Extreme Weather and Alberta's AWOL Renewable Energy

00:00:04:11 - 00:00:32:20

Chris Keefer

Welcome back to Decouple. Today I'm joined by Chris Popoff. Chris is a engineer from Albert, I believe a mechanical engineer. He is the president of a engineering consultancy, which I'm going to get him to pronounce. I'm what I say, a lapsed Ukrainian. I have a hard time with words. A lot of whys in them. But Chris is also the co-founder of Terrestrial energy and my guest today to chat about Alberta.

00:00:32:22 - 00:00:58:19

Chris Keefer

Some pretty interesting news coming out today on the nuclear fronts and on the broader energy front, as the Alberta grid finds itself under some degree of strain with the polar vortex, which is, I guess, swept the middle part of this continent. So, Chris, welcome on the podcast. Perhaps you can give us the pronunciation of your engineering consultancy and if you want to fill us in a tiny bit more on your background, I'd be great to get to know you a bit better.

00:00:58:21 - 00:01:30:05

Chris Popoff

Yeah, you bet. Thanks for having me on the show, Chris. Huge fan and followed you right from the beginning and one of your biggest cheerleaders. So it's a real treat and pleasure. My consultancy is called Syzygy Engineering Consultants. It was never really meant to be a public brand, so I apologize for the mouthful that it is. And I'd say the most relevant and I guess it prior that I have that I'm most proud of for the decouple community is being a co-founder at Terrestrial energy.

00:01:30:07 - 00:02:01:13

Chris Popoff

I came to that, by the way, of my involvement in Alberta as a oilsands development engineer, and prior to that I had about a decade or so of previous experience in conventional oil and gas development extraction. So everything from the downhole up to the surface and had a a role where I had a bit of a wide ranging set of duties to have the different disciplines interact with one another.

00:02:01:13 - 00:02:32:18

Chris Popoff

And in delivering a concept of a project into licensing and then and then production. So my passion for nuclear started in that crucible, so to speak. Seeing how much resource that we have as a province and the contributions we make to the to the country and the planet through producing them and and marketing them to people who use them, but also in the tremendous amount of energy that we consume in doing that.

00:02:32:20 - 00:03:03:19

Chris Popoff

And it was very plain to see early on in my thermal oilsands career that Alberta was going to run into a marketing PR issue rather rather quickly with the emission intensity related with those operations and thought to get ahead of it. So that was kind of my genesis into into the nuclear space in western Canada. And other than that, I do a little bit of dabbling around serial entrepreneurship in general.

00:03:03:19 - 00:03:11:14

Chris Popoff

So inventing starting companies up, acquiring small businesses, operating them and doing that kind of thing. So thanks for having me on.

00:03:11:16 - 00:03:34:19

Chris Keefer

Awesome. Awesome. It's great to have you. And you're planting a big seed because certainly I think myself and my listenership are very interested in understanding unconventional oil a bit better. We've been chatting about cheap oil with a few different guests and some of the controversies around that. So looking forward to a future episode with you two to really deep dive and understand that better.

00:03:34:21 - 00:03:52:19

Chris Keefer

But for today, again, you know, I said this episode will be evergreen, I'm sure, in many respects, but there is I won't call it necessarily breaking news, but certainly I think you've been getting a lot of alerts on your cell phone, as many Albertans have regarding this this cold snap, and to please conserve electricity. The grid is under stress.

00:03:52:19 - 00:04:10:17

Chris Keefer

So why don't you first, you know, be a bit of a weatherman for us and tell us a little bit about what's been happening in Alberta on that front. And let's use that to go into a bit of a bit of a deep dive to better understand Alberta. I'm guilty of being one of those, you know, Ontario centric central Canadians.

00:04:10:17 - 00:04:37:00

Chris Keefer

Despite having wrangled horses out in Bragg Creek and up in the Yukon, spent some some lovely time in the in Alberta. I love it deeply, but I am Ontario centric, I think, in this new advocacy. So it's great to bring in that perspective. So, yeah, tell us what the weather's been like and then let's talk about how the grid has been handling it and, you know, how we've gotten to the point that we're at and then we'll jump into the nuclear announcement, the halfway point or something like that.

00:04:37:01 - 00:05:03:23

Chris Popoff

Yeah, sure. I'll forgive you for maybe your experience being a DiCaprio esque with your your adventures in Interbred Creek and Horses is Leo was famous for shooting some of his movie The Revenant out here and got caught making a comments to to some media about the phenomenon known as a schnook. I love it. So we we get we get a lot of cold in Alberta obviously being in our latitude.

00:05:04:01 - 00:05:28:22

Chris Popoff

We're on the east side of vast mountain ranges in the the continent. So we we enjoy many benefits from that. But one of them is the interesting effect that during a cold snap, the southern part of the province can experience these prolonged periods are very warm winds coming along and and melting the snow. I believe that word translates roughly into snow eater Chinook.

00:05:28:22 - 00:05:52:15

Chris Popoff

So I could be wrong on that. I might be buying into local myth because there are also salmon named after Chinook and that phenomenon doesn't tend to happen where where the salmon are. So and anyway, that's what it means to us. The Chinook don't really extend much beyond the central portion of the province around Red Deer, if you're familiar with where we live.

00:05:52:17 - 00:06:14:22

Chris Popoff

We also do not have tremendous amounts of lakes in in and around our major population centers as Toronto benefits from and places like Chicago. So we don't have lake effects, but we have other big affects like Chinook. And every once in a while we get a disruption from the polar vortex when it experiences a little bit of instability.

00:06:14:22 - 00:06:42:20

Chris Popoff

And, you know, I've lived here my whole life. So I, I usually expect to have about a week or two of very, very cold weather all the way down to the southern parts of the province. It gets as cold as -40 degrees Celsius, and that's where Celsius and Fahrenheit tend to overlap. Right. No more conversion required. And with wind chills, you know, you can get into -50 is as it feels on the skin.

