What year would be complete without a year-end review of renewables? Certainly none is more deserving than this.
2015 was truly a year of momentous shifts in public, political and corporate perceptions concerning both climate change and the options available to address it.
We're betting that as a result and when they look back, the last 12 months will be seen as a pivotal year for the implementation of renewable energy - in Saskatchewan, across Canada and Globally.
So and with an eye to the ramifications for Saskatchewan in particular, what happened?
There have been three major trends over the year; Oil prices, Renewable costs and Climate Change.
CRUDE OIL PRICES
"So what!" you might say.
Actually it's been a major factor for Canada and Saskatchewan in the last year: so stick with us..
Brent crude oil prices: 2013 & 2014
Crude prices hit their 2014 peak, at just over $110 per barrel, before beginning a steep decline in June 2014 and ending the year just north of $60.
The reason: excess supply and softening demand - particularly in China and the Eurozone region.
WTI crude oil prices: 2015
High cost oil producers, of which those in Western Canada are no exception, were surprised but nonetheless hoped it was a short-term event which would correct in 2015.
In fact OPEC's biggest producer (Saudi Arabia) kept the pumps open, America's tight oil output saw no lack of momentum, the 'threat' of major new supplies from Iran hung over the market and China did not stage a stunning recovery (or even a minor one). As a result oil prices continued their downward trajectory through the year and this morning are at $37. This is having major political repercussions in economies around the world and particularly for Canada: more on that below.
RENEWABLE ENERGY ECONOMICS
2015 data shows that the cost of wind and solar power has declined more than 60 and 80 percent respectively in the last six years alone.
Of even greater relevance is how both are now competing with other generation options. The specifics are influenced by local resource availability but the broad trends are unmistakable, especially here in Saskatchewan with our world-class wind resource. Wind is now directly competitive with the cheapest, non-renewable, options and solar is rapidly becoming so;
The proof of the pudding is in the eating and, as far as renewables are concerned, it's down to installation rates. In 2015, and for the first time ever, the global installation of renewables is set to exceed that for non-renewables.
In the US, renewables - led by solar and then wind - have dominated;
One could write about the many blue-chip companies, investment banks and insurance firms which have announced low carbon initiatives. One might talk about individual government renewable energy proposals or, indeed, analyses conducted by think tanks, government institutions and religious denominations. But arguably the single best sign of progress is the Paris Agreement which, earlier this month, was adopted unanimously i.e. by all 195 UNFCCC participating states (and the European Union). Not bad considering there are 196 countries in the world. BTW - for those wondering - North Korea did not adopt the Agreement.
The usual suspects will say the Agreement is not legally binding and, even if it was, the targets contained within it will not serve to keep the world within the 2°C limit which scientists tell us is needed to avert dangerous climate change. But that would miss the point.
The point is that for the first time almost every country in the world came together to agree country-specific targets which, while not everything we might want today, are nonetheless aimed towards;
- global peaking of greenhouse gas emissions as soon as possible;
- rapid reductions thereafter in accordance with best available science, and;
- a shared goal of reducing net greenhouse gas emissions to zero by the end of the century.
International agreement on any one of these would have been almost unthinkable only a couple of years ago. All three simultaneously is a big, big, deal.
Canada does not exist in a vacuum and arguably the biggest factor in the equation has been the aforementioned low price of crude oil together with the seismic political change which it triggered.
Western Canada's big oil producers were surprised by the oil price decline which caused mass layoffs in the oil patch and reduced available cash for their usual lobbying/political efforts. This led to significant ramifications in their traditional political power base - primarily Alberta but also in Saskatchewan. It was manifest by a botched showing of the Progressive Conservative party in Alberta's May provincial election.
The NDP, under Rachel Notley, leveraged the opportunity to secure a surprise victory thereby ending the PC's 44-year reign. One of Notley's first post-election promises was to examine electricity generation with a view to substantially reducing greenhouse gas emissions. That review was completed in November when her Government announced that coal, which currently generates 55 percent of Alberta's electricity, would be phased out by 2030 and replaced with a mix of gas and renewables (led by wind).
With major political change in Alberta it was clear that the public was looking for change in October's federal election. Nonetheless ex-PM Steven Harper did not deliver. He presided over a lacklustre federal election campaign and on the 19 October was swept from power by the Liberals headed by Justin Trudeau. One of PM Trudeau's first promises was that he would meet with the Premiers, within 90 days, to hammer out a national plan to deal with climate change.
On to the good stuff..
New CEO at SaskPower. The big electricity-sector change was the appointment of SaskPower's new CEO, Mike Marsh, in April. In and of itself that was not particularly newsworthy: however his plans for the future of the electricity sector were (and are!).
