Canada’s energy transition: Finding balance in a complex landscape

As published in The Financial Post

How we power our homes, businesses and essential services has become a critical conversation. Increasingly, Canadians are concerned about the sustainability and cost of electricity generation. While idealizing a fully renewable and affordable electricity grid is easy, the reality is considerably more complex.

As the leader of one of Canada’s largest electricity generators, I believe it’s essential to recognize the progress that our country has made, acknowledge the challenges that we face and ensure our path forward enables us to power the prosperity and underpin the long-term sustainability of our nation.

Despite the polarizing commentary, I believe most Canadians share common goals regarding our energy future. We are concerned about the climate and want to seek sustainable solutions that will benefit future generations. We also want to ensure our lights turn on when we flick the switch, our furnaces fire in the winter and that we can pay our bill when it arrives. Canadians deserve reliable, affordable and sustainable electricity.

I think of the energy transition as a three-legged stool. All three legs — reliability, affordability and sustainability — must be balanced. Canada’s electricity sector has been a leader in emissions reduction. Today, our sector is more than 80 per cent non-emitting, but the path to a net-zero grid remains challenging and the final steps will need to be supported by thoughtful policy, strategic investments and technological innovation.

TransAlta is proud to be at the forefront of energy transformation. Since 2015, we’ve transitioned from operating nine coal-fired plants — responsible for five per cent of Canada’s total emissions — to zero coal-fired generation in Canada. We have reduced our emissions by 30 megatonnes annually, representing approximately 10 per cent of Canada’s Paris Agreement commitments. This is impressive progress.

Globally, we are facing rapid load growth driven by mass electrification, cloud computing and the rise of artificial intelligence. To address this demand, while continuing to support emissions reductions, we must carefully manage the next stage of the transition. As a country, we need to grow our generating capacity while ensuring the system remains reliable. And we need to do it affordably.

Alberta has made huge strides, tripling its renewable capacity since 2020. Yet in 2022, wind and solar provided only 15 per cent of the province’s electricity, while natural gas supplied 69 per cent.

The reason is straightforward: the wind doesn’t always blow and the sun doesn’t always shine. This doesn’t mean that we shouldn’t continue to invest in these resources — we should. However, we need to recognize that intermittency creates new challenges for the grid as renewable generation fluctuates, and complementary resources are needed to be available to enable the role that renewables can play. Managing these fluctuations will become increasingly critical.

Affordability presents a significant challenge. The construction of new energy infrastructure is capital-intensive. Today, we are experiencing rising material costs, supply chain disruptions, extended project timelines and regulatory uncertainties, all of which increase costs and create delays. When these challenges are compounded by an elevated interest rate environment, the economic hurdles to constructing new projects become even higher.

So, where does that leave us? While we are making great strides in renewable energy, the fact remains that the technologies needed to replace existing fuel sources, such as natural gas, are not yet fully developed or are not yet financially viable if we want to maintain an affordable grid.

Over the next period, we must carefully balance accelerating renewable development with reliability and affordability — existing technologies and assets, such as gas-fired generation, are going to be required for longer than we may have originally anticipated. Canadians rightly expect clean reliable power at a reasonable cost, and we must deliver

I am optimistic that Canada will achieve a net-zero grid, and companies like TransAlta will continue to work diligently to get us there. However, this will require time, significant investment and a collaborative effort between policymakers, investors, innovators and the public.

By fostering an environment that encourages innovation, provides regulatory stability and builds strong partnerships between the private and public sectors, we can achieve a future where energy is sustainable, reliable and affordable for all Canadians.