00:06:42:20 - 00:07:16:09

Chris Popoff

So severely hazardous and life threatening for for people to be in those kind of conditions will stop working outdoors on drilling rigs and completion rigs when it gets that cold. But up to that, we we try to push and I think the the thing that is really important to understand about that is that, you know, materials, buildings, cars, machines, everything, they they're subject to a lot of extreme conditions in a very short amount of time.

00:07:16:09 - 00:07:43:19

Chris Popoff

In a place like Alberta, you can swing from a -40 centigrade sort of condition. And then if you get a nut blow through the next day, it's plus 20. Wow, that's a 60 degree swing in a matter of 24 hours. And that happens enough that it's not weird. And if you were a designer, an architect, an engineer, or someone that's contemplating putting a thing into these conditions, you've got to account for those thermal stresses.

00:07:43:19 - 00:08:02:12

Chris Popoff

And what that means, it tends to limit your material choices. You're forced to build for those edge cases where the conditions are the most extreme so that they can continue operating. And that's really relevant for something as complex and important as an electric grid.

00:08:02:13 - 00:08:18:11

Chris Keefer

Now, it's just just more broadly, again, for the international audience, I think Albert Albert is pretty well known around the world as you mentioned, Leo DiCaprio, I mean, a little famous there, but you've got the beautiful Rockies, you have the oil sands. Yeah, I guess you had a lot of or a decent amount of conventional oil and gas.

00:08:18:11 - 00:08:43:01

Chris Keefer

I mean, Alberta has certainly some resentments towards central Canada because I think of the, you know, our federal system and, you know, there's this Western alienation because I think a lot of Alberta's wealth has has gone to help out some of its provinces to the east. But again, just want to get a slightly better sense because, you know, there's been commentary about how, you know, Albertans are being told to conserve energy.

00:08:43:01 - 00:09:04:15

Chris Keefer

And this is one of the most energy rich places in the world. So just very briefly, give us that energy context for Alberta. You know, I understand that the the bitumen reserves are truly massive, not not the easiest to access and quite energy intensive to produce, but yeah, if you can just give us a quick little tourism Alberta take on sort of the underlying energy and then we'll dive back into the grid side of things.

00:09:04:17 - 00:09:35:00

Chris Popoff

Sure. And maybe, maybe we can get, you know, more into specifics and a richer history. Yeah, in future, definitely, definitely go to treat that. But broadly speaking there, Alberta's situated in a in a place that at one point in time was a very vast sort of tropical ocean. And as that evolved geologically, part of it got covered with sediment.

00:09:35:00 - 00:10:14:16

Chris Popoff

We had very tremendous coral reef structures that were present akin to the Great Barrier Reef as it exists today. But it gets buried with sediment and then as the mountain ranges form, they get sort of reorganized and pushed up into what we refer to as the Western Canadian sedimentary basin broadly. And that's basically from the eastern slope of the the Rocky Mountain ranges and extends out into where it will eventually outcrop to the surface on to the Canadian shield as you extend through Saskatchewan and into Northwest Territories and so forth.

00:10:14:18 - 00:10:40:22

Chris Popoff

So what happens is you get these little layers of sandstone that form and and get consolidated and you'll have various layers of clays that act as cap rocks for those formations. And that's sort of where conventional reservoirs are, you know, produced and access. And most people would think of oil bearing formations as one of these sandstone type formations.

00:10:40:22 - 00:11:03:18

Chris Popoff

So if you see a classic sort of building in downtown Toronto or Chicago and it's like that beautiful sandstone formation, it's pretty much exactly the same as that the carbonate reef that exists is what we would have as more of your sort of textbook world grade formation. These are the types of formations that tend to exist more in the Middle East.

00:11:03:18 - 00:11:34:17

Chris Popoff

They're very large and prolific. They they behave a bit differently. But the primary difference is one is like a sand cemented in place and then the other is like chalk. And where the oil sands are deposited are very near surface and in the sandstone type. But because it's somewhat young geologically and was not subject to a lot of depth and pressure from the overburden, they're cemented.

00:11:34:17 - 00:11:57:17

Chris Popoff

So you get these it's more like a sandbox. If you hold it in your hand and massage it, it will break apart. And the the bitumen actually acts as kind of a consolidating factor. It's kind of hard. It feels like a hockey puck at room temperature. So it needs to be encouraged to to move like conventional oil does.

00:11:57:19 - 00:12:42:12

Chris Popoff

Alberta has an abundance of a selection of resource types as well as a lot of some of those resource types. We traditionally develop the conventional type resources sort of as a captured sort of state to American oil interests early in the development cycle. We could talk a lot about that. So a lot of the capital and even the regulatory frameworks that set the stage for oil and gas development in the West were actually formulated by American minds, American interests primarily to keep already built or plan to be built.

00:12:42:12 - 00:13:17:08

Chris Popoff

American refineries fed and a lot of our resource tends to flow either south or southeast towards these major markets. And so Alberta's been more or less captive to a single customer for majority of its lifetime. And I think that's relevant for this conversation because of some of the things you alluded to with attitudes of people in Alberta towards energy, a lot of identity gets tied to a sense of identity.

00:13:17:09 - 00:13:47:14

Chris Popoff

It's tied to being an oil worker and or having family. This worked in oil and gas or agriculture is another popular sort of feeling farming. And it puts in place this resentment between western Canada and eastern Canada. I think it also speaks to the difference between the two regions where one in the east, central Canada is, you know, primarily as Toronto goes to the rest of the country goes.

00:13:47:16 - 00:14:24:23

Chris Popoff

And that's just the nature of demographics. In a democracy, there's way more people out there, the institutions are way more mature and established, and it's where government class, the bureaucratic class and the banking class resides. And they've been in cahoots for a very long time. And Western Canada has had little, you know, periods of increased importance over the past, but it's never really been able to be sustained where, you know, there was a point in time recently where Calgary had more corporate headquarters than Toronto, and that was a first.

