Get ready for the clean energy boom
Companies in oil-rich Canada are leading the way to a greener future
Are you ready for the clean energy boom?
Like a gathering tsunami, a flood of capital is bursting into the clean energy sector, nearly all of it destined to support photovoltaic (solar) and aeolian (wind) power generation, and the battery storage capacity needed to conserve their output.
For much of the past decade, China has been the undisputed leader in sustainable energy production, even as it continues to build and rely on coal-fired electricity for its basic needs.
Yet in the last five years, nearly every major energy company outside of the United States has moved from fossil fuels to an “all of the above” quest for energy production — using their proven record in investing and developing energy to pursue emerging technologies.
Now, coming out the economic shock of the Covid-19 pandemic, there is more and more evidence that companies are able to harness the capital flows necessary to make “alternative” fuels a viable replacement for the fossil fuel economy.
It’s particularly interesting that some of this capital is flowing into Canada, home to the world’s third largest oil reserves (behind Venezuela and Saudi Arabia), a robust democracy where the rule of law prevails in both public and private governance.
Equally refreshing, this is happening without government leadership or directive. In the petro-state of Alberta, investment in photovoltaic and aeolian energy generation now far outstrips new spending on oil and natural gas.
Jeff Bezos made a significant bet on Alberta’s abundant sunshine, with Amazon set to purchase all the energy generated by Greengate Energy’s $700 million Travers solar project. It is one of the largest solar farms in the world, in Vulcan County in southeastern Alberta, comprising 1.3 million photovoltaic panels spread over 3,000 acres: generating enough energy upon commissioning in 2022 to fuel the electricity needs of 150,000 residential dwellings.
While Bezos and similarly visionary entrepreneurs build a new energy economy in Alberta through long-term power purchase agreements that make clean energy projects immediately viable, it is clear that the rebound in fossil fuel prices is bringing a “jobless” recovery to Alberta’s traditional economic engine.
Knowing full well that no new oil sands extraction is going to be built, the major players are streamlining costs at their legacy fossil fuel projects through automation. Why pay a high school graduate $80,000 a year to drive up and down a road taking readings, when you can do that with a remote-controlled vehicle equipped with all the necessary equipment to replace a human?
Suncor, the pioneering firm in the Alberta oil sands and a dominant fossil fuel player for some five decades, already operates four wind power projects generating more than 100 megawatts (MW). It is looking at a strategic move into photovoltaic energy. And it owns Canada’s largest biofuels plant in Ontario, able to produce 400 million litres per year.
Moreover, as governments look to hydrogen (derived from natural gas) as a clean fuel source of the future, Suncor owns and operates one of the world’s largest hydrogen plants at its major oil sands installation (Mildred Lake) just north of Ft. McMurray. Right now, the hydrogen is used to crack long-chain molecules of gooey bitumen, to upgrade it into a hydrocarbon that can be more easily refined. Yet Suncor’s deep and long track record of producing safe and abundant hydrogen surely will be of increasing value, as the planet shifts to sustainable energy.
This energy shift is happening beyond the horizon of the current Alberta government, which overflows with inept ideologues displaying a remarkable talent for deflecting the puck into their own net. (The justice minister recently proposed arming everyone with pepper spray, empowering citizens to blind and stun one another in the name of “self-defence.”)
The provincial government is so fixated on turbo-charging the fossil fuel economy, that it actually tried to open up the pristine eastern slopes of the Rocky Mountains to open-pit coal mining — a habitat protected by previous Conservative governments for more than 50 years.
It is quite a feat to unite cowboys, ranchers, hikers, and environmental activists in a common opposition. Yet the provincial government’s partial retreat in the face of this united front satisfies no one: not least the Australian marauders still blasting the Rockies with seismic exploration, for coal mines that may never get the federal approval they need.
Meanwhile, the tide of private investment capital flows to cleaner energy sources. The Business Renewable Centre of Canada reports that 2021 already is setting records for renewable energy deals: all of them in Alberta.
This includes indigenous enterprises. Montana First Nation, one of four indigenous nations in the Treaty Six community of Maskwacis, is building an on-reserve solar farm after setting up its own energy company, Akahmik Energy.
Akahmik’s success may well pave the way for more indigenous clean energy projects. Meanwhile, Canadian First Nations are involved in advanced bids to take ownership of pipelines that deliver fossil fuels to international markets, and investing in a major project poised to ship Liquefied Natural Gas (LNG) to Asian customers. One can already foresee that the economic sovereignty enabled by revenues harvested from Indigenous ownership of legacy fossil fuel projects, carries the potential to make First Nations major players in the transition to a clean-energy future.
