Net-zero analysis of Alberta’s electricity distribution system

The AUC has issued a report analyzing Alberta’s electricity distribution system in the context of achieving net-zero goals. The report, conducted by external consultant Guidehouse, was released January 24, 2024, and is available here.

Transitioning to net-zero is a focus of many organizations, governments and stakeholders in Alberta. The Alberta Electricity System Operator (AESO) recently concluded its own study, the Net-Zero Emissions Pathways Report on transmission and future cost impacts, as industry and regulators prepare to facilitate the directions reflected by government in the Electricity Statutes (Modernizing Alberta’s Electricity Grid) Amendment Act, 2022.

The AUC aimed to proactively assess the potential impacts of transitioning to a net-zero distribution system and to further understand the associated costs for consumers. The AUC also wanted to explore and understand how costs could be mitigated through thoughtful approaches that optimize the system.

With the rising adoption of electric vehicles, residential solar installations, and energy efficiency measures, the importance of understanding how technological changes may impact Alberta’s distribution system and the associated costs of these changes becomes more prominent.

Alberta’s electric distribution system delivers power to our homes and businesses. Across the province, the distribution system is maintained by distribution facility owners including ATCO Ltd., ENMAX Power Corporation, EPCOR, FortisAlberta Inc., the City of Lethbridge, the City of Medicine Hat, the City of Red Deer, and rural electrification associations. The system undergoes regular maintenance and upgrades; however, with changing and growing electricity demand, the reliance on a dependable distribution system also increases.

The AUC’s study closely examines how demand may increase and addresses considerations essential for maintaining an affordable and reliable system.

Study overview and results

According to the report, the cost of reaching net-zero for Alberta’s electricity distribution system could be approximately $3 billion by 2050, in addition to business as usual costs for distribution facility operators. However, substantial cost reductions – up to $800 million – can be achieved through system optimization.

The study predicts affordable, incremental costs for the distribution system during a transition to net-zero. These costs are expected to be driven by the need for substantial infrastructure investment, electric vehicle and residential solar adoption, and necessary enhancements to accommodate the deployment and electrification of distributed energy resources.

Three scenarios (baseline, net-zero, and net-zero optimized) were compared to assess the incremental net-zero cost on the distribution system by 2050, with costs varying with each scenario.

The net-zero optimized scenario forecasts investment requirements of an incremental $520 million of investment to 2035 and $1.8 billion to 2050. The cost reduction of around $800 million compared to the net-zero scenario is mainly due to an anticipated 35 per cent decrease in peak charging hours for electric vehicles. This forecasted shift is influenced by changing customer behaviors and adjusted rates to promote diversified and off-peak charging times.

Next steps

This report marks the first step for the AUC as it continues to gain valuable information to help guide the facilitation of the transition to net-zero, providing a framework for future work and refinement as the path to net-zero matures and becomes clearer. The AUC acknowledges there are several study-related limitations and opportunities for further refinement in both the technical and economic assessments in the future.

Technical session

The AUC will be hosting a virtual technical session on February 5, 2024, to provide additional information on the report’s findings and to answer questions from stakeholders.

Interested parties can participate and listen to the technical session through any of the following:

1. Attend in person at the Calgary hearing room.
   • Interested parties who wish to attend in person are required to register by contacting info@auc.ab.ca. The AUC requests that organizations limit in-person representatives to one person to accommodate other interested stakeholders.
2. Participate virtually on Zoom.
   • Interested parties who wish to ask questions virtually will need to register to participate in the session on Zoom.
3. Watch the session live on the AUC YouTube channel

A recording will be available following the session.