00:14:24:23 - 00:14:54:01

Chris Popoff

For a while, there was movement to establish a major stock exchange here and we attracting some more of that capital into that banking class. But largely speaking, Alberta's institutions are not as Ontario's institutions have been able to accomplish so and that's relevant for for nuclear as well, in my opinion. We can get into that now.

00:14:54:03 - 00:15:19:06

Chris Keefer

I think that's that's great context as well, because part of the story of, you know, moving back to the grid in Alberta is federal interference there in terms of some of the goals of the current federal government in regards to some of, you know, its its climate environmental goals of, for instance, a net zero grid across the country by 2035, which I think many in Alberta see as as not realistic and potentially even dangerous.

00:15:19:06 - 00:15:38:10

Chris Keefer

And again, that brings us back to this current weather event. So you've done a great job, I think, of setting the table here for the rest of our conversation. But yeah, let's let's talk a little bit more about, you know, what makes up the Alberta grid. I understand that's Alberta's almost all the way through a coal phaseout having largely shifted to natural gas.

00:15:38:10 - 00:15:59:12

Chris Keefer

But there's certainly been some large additions of of so-called renewable energies, wind and solar. So maybe you can sort of give us a quick overview of of that current grid makeup before we start talking again into some of the politics of of of federalism as it pertains to kind of evolving energy conversations and now this interest in nuclear.

00:15:59:12 - 00:16:02:21

Chris Keefer

But for now, tell us about the Alberta grid.

00:16:02:23 - 00:16:36:07

Chris Popoff

Sure. The Alberta grid, as it evolved, it sort of evolved in lockstep with oil and gas infrastructure development. When people talk about grids, there's a focus, perhaps rightfully so, on on just the electric grid. However, in Alberta, it's quite relevant to discuss the fossil fuel grid. I sort of refer to it as the thermal grid, more or less due to the fact that natural gas gets utilized for space heating and in furnace heating for industrial uses.

00:16:36:09 - 00:17:24:06

Chris Popoff

And I mean, that's a traditional use. It's getting to be adopted more and more as an electricity generation fuel for a number of reasons. But conventionally, Alberta's grid was developed as around large centralized but remote coal fired power stations, primarily in the northwestern portion of the province. So just west of Edmonton region, more or less in and around Edmonton, with some extending further east and south and for a long time the major municipality of Edmonton and Calgary were kind of on separate grids and that's been connected recently.

00:17:24:08 - 00:17:55:07

Chris Popoff

We also have and that was largely on the back of the emergence of an overabundance supply of electricity from gas fired cogeneration from the oilsands. So you had a situation where in the Fort McMurray region where most of the oilsands deposits exist, a lot of producers were were getting more and more into putting cogeneration on their facilities for their own operation, but also to add another stream of revenue to their business on top of oil and gas sales.

00:17:55:07 - 00:18:25:11

Chris Popoff

They would sell electricity and that was just putting too much supply onto the northern grid and the lack of inter ties into British Columbia versus Scotch when left with no place to go. And it's not exactly something that's easy to curtail when it's coming from an industrial operation that's running 24 seven. So there there was investment made to increase the inter ties and the connections between the North and South and the south, also connection to Montana.

00:18:25:13 - 00:19:10:06

Chris Popoff

So over time, as of the Harper government enacted some regulations to retire coal fired power, Alberta and its generating generation owners made motions to to begin shutting them down. Rachel Notley NDP accelerated that transition by encouraging It's for lack of a better word, those those generators to take an option to retire early. And that really set off repowering projects that mostly utilize the existing plant infrastructure, the personnel, etc. into gas fired turbines as opposed to coal fired turbines.

00:19:10:08 - 00:19:54:22

Chris Popoff

We have pretty limited coal capacity remaining, but that transition will be more or less complete before before the end of the decade. Here. It's important to note, too, that when those decisions were made, those turbines were selected to also allow for flexible fuel in a sense of being able to use natural gas with increasing amounts of hydrogen blend in it, because there is quite a motion afoot as well for Alberta to to leverage its resource abundance in producing just hydrogen and that's one of the proposed sort of alternatives that there's a lot of proponents for.

00:19:55:01 - 00:20:07:05

Chris Popoff

I personally feel there's there's severe limitations around hydrogen as well as renewables, that we need to be honest with ourselves about when we're actually integrating them into our power supply.

00:20:07:07 - 00:20:30:09

Chris Keefer

So that brings us, I guess, to I mean, first off, just one clarifying question, like what percentage of Alberta's electricity generation is from these cogeneration plants and I guess they're coming on maybe interrupting some of that industrial heat supply work to sort of take advantage of high market prices on the grid, or are they kind of providing baseload or how does that work?

00:20:30:11 - 00:21:00:16

Chris Popoff

Yeah, that's a great question. If you looked at the way the generation mix has changed over the last few decades, it was, you know, strongly weighted towards coal and and natural gas. So you'll see commentary where 80% or greater of of electricity demand was satisfied by fossil fuels. And as the transition has occurred, it's still regarded as fossil fuel powered, but just less and less contribution from coal.

00:21:00:18 - 00:21:53:22

Chris Popoff

If you look at the contribution from natural gas, it is a mixture of natural gas and cogeneration. That split is still primarily provided by the dedicated gas fired plants, but the coal generation contribution is significant and the way those plants are operated, they're serving their steam requirements. First, the electricity production is a happy byproduct of that. So the decisions that get made to to run Cogen or not are mostly affected by the steam schedule and not very affected by what whatever the grid is, request thing or offering in terms of a price to two co-generation producers.

00:21:54:00 - 00:22:16:01

Chris Keefer

Okay. So let's let's say gas cap off this discussion with the new kids on the block and that would be the intermittent wind and solar that's that's been added. You know, we had our experience here in Ontario with a pretty rapid deployment under the energy vendor light of our Green Energy Act, which saw, I think about 5000 megawatts of wind added.