Meanwhile, some of the listed Canadian companies leading the transition are reaching record levels of investor interest.
Capital Power Corporation has deep roots planted long before Alberta became a province. Its origins lie in the Edmonton Electric Lighting and Power Company, a citizen-owned enterprise formed in 1891, to illuminate a frontier city on the high plateau leading to the Rockies. Capital Power is a classic illustration of a coal-fired power generator transitioning to a more sustainable future. It has a stake in multi-platform electricity generation in Canada, and the United States of North Carolina, New Mexico and Kansas. Its U.S. holdings include a portfolio of aeolian and photovoltaic projects. The firm generates energy from gas trapped in landfills.
As the firm’s corporate strategic plan puts it:
“We’re laying the groundwork to meet our goal of being net carbon neutral by 2050. Our power generation facilities are a hub of innovation and we are continuously learning, adapting, and developing to create clean, reliable and accessible electricity. We believe a holistic transformation of our energy system requires an “all-of-the-above” solution from our industry — one that expands our use of renewable energy, employs storage technologies to optimize those renewable sources and transitions to lower- and zero-carbon thermal generation with improved efficiency and minimal emissions.”
TransAlta Renewables Inc. is another energy company with century-old roots in Alberta. It has grown to twice the market capitalisation of the parent company that created it. It has done so on the strength of a portfolio of renewable and natural gas power generation facilities. Its basket includes 23 aeolian energy installations, 13 hydroelectric operations, seven natural gas-fired plants, a photovoltaic installation, a natural gas pipeline, and a battery storage project. Its reach goes well beyond its Alberta birthplace, spreading across Canada, reaching down to the United States of Wyoming, Massachusetts, and Minnesota; and into Western Australia.
Then there are Canadian firms that already have expanded beyond North America, to take a stake in the renewable energy projects multiplying in Asia and Europe.
Boralex Inc is strictly renewables: wind, hydroelectric, thermal and solar. Its major holdings are almost equally split between Canada and France, where it is developing a new portfolio of aeolian power generation.
Northland Power Inc. stretches beyond Canada and Europe to take a step in offshore aeolian power generation in Asia. Its expertise spans land and sea, based on offshore wind, thermal, biomass, and on-shore renewables.
These Canadian companies join major international players with chequered histories, who are firmly moving into a net-zero-carbon future.
One of the earliest to make the move is BP. Once known as British Petroleum, it was so powerful that its antecedent company engineered a 1953 coup d’etat that toppled a democratic Iranian government bent on nationalising its oil assets. It now says BP stands for “beyond petroleum”, and declares that “After more than a century defined by two core commodities — oil and gas — we are pivoting from an international oil company producing resources to an integrated energy company delivering solutions for customers.”
A similar path is followed by Royal Dutch Shell, historically notorious, among other things, for its intensely toxic operations in Nigeria. It declares a goal “to become a net-zero emissions energy business by 2050, in step with society’s progress towards the goal of the UN Paris Agreement on climate change.”
Even so, this private sector leadership is dwarfed by the state-supported growth of China’s clean energy economy. China has already exceeded the ambition stated in its 13th five year plan for socio-economic development, set in 2016: “We will make a strong push to advance the energy revolution, giving impetus to a transformation in the way energy is produced and used, improving the energy supply mix, and elevating the efficiency of energy utilization. We will build a modern energy system that is clean, low-carbon, safe, and efficient, and will safeguard the country’s energy security.”
Already the world’s largest producer of aeolian and photovoltaic energy, China is aiming to have at least half of its electricity generated from renewables by 2025: and is building 30 gigawatts of energy storage to accommodate this goal.
This is seen as a minimum target for the world’s most populous country, its cities often blanketed by choking fossil-fuel pollution: a problem it’s addressing by surging ahead with the mass production of battery-powered electric cars.
China’s accelerated energy transition is necessary to support the evolution of mass transportation: by the end of the last five year plan, China had built 30,000 km of high speed rail networks, which now span the country with fully electrified 325 km/h trains.
Our Canadian transition to sustainable energy, led by the private sector, has a long way to go before matching the scope and scale of China’s transformation.
Yet it is a necessary move, and all the more welcome that it is being fuelled by the brilliant sun and strong winds of Alberta.
satya@cambridgestrategies.com
