Alberta to introduce rules to help align battery storage in electrical system

By COLLIN GALLANT on November 18, 2021.

cgallant@medicinehatnews.com@CollinGallant

Alberta will introduce rules to help align battery storage in the electrical system, the government announced Wednesday, stating changes are needed to govern and support the emerging technology.

That comes 10 months after the City of Medicine Hat announced to great controversy that it was studying how its lucrative power export business might be undercut by lower market prices that large-scale storage might bring.

Dale Nally, the associate minister of natural gas and electricity, announced the changes to the Electrical Statue Acts on Wednesday at an embargoed press briefing.

“We believe it’s a new technology that will do some important things for Alberta,” said Nally, later adding “forms of energy storage are increasingly becoming economically viable, and could take on a wide range of roles within the electricity system to support lower carbon generation and help manage system costs.”

He said the changes are in response to calls from utility developers and large power users looking to develop their own power plants.

If passed, changes would give Energy Minister the ability to draw up and institute new regulation in 2023 toward letting large power users co-locate on power production sites and be allowed “unlimited self-supply” capacity with export potential.

Stored power could also create a hedging system of holding back during low-price periods, then releasing power when bids rise in Alberta’s “energy only” market.

The overall effect would be more even pricing in the “free market system,” said Nally and ministry officials.

Such producers would become subject to new, but differentiated transmission fees that cover grid upgrades and maintenance, typically covered by consumers. Both generators and distribution companies would participate under a single permitting format.

Officials as well said managing storage and power flow through the open market system could also help avoid overbuilding power lines in order to deliver large amounts of power, especially from intermittent renewable sources.

Medicine Hat, which is shielded completely from transmission fees, would still have the ability to export power, but it is specifically barred from participate in storage trading, according to background information.

City of Medicine Hat officials plan to comment on the proposed changes on Thursday.

Last January the city’s utility division announced it was analyzing the future profitability of its power plant in light of growing storage potential and included the possibility of private sector partnership or sale.

That option was eventually removed after public backlash, but last month administrators described technological change in the utility sector as a major challenge to the city’s 110-year-old power business.

The general consensus last spring was that natural-gas fired power would be a key transition fuel and the outlook was steady for some time.

In the summer, however, Greengate Power told Cypress County council that it plans to build two large battery-connected solar projects in Southeast Alberta over the next several years at a cost of $1.3 billion.

Ministry officials said Wednesday the province’s utility regulator is aware of 15 energy storage projects at some stage of development. About 50 megawatts of storage capacity is currently in service, about enough to supply about 2% of the province’s average demand and only for a short time.

Widespread adoption, say ministry officials, would improve reliability, avoid some need to reinforce or build new transmission lines that are paid for by ratepayers (with the exception of Medicine Hatters), and help blend more zero-carbon energy into the system.

Solar and wind provide power on an intermittent basis, and in the case of wind, typically more in overnight hours when demand and therefore prices are low on the Alberta grid. All or a portion of that production could be stored to be sold during the high-use daylight hours, and for solar facilities as well, a portion “shifted forward” into the early evening when sunlight and production fall off but demand remains high.

New regulations wouldn’t specifically support renewables, but be open to all types of generation, including gas-fired, dual fuel or coal-fired production plants.

The Bill will also make it possible for regulators to assign a portion of provincial transmission fees to companies that choose a self-supply and storage and export model. Medicine Hat customers are shielded from the charges, which pay for grid maintenance and upgrades, due to its self sufficient status.

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