00:22:16:01 - 00:22:33:09

Chris Keefer

And I get confused because a lot of behind the meter solar, but I think in total and I go out on a limb here and say about three gigawatts of solar in Ontario, that was a little before I think Alberta's sort of great renewables build outs. There's now a moratorium on new wind and solar in Alberta. So, you know, lots to discuss here.

00:22:33:09 - 00:22:39:18

Chris Keefer

But but yeah, catch us up a little bit on on the the wind and solar side of things or the renewable side of things in Alberta.

00:22:39:20 - 00:23:06:08

Chris Popoff

Yeah, absolutely. So one of the one of the other famous or claims to fame for Alberta is that we're actually one of the sunniest places on earth year round despite our cold weather. We do have a tremendous amount of sun like ours as a resource. Our high latitude means that the strength of that solar resource is, you know, as prolific as somewhere and Arizona.

00:23:06:10 - 00:23:28:04

Chris Popoff

But the the amount that we get it honestly makes our winters bearable to have the right So and and we also have some corridors that are also quite windy and again the benefit of of the mountain. So if you've ever been through that corridor between Los Angeles to Palm Springs, you get this wind tunnel sort of a fact.

00:23:28:04 - 00:24:01:12

Chris Popoff

And we we have smaller versions of that in different places in the province. Famously, most famously in the sort of eastern slopes region and in the southeast portion of the province. So prolific and abundant. And absolutely, when you live in a a free market like Alberta, where investment is encouraged and entrepreneurship is encouraged, you'll see a lot of capital coming in and chasing these opportunities.

00:24:01:16 - 00:24:42:16

Chris Popoff

And then it's it's sort of up to the rest of the system to to integrate that we're in an energy only market. So generation is deregulated and that is done to allow for competition to occur on the generation side, the distribution, so the wires portion of it and the delivery is regulated. So it's an interesting sort of mix and it's very difficult to talk about energy sometimes with people that aren't necessarily in the space or they have a strong bias one way or another because, you know, you can see their their bias is showing based on how they they represent the conversation.

00:24:42:18 - 00:25:17:11

Chris Popoff

But, you know, cheap wind and solar doesn't always mean quality and cheap may only mean cheap to the person who's making the investment decision for generation only, which means their area of concern ends at the edge of their property. It is not extended to the end consumer. I think the other thing that's important for people to understand, we talk a lot about the energy grid and cleaning that up the electric grid, but electricity is only 7% of our end use consumption.

00:25:17:11 - 00:25:51:14

Chris Popoff

In this province. We have about a 12 gigawatt grid, so respectable, modern, but a tiny fraction of the total energy that we consume as a province. A lot more goes into combustion for generating steam for our oil sands production, running petrochemical plants, refineries and things of that nature, and then taking natural gas liquids and condensates in kind and either blending them with our bitumen or using them as a source of hydrogen to upgrade the bitumen into a higher energy product.

00:25:51:16 - 00:26:19:00

Chris Popoff

And that's what I refer to as energetic subsidization of our product. And so when you look at Alberta's energy consumption and their demand profile, we're being either dishonest with ourselves about where the real work needs to be done or we're just we're buying into the discussion about the electric grid. And I don't know, we're both missing opportunities and maybe putting our efforts into the wrong area.

00:26:19:03 - 00:26:23:02

Chris Popoff

Personally, that's my opinion.

00:26:23:04 - 00:26:24:05

Chris Keefer

So, you know, you we.

00:26:24:05 - 00:26:27:20

Chris Popoff

Have maybe remind me, remember where we started with that question?

00:26:27:22 - 00:26:29:19

Chris Keefer

No, no, that that's good. That's so I wanted to.

00:26:29:19 - 00:26:31:02

Chris Popoff

Make that point.

00:26:31:04 - 00:26:58:10

Chris Keefer

No, it's a great point. In Ontario, you know, we have the lake effect, which means that our wind in particular is most abundant in our shoulder seasons of spring and fall, when our demand is actually at its lowest. So the capacity value, the value of that energy is is fairly low and often displaces cheaper hydroelectricity. So, you know, many of us think that it wasn't the greatest investment or certainly that we overinvested, built a little too much of it.

00:26:58:12 - 00:27:21:23

Chris Keefer

And, you know, new investments have petered out as the feed in tariffs were or dropped. But in Alberta, Do you tell us a little bit about, again, that kind of capacity value of the resource is when producing in sync with with demand. I mean, I know I don't mean to ask too loaded of a question. I know certainly that during this cold snap wind in particular has has had a pretty egregious performance.

00:27:21:23 - 00:27:28:05

Chris Keefer

Can you can you walk us through, again, tying things back in to your current sort of weather reality?

00:27:28:06 - 00:28:01:16

Chris Popoff

Yeah, sure. In extreme conditions like this, I refer to them as edge cases. These are what system designers and planners, you know, stay up at night thinking about wind and solar are somewhat predictable and you can think about them in terms of being able to be there through seasons. You can look ahead with weather forecasts with, you know, some reasonable amount of predictability.

00:28:01:18 - 00:28:26:17

Chris Popoff

But the fact is that every once in a while you get these extreme conditions that push it right to the edge and it's no longer a matter of, you know, using averages or saying you can just knuckle down and get through it. Wind is fairly steady in Alberta as an aggregate due to some of those wind tunnel type effects.

00:28:26:18 - 00:28:49:05

Chris Popoff

It does tend to blow a little bit stronger in the evening past conventional sort of peak demand on the grid as well. But again, you can't plan on it because it won't necessarily be there, which means you need to to build out back backup. You either need to have storage or you need to have redundancy in your grid.