In late April and only a couple of weeks after getting his feet under the table, he announced a major expansion in wind energy. Information at the time was limited to a statement of intent that, by 2030, 20 percent of installed generation capacity (which equates to 12 percent of electricity generation) would be wind energy.
This amount of generation from wind is not particularly challenging - especially given our world-class wind resource - however its significance lay in what it said about the change in tone at SaskPower and the new CEO's genuine intent to develop Saskatchewan's cost-competitive renewable resource.
At the time additional details were due to be released before the end of the Spring (i.e. June 19) but were delayed until November.
Report detailing weak economics at Boundary Dam Carbon Capture scheme. This 100-page report, written by SaskWind, was released in March. It was the first publicly available financial analysis of the $1.5-billion, publicly-funded, carbon capture scheme at SaskPower's Boundary Dam coal-fired power station (BD3). The report confirmed various government and industry studies which had estimated coal with carbon capture to be deeply uneconomic. It showed that the carbon capture component of BD3 would result in a loss of at least $1-billion over its 30-year operating life.
The report received minimal coverage in the local media but was the most viewed page on our web site from March through to December during which time the report itself was downloaded several hundred times. In the 8+ months since its release, neither SaskPower nor the SaskParty has refuted any of its numbers, calculations or conclusions. It would therefore appear that the report's conclusions are valid.
Put another way: BD3 demonstrated that coal with carbon capture is not the economically viable option which its proponents had hoped it would be. It also showed that there are many other substantially cheaper options - not least of which is wind energy. The demonstrably weak economics of BD3/coal + CCS must have played a crucial part in the major renewables announcement, in November, by the Premier and SaskPower...
Provincial plans to double renewable energy. Details of the aforementioned April wind energy package were, as noted, delayed by several months. The catalyst for their eventual release was the November leak, to the NDP, of a 2014 briefing memo from SaskPower to the Premier. The documents showed that the Boundary Dam carbon capture facility (BD3) was experiencing problems in commissioning. For a project of this size and given its world-first status, that was hardly surprising. Nonetheless the document led to several weeks of furious back and forth between the NDP and the SaskParty.
It is ironic that the debate during this time did not touch on the real issue - the $1-billion transfer of public funds to an oil company - and instead focused on what Premier Wall had told the public versus what was actually going on at BD3.
The matter came to a head on Wednesday 18 November when Premier Wall, speaking in the legislature, made the surprise announcement that, by 2030, 50 percent of Saskatchewan's electrical generation capacity would be renewable. This political statement was subsequently confirmed by SaskPower in a formal announcement the following Monday (23 November).
50 percent by capacity translates into about 45 percent of electricity generation and is double today's 23 percent. In purely financial terms it represents the need to invest approximately $5-billion in total or $300-million annually, just in wind and solar capacity, in the next 15 years.
That's another big deal!
..what's in store for 2016?
Saskatchewan - filling in the renewables gaps: The aforementioned renewable energy targets for 2030 are ambitious and also noticeable for the large gap between where we are today (25 percent renewables capacity) and where we need to be in 2030 (50 percent renewables capacity).
As a result expect 2016 to be the year in which much work will be devoted to filling in the gaps. Specifically: where, when, how and by whom will these projects be developed?
That process will undoubtedly see established, out-of-province, players seeking to profit from this $5-billion opportunity. As a consequence and in order to ensure that Saskatchewan's best interests are well represented, a new organization was formed in late November: SaskRenewables. Its stated purpose: "To assist SaskPower in maximizing the economic benefits, to Saskatchewan, of developing our world-class renewable resource."
Expect to hear much more from them in 2016. In the interim and to get a feel for what they are about, check out their seven policy priorities for 2016 and beyond.
Saskatchewan - provincial elections: April sees provincial elections. The Premier knows that voters love renewables which is why it is no coincidence that, in almost the last session of the Legislature before the April elections, the Premier announced the 50 percent by 2030 renewables goal. This represents the start of pre-election political horse-trading with renewables and electricity. Expect more of it in the months ahead especially given the imminent 'National Climate Strategy'...
Canada - National Climate Strategy: PM Trudeau advised, the day after the aforementioned Paris Agreement was adopted;
In other words that meeting is due to take place before 12 March. It seems almost certain that it will significantly influence electricity policies for individual provinces. In fact and given the 50 percent renewables target already announced by SaskPower, it seems that it may already be having that influence. Either way this is definitely one to watch in 2016.
So there you have it. 2015 was a truly momentous year for renewables in Saskatchewan and around the world. Believe it or not it looks as though 2016 will be even better - so hang on to your hats.
Have a great Christmas: we'll be back in 2016 and are looking forward to it!