remote Indigenous coastal communities, integrating marine renewables, storage, and demand management for resilient off-grid power along Vancouver Island and Haida Gwaii.

Key Points

Community-run tidal turbines and storage deliver reliable, diesel-free electricity to remote B.C. coastal communities.

✅ Predictable power from tidal currents reduces diesel dependence

✅ Integrates storage, demand management, and microgrid controls

✅ Local jobs via marine supply chains and community ownership

Many remote West Coast communities are reliant on diesel for electricity generation, which poses a number of negative economic and environmental effects.

But some sites along B.C.’s extensive coastline are ideal for tidal energy micro-grids that may well be the answer for off-grid communities to generate clean power, suggested experts at a COAST (Centre for Ocean Applied Sustainable Technologies) virtual event Wednesday.

There are 40 isolated coastal communities, many Indigenous communities, and 32 of them are primarily reliant on diesel for electricity generation, said Ben Whitby, program manager at PRIMED, a marine renewable energy research lab at the University of Victoria (UVic).

Besides being a costly and unreliable source of energy, there are environmental and community health considerations associated with shipping diesel to remote communities and running generators, Whitby said.

“It's not purely an economic question,” he said.

“You've got the emissions associated with diesel generation. There's also the risks of transporting diesel … and sometimes in a lot of remote communities on Vancouver Island, when deliveries of diesel don't come through, they end up with no power for three or four days at a time.”

The Heiltsuk First Nation, which suffered a 110,000-litre diesel spill in its territorial waters in 2016, is an unfortunate case study for the potential environmental, social, and cultural risks remote coastal communities face from the transport of fossil fuels along the rough shoreline.

A U.S. barge hauling fuel for coastal communities in Alaska ran aground in Gale Pass, fouling a sacred and primary Heiltsuk food-harvesting area.

There are a number of potential tidal energy sites near off-grid communities along the mainland, on both sides of Vancouver Island, and in the Haida Gwaii region, Whitby said.

Tidal energy exploits the natural ebb and flow of the coast’s tidal water using technologies like underwater kite turbines to capture currents, and is a highly predictable source of renewable energy, he said.

Micro-grids are self-reliant energy systems drawing on renewables from ocean, wave power resources, wind, solar, small hydro, and geothermal sources.

The community, rather than a public utility like BC Hydro, is responsible for demand management, storage, and generation with the power systems running independently or alongside backup fuel generators — offering the operators a measure of energy sovereignty.

Depending on proximity, cost, and renewable solutions, tidal energy isn’t necessarily the solution for every community, Whitby noted, adding that in comparison to hydro, tidal energy is still more expensive.

However, the best candidates for tidal energy are small, off-grid communities largely dependent on costly fossil fuels, Whitby said.

“That's really why the focus in B.C. is at a smaller scale,” he said.

“The time it would take (these communities) to recoup any capital investment is a lot shorter.

“And the cost is actually on a par because they're already paying a significant amount of money for that diesel-generated power.”

Lisa Kalynchuk, vice-president of research and innovation at UVic, said she was excited by the possibilities associated with tidal power, not only in B.C., but for all of Canada’s coasts.

“Canada has approximately 40,000 megawatts available on our three coastlines,” Kalynchuk said.

“Of course, not all this power can be realized, but it does exist, so that leads us to the hard part — tapping into this available energy and delivering it to those remote communities that need it.”

Challenges to establishing tidal power include the added cost and complexity of construction in remote communities, the storage of intermittent power for later use, the economic model, though B.C.’s streamlined regulatory process may ease approvals, the costs associated with tidal power installations, and financing for small communities, she said.

But smaller tidal energy projects can potentially set a track record for more nascent marine renewables, as groups like Marine Renewables Canada pivot to offshore wind development, at a lower cost and without facing the same social or regulatory resistance a large-scale project might face.

A successful tidal energy demo project was set up using a MAVI tidal turbine in Blind Channel to power a private resort on West Thurlow Island, part of the outer Discovery Islands chain wedged between Vancouver Island and the mainland, Whitby said.

The channel’s strong tidal currents, which routinely reach six knots and are close to the marina, proved a good site to test the small-scale turbine and associated micro-grid system that could be replicated to power remote communities, he said.

The mooring system, cable, and turbine were installed fairly rapidly and ran through the summer of 2017. The system is no longer active as provincial and federal funding for the project came to an end.

“But as a proof of concept, we think it was very successful,” Whitby said, adding micro-grid tidal power is still in the early stages of development.

Ideally, the project will be revived with new funding, so it can continue to act as a test site for marine renewable energy and to showcase the system to remote coastal communities that might want to consider tidal power, he said.

In addition to harnessing a local, renewable energy source and increasing energy independence, tidal energy micro-grids can fuel employment and new business opportunities, said Whitby.

The Blind Channel project was installed using the local supply chain out of nearby Campbell River, he said.

“Most of the vessels and support came from that area, so it was all really locally sourced.”

Funding from senior levels of government would likely need to be provided to set up a permanent tidal energy demonstration site, with recent tidal energy investments in Nova Scotia offering a model, or to help a community do case studies and finance a project, Whitby said.

Both the federal and provincial governments have established funding streams to transition remote communities away from relying on diesel.

But remote community projects funded federally or provincially to date have focused on more established renewables, such as hydro, solar, biomass, or wind.

The goal of B.C.’s Remote Community Energy Strategy, part of the CleanBC plan and aligned with zero-emissions electricity by 2035 targets across Canada, is to reduce diesel use for electricity 80 per cent by 2030 by targeting 22 of the largest diesel locations in the province, many of which fall along the coast.

The province has announced a number of significant investments to shift Indigenous coastal communities away from diesel-generated electricity, but they predominantly involve solar or hydro projects.

A situation that’s not likely to change, as the funding application guide in 2020 deemed tidal projects as ineligible for cash.

Yet, the potential for establishing tidal energy micro-grids in B.C. is good, Kalynchuk said, noting UVic is a hub for significant research expertise and several local companies, including ocean and river power innovators working in the region, are employing and developing related service technologies to install and maintain the systems.

“It also addresses our growing need to find alternative sources of energy in the face of the current climate crisis,” she said.

“The path forward is complex and layered, but one essential component in combating climate change is a move away from fossil fuels to other sources of energy that are renewable and environmentally friendly.”

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