00:28:49:06 - 00:29:28:00

Chris Popoff

And that typically gets considered when other large thermal plants get put on the grid, as in our first attempt, major serious attempt to bring nuclear into the province with Energy Alberta Corporation, and then eventually Bruce Power found out they were proposing fairly large reactor types at that point in time relative to the grid and the system operator was concerned that if there was ever an event where that that generation source tripped, they wouldn't be able to make up a gigawatt worth of generation in the matter of moments.

00:29:28:02 - 00:29:58:17

Chris Popoff

So the net effect of having, you know, four gigawatts worth of wind on the grid and then all of a sudden it's not it's a similar sort of problem, but because you build out these turbines a little bit at a time, 50 megawatts here, 100 megawatts there, they don't really get subject to the same level of scrutiny and questioning when having to account for that fallout or that trip condition more or less.

00:29:58:17 - 00:30:26:04

Chris Popoff

What is our backup, what is our redundancy? And when it happens randomly, more or less, I mean, it creates these severe conditions that the grid may actually fail to operate. And that puts you in a position where you're doing cold starts on thermal assets that may not have been running or they've been shut down just due to the grid being unable to take their supply.

00:30:26:06 - 00:30:50:16

Chris Popoff

And if you're trying to do that in the middle of a -50 polar vortex storm with precipitation on top of that, it can be absolutely awful and you may not get up. And then you're looking at a truly dire situation where harm to two people and property are really severe. I don't want to ever see that happen. I don't think anybody does.

00:30:50:18 - 00:31:14:17

Chris Popoff

And that's really where we need to be coming from when we're having these conversations and not trying to pitch our preferred solution more or less, or to promote the talking points of whatever political group that we we are subscribed to at the moment. It should be noted, too, that gas is subject to I mean, everything fails in conditions at extreme.

00:31:14:18 - 00:31:47:17

Chris Popoff

The oil and gas industry in Alberta obviously has learned a lot of lessons from that. We we do a lot of cold weather hardening or winterization. We use a lot of insulation on the pipelines. We do injection of antifreeze for lack of a better term. At points in the system where we know they're they're more susceptible to hydrates or ice gas ice forming, which get exacerbated with really, really extreme ambient conditions like that.

00:31:47:18 - 00:32:20:02

Chris Popoff

You don't see that in other warmer climates where they do have major gas networks built, you know, East Coast down into Texas. They don't go to the extent of Alberta practices when it comes to winterization. So we're not we're more prepared for extreme conditions on the gas side, but we're not immune. And in this most recent example, there were two gas fired plants that were already down due to maintenance.

00:32:20:04 - 00:32:40:10

Chris Popoff

What one was really just trying to get onto the grid to begin with and the system operator doing all the math and all their homework thought, Hey, we look good, we should be fine. But every once in a while a little event like this comes along that, you know, proves us wrong. And then and then we have to scramble to respond.

00:32:40:10 - 00:32:43:08

Chris Popoff

And that's where that demand response came in.

00:32:43:10 - 00:33:06:20

Chris Keefer

You know, there's there's obviously some echoes, I think, for us listeners to the Texas freeze. I believe that's two years ago now and 2021. And there the gas infrastructure was not as winterized or winterized. The nuclear infrastructure, I believe there's a turbine hall or two that are just fully outdoors at the nuclear plants. There was exactly there was a trip at a nuclear station.

00:33:06:20 - 00:33:31:23

Chris Keefer

But I think in terms of the capacity factors weathering that storm, nuclear led the pack. I think 80% capacity factor. You know, gas lines froze. There was, I guess, problems of supply, coal piles froze. And the similarly the when the wind fleet and solar fleet were were absent, now they've made massive investments in in those technologies and you know the champions of these technologies to say, hey, listen, we never promised we'd show up.

00:33:32:01 - 00:33:56:04

Chris Keefer

So it's not our it's not our fault. But I mean, this does raise the question of of investment choices. You know, and as you mentioned, with that idea of a large wind fleet acting like a very large nuclear plant or potentially several nuclear plants tied together, this this idea think Meredith Angwin brought this up of a common mode failure and she was referencing this idea of like a, you know, a twin engine jet or even a four engine jet.

00:33:56:04 - 00:34:14:19

Chris Keefer

And you know, engineers really having to think through and deal with, you know, contingencies. And if all four jet engines going on on a A-380 Airbus, big, big problems. But in ways, you know, a system made up of, you know, small modules, if they are all subject to the same stressor or power source being the wind, they they can go off quickly.

00:34:14:19 - 00:34:48:12

Chris Keefer

So in any case, this would probably tie into, I guess, the the renewables moratorium that Alberta's going under right now. Is this weather event like a vindication of that policy given how the wind fleet, for instance, just has not shown up and then not been of any assistance, you know, investing more in this resource? You know, while it may have some benefits in aggregates or in shoulder seasons or, you know, in terms of sparing fossil fuels or lowering carbon intensity slightly, is this kind of why that decision was made in terms of how it was justified to the public?

00:34:48:14 - 00:35:27:10

Chris Popoff

That is, that's a hot potato sort of question. My personal opinions definitely get me in hot water on that topic and I'm not I'm not afraid to share them here. I think there's there's a number of reasons that that decision got made. One of them is the theater of it. Of course, it helps the party in power currently, which is more or less a pro oil and gas party to back their base up and to show support for the industry, which is popular, whether it's accurate or not.

00:35:27:12 - 00:36:11:01

Chris Popoff

So certainly I think that's a factor. But leading up to the moratorium and that decision, we were experiencing many, many cycles of that absenteeism. Like you said, the well, we weren't counting on it. That is a very strange attitude. If you're someone that designs these sorts of grids and has the concern for others and, you know, factors like uptime and and health factors in your heart, it's sort of why I consider I wind and solar narcissistic supply because it's like, well, I'm going to show up when I feel like it and when I'm here, I'm amazing.

00:36:11:01 - 00:36:38:01

Chris Popoff

I'm the best, I'm the lowest carbon, I'm the cheapest. And if you have criticisms of me, well, they're not true. That's up to you to fix. That's a you problem. That's a classic narcissist if you deal with people like that. So I look at that presence of wind and solar on a on a grid or a society is as that sort of like an absentee dad or, you know, just a real deck, someone to deal with.

00:36:38:03 - 00:37:11:18

Chris Popoff

And they're asking us to to bend to their will. And I just find that is completely incompatible with modernity and the needs of a modern, industrialized society. And sure, it is possible to do the math, to contemplate the worst of worst case scenarios and say, okay, well, let's call it two weeks of no supply from wind or solar for whatever reason, terrible blizzards, ice storms, etc. Here's how many batteries you'll need to invest.

00:37:11:20 - 00:37:52:23

Chris Popoff

Or one proposal that was out here was converting old coal mine sites in the eastern slopes into pumped hydro storage. We do not have tremendous hydro resources in Alberta at all. We have some pretty big rivers that have potential, but nothing like Ontario and Quebec and here's a company that was proposing some major build outs of coal fired or straight more or coal mining that got rounds rejected by them, by the populace and was kind of redirected into taking that asset and then putting it into a pumped hydro storage that would work with local wind.

00:37:53:00 - 00:38:18:11

Chris Popoff

Now let's say we build all that out. The extreme event, that two week lull or a four day lull just like this, it doesn't come around that often. So you're building it for that just in case scenario. And if you're making an investment like that and doesn't actually run into the circumstance that it was built for, it's not going to recapture the capital required.

00:38:18:12 - 00:38:37:21

Chris Popoff

Is not selling anything, is buying all this power and it's not putting it back to the grid. It's totally overbuilt. So then you have to make all these other mechanisms and negotiations and up paying for things like capacity or availability and like creating all these little workarounds and new rules to find ways to get money into the hands of those developers.

00:38:37:23 - 00:39:09:01

Chris Popoff

Or you develop it as a state and you just take losses and losses until one day, okay, it is needed and thank goodness it's there to resolving those issues is a real problem. And we were seeing a lot of that effect going on on a smaller scale, even up until the moratorium. So I think the moratorium was a factor that affected by factors like that, where we saw really low power prices when wind and solar were contributing.

00:39:09:03 - 00:39:41:21

Chris Popoff

But that meant the gas fired companies weren't able to sell their supply. So they're sitting on this underutilized asset and when the grid was able to accept capacity from the gas fired generators, they're sort of permitted to overcharge and make up the difference. There is a legal limit to how much can be charged in Alberta. And there were just more and more hours being applied where those generators were doing a practice, what's called withholding and economic withholding.

00:39:41:21 - 00:40:18:23

Chris Popoff

So they have the ability to generate and supply the grid, but they're waiting until the price is a bit higher so that they can make up for all those times that they're not making any money. And that's their obligation and duty as as a private corporation. That's their interest. And it really sets up these really strange games where we have things that are happening that are technically legal, morally gray, and you shouldn't expect a system that's set up to optimize return of capital and profit maximization to do anything different.

00:40:19:01 - 00:40:58:17

Chris Popoff

This is this is a dream scenario for someone that owns sporadic generation and storage. They'll go and buy the supply when it's being curtailed, essentially free or negative pricing fill up their storage capacity. Wait until they can capture the maximum allowable price. So a highly variable unstable grid is a dream come true to renewable plus storage. They will make a ton of money in this circumstance and the people operating the grid and taking their supply from the grid, trying to run their businesses or social services.

00:40:58:17 - 00:41:23:11

Chris Popoff

On top of that, schools, hospitals, industrial plants, production plants, what have you. They suffer deeply from an unreliable random grid that they may or may not count on. They have people to pay. They have loans to repay. They have really expensive equipment to maintain that can't be subject to move. Maybe I'll show up today.

00:41:23:13 - 00:41:43:22

Chris Keefer

So so we joke here in Ontario and then this can get into our sort of central western Canada rivalries as as as real as the reasons behind them are. But as silly as they sometimes get that Alberta electricity prices have started to make our prices look good again. We had a major cost escalation with our renewables buildouts for different reasons.

00:41:43:22 - 00:42:10:00

Chris Keefer

I guess we had these, you know, very generous to put it mildly, feed in tariffs, 20 year contracts, curtailment was paid for, you know, prices as high as $0.80 a kilowatt hour for for solar and I believe around $0.25 for wind, which, you know, when all is said and done, just the subsidies will have cost us $62 billion by the time the contracts expire.

00:42:10:01 - 00:42:31:01

Chris Keefer

We took that that burden off of the rate payer to some degree by shifting it to the tax base. And now it's I think the seventh or eighth line item on our provincial budget is paying renewable subsidies. It's part of the renewables cost shift. I believe it's about $3.2 billion a year, if I'm not mistaken. What's been the impact of the renewables penetration into an energy only market in Alberta?

00:42:31:01 - 00:42:44:13

Chris Keefer

Have prices gone up, gone down? Is it as simple as that? Can you attribute price hikes to to this these additions? Or is it a more sort of complex story than I'm maybe painting it to be?

00:42:44:15 - 00:43:23:08

Chris Popoff

No, it's it's a it's a repeating story of places like Germany and Ontario, California have run this experiment and have applied different regulatory frameworks and approaches and grid control approaches, lots of different complex contract for difference or subsidization techniques. And it's great that we get to see this work in practice. But when you're looking at it at at the beginning of something, you're like modeling out and predicting what if scenarios and what could happen type questions.

00:43:23:08 - 00:43:53:22

Chris Popoff

It becomes pretty clear that this is what happens when when you're having to build a system. If your goal is to supply all of your demand with these low carbon but highly variable and random supply sources that show up at random periods of time, you have to rebuild the entire grid essentially as a backup, not just the generation, but the way it's delivered.

00:43:53:22 - 00:44:26:09

Chris Popoff

It moved and stored because power provision is not really a commodity in the classic sense. It's not like I'm buying a bundle of oranges and they can sit in the fridge in a cold storage warehouse or on a boat somewhere, and they're totally fine. Months later, for me, power is a space time sort of phenomenon. It needs to show up at a very specific time and place and in a certain form to be able to do useful work.

00:44:26:11 - 00:44:57:19

Chris Popoff

And we don't really have a system that truly appreciates that or allows the average person to think about it in those terms, which is how you sort of get caught up into debates and biases around, you know, picking sides. And the experience in Alberta is like anywhere else, as the contribution from variable resources has increased, the delivered price to consumers has also increased.

00:44:57:21 - 00:45:43:06

Chris Popoff

And that is sort of highlighted by the fact is that because of the wind and solar or is it because of the gas generators withholding? And are the gas generators withholding because they're evil people or because that's what the regulations allow them to do? So it's the regulators fault. It's a ton of blame gaming, but the end result remains that if you have a system that is trying to deliver extremely high quality resource like timely ability to, do work for a number of completely random uses of questionable import.

00:45:43:08 - 00:46:09:00

Chris Popoff

But that's what modern life is. You know, having having access to clean, affordable, affordable, reliable energy to me should be a human right. And in modernity, we we don't have that for everyone. And the more renewables we put on the grid for the masses, the the more that dream is challenged. And we see that story repeating over and over again.

00:46:09:00 - 00:47:02:13

Chris Popoff

So I do think that that instability in that overall the rising price environment was a major factor behind the moratorium. And I know there were complaints from rural and state constituents that just oppose development of those resources on their land. Anyway, that's another significant factor. But if if we go back to your comment about Ontario's pricing looking better than Alberta is all of a sudden, well, that looks a lot like we're we're losing out on opportunities to attract new business, to attract new people moving into the province to to settle and establish a family here and it's true if if your availability, reliability and price of power is expensive, it's no different than having an

00:47:02:13 - 00:47:09:00

Chris Popoff

extremely high tax base because it's an input that goes into absolutely every activity that occurs in that economy.

00:47:09:02 - 00:47:11:16

Chris Keefer

And it's regressive. It's interesting looking.

00:47:11:16 - 00:47:13:00

Chris Popoff

At completely regressive.

00:47:13:00 - 00:47:45:11

Chris Keefer

And again, I think that's why we shifted this expense over to the tax base, because it's it's a progressive tax base. But let's leave that aside for a second. You know, beyond beyond this, I guess, kind of mantra that that wind and solar are the cheapest form of electricity lies, you know, these edge cases. Again, when the system gets very strained in Texas, there was, I believe, $200 Billion in economic losses, not from a total you know need to black start the grid but just from these rolling blackouts that they had.

00:47:45:13 - 00:48:05:17

Chris Keefer

More importantly, I think there were 2000 lives lost. I mean this is highly consequential. All I'm struck in the discourse by how sort of fast and loose people are willing to play with the grid, you know, making assumptions about, you know, numbers of Tesla, you know, battery walls that will be able to float everything. And like we've modeled it and realized on the modeling, you know, the reality of what's happening.

00:48:05:17 - 00:48:30:04

Chris Keefer

Alberta doesn't make sense compared to the model that we've we've developed. Is this some really bizarre stuff happening out there in the discourse. But this idea and so far we haven't, I think, seen it in the developed west, but we we tend to be teetering on it. There's warning signs, you know, and from a medical perspective, you know, the vital signs are off when we're getting, you know, this kind of frequency of of grid strains and grid alerts.

00:48:30:06 - 00:48:53:09

Chris Keefer

It's something that I don't I find quite worrisome. I'm not sure if that's really a question or something for you to riff off quickly, but that that idea of of, you know, what could what could have been done with the $200 billion that had to go into the economic losses that occurred in Texas, what could that do for a society, whether it's achieving climate goals or educating their population or paying for services like health care?

00:48:53:11 - 00:49:06:13

Chris Keefer

It's a big open question. But as these as as the potential for these events becomes more likely, I mean, it's something that we should guard against. I think, you know, with all our potential tools on the table.

00:49:06:15 - 00:49:36:18

Chris Popoff

Yeah, I'll and also the question, but I'll, I'll reinforce your, your thinking and your your concern. It is regressive. And the more we see these sorts of events, the more I believe it indicates an overall degradation of of the quality of our energy system and, and the quality of the resources that we're accessing. It ties in to some of the larger themes of your show, too.

00:49:36:19 - 00:50:06:08

Chris Popoff

With that cheap oil concept. Cheap oil really means high quality oil and something that you get a lot of bang for your buck out of. We are really out of that phase of oil and gas development and in human civilization, period, globally. And Alberta is a very good microcosm of that. With oil sands, it's an extremely low quality energy resource.

00:50:06:10 - 00:50:36:14

Chris Popoff

We have a ton of it, but as I referred to earlier, we provide a tremendous amount of energetic subsidization by blending it with higher quality energy resources like gas liquids, combusting the gas that is available to insert hydrogen into it and get it to surface in the first place. And in the early sort of phase of oil and gas development, you could kick the ground and you'd have a gusher in some places.

00:50:36:16 - 00:51:17:09

Chris Popoff

So you would have, you know, 1500 barrels back for every barrel you put into your exploration efforts. Modern oil sands operations on average is something like three barrels for every one that we put in. So it's similar sort of ratios with wind and solar just very low. And the more we have of those kind of low grade sources contributing to the mix overall, more the average comes down and the the ability for the very energetically abundant sources to pick up the slack degrades over time.

00:51:17:11 - 00:51:48:19

Chris Popoff

So it it's something deeply concerning to look at. And the other thing that you touch on a lot in your show is innumeracy really bad with big numbers, really bad as people, really bad with looking at rate of change. If it's not a linear thing and we're really bad at observing systems, it's maybe one of the things I'm fortunate to see naturally without a ton effort is, is how things connect and and how things work on a systems level.

00:51:48:19 - 00:52:38:09

Chris Popoff

And you know, my hope and reason for coming on like this and doing public talks and doing the work I'm doing with nuclear is to try to educate the average person around how important this is for our well-being, not just as individuals, but as as a healthy civilization on planet Earth. I I've said this before to you, but we will live to see the full impacts of climate change if we allow our our energy provision to to keep degrading like this and and really putting our our bets behind low quality, high, high entropy energy sources and expect that that is going to provide a low entropy civilization.

00:52:38:11 - 00:52:48:23

Chris Popoff

It does not work in that direction. So you see it picking at the edges of what we've built and it is coming apart.

00:52:49:00 - 00:53:09:23

Chris Keefer

Of course, I think that's a is a good place to dive into. You know, probably got about 10 minutes now to chat briefly about this development now with Capital Energy and on the power generation making an announcement about, I believe, a feasibility study for nuke in Alberta. As you mentioned, an energy only market which has proven to be very challenging for nuclear particularly.

00:53:09:23 - 00:53:30:06

Chris Keefer

We've seen a number of nuclear plants shut down for economic reasons in the U.S. with the both the glut and low natural gas prices, but also renewables entry into energy only markets and the disadvantage, disadvantages of, you know, these low entropy baseload sources of electricity like nuclear. Let's just have a quick chat about that. I think we're going have to expand it in a further episode.

00:53:30:06 - 00:53:52:18

Chris Keefer

But just in terms of taking in the the news of the day, as it were, tell us a little bit about about this announcement and and how it's being received and maybe how it fits. You know, it's just so, so pertinent to me that the announcements are occurring as we're feeling a system strained with, you know, these these high entropy sources that we've just been chatting about.

00:53:52:19 - 00:54:21:00

Chris Popoff

Absolutely. So Alberta has been flirting with nuclear power for a very long time. And I mean, studies have gone back to very, very, you know, deep parts of of last century where people were thinking about using atomic weapons actually to mobilize the bitumen resources underground, as I think it was part of plowshares. They were investigating things like this.

00:54:21:02 - 00:54:50:09

Chris Popoff

None of those experiments ran up here. To the best of my knowledge. But the fact remains like Saskatchewan, one of our neighbors is is the Saudi Arabia of uranium on the on the planet right next door. There is a lot of evidence in our drilling records and drilling logs that indicate a few regions that have uranium deposits that may be able to be extractable with in-situ mining techniques.

00:54:50:11 - 00:55:19:21

Chris Popoff

So that's really encouraging to think that Alberta might have something to contribute in the future post fossil fuels, leaning on on a resource like that or with friendly relations with our our provincial brothers and sisters. Right. So that's that's exciting and Alberta energy sorry energy Alberta corporation Bruce Power looked at bringing in the the twin ACR designs into the Peace River area say 20 years ago its timing was so fast.

00:55:19:21 - 00:55:43:09

Chris Popoff

So I'll get the actual years on our next talk. But that went away because largely I think of the inability to have a backup plan in the event of a trip. ACL didn't have smaller module sizes that they were marketing at the time, even though they had designs that they could have offered just wasn't part of their mandate.

00:55:43:09 - 00:56:10:07

Chris Popoff

So that sort of died. And what's sort of unique and interesting about this scenario is all the work that the province and industry has been doing, studying nuclear. There's broadly, I think, a very high level of acceptance, if not curiosity, around nuclear power with the broad population in Alberta. Sure, there will be some opponents and and that's fine.

00:56:10:07 - 00:56:42:01

Chris Popoff

That's that's normal. But what we have here is a unique situation where, at least in my conversations earlier, in trying to bring our small modular advanced reactor to the oilsands, there was a lot of people saying, well, maybe, but there was some uncertainty around who might lead. And the province doesn't have very clear regulatory frameworks on how such projects would be evaluated, reviewed, approved, regulated.

00:56:42:01 - 00:57:14:06

Chris Popoff

Once they're built and so on. There's kind of this sense that it's a federal jurisdiction, but in practice there are contributions made from both federal level and provincial levels of government. There's no real presence of people that have built and operated such assets in this province by themselves. So there's there's a real challenge on that. And the the players that are involved here feel in a lot of those gaps.

00:57:14:08 - 00:57:41:04

Chris Popoff

The the government of Alberta is currently doing work to play part of the broader small modular reactor roadmap that's rolled out and being executed by the federal government of the oil and gas industry has a similar sort of roadmap called Pathways to Net Zero that contemplates the the use of small modular reactors if they're commercially available sometime in the 2040s.

00:57:41:06 - 00:58:17:13

Chris Popoff

We have new regulations being issued on a federal level level with the CCR around emissions regulations that go over and above what Alberta already has in place for its own emission regulations. We're one of the only jurisdictions on earth that that rolled emission regulations out early and have functional commercial scale carbon capture and sequestration operating. So it's it's this really strange dichotomy of people pointing their fingers at us because our numbers look terrible and they really are from that perspective.

00:58:17:13 - 00:58:42:18

Chris Popoff

But we're doing quite a lot to try to change that. And and to break the barriers into figuring out something that will actually work at scale. And so capital power is a utility that's based in Edmonton. Their generation assets are largely in that northern half of the province. They participated in a large number of those coal repowering projects to gas.

00:58:42:20 - 00:59:15:21

Chris Popoff

I should note that the lifespan of those repowering projects are somewhat limited. I believe they're only on the 20 to 25 year sort of horizon. So as they were repowering those, you know, five or so years ago, they've only got another decade or so left before they need to make another repowering decision. And if they're going to do that, why not look at putting a small modular reactor that could fit in a similar footprint, utilize the same inter ties and grid connections, same workforce?

00:59:15:23 - 00:59:47:09

Chris Popoff

You know, it's just a different sort of fuel supply. And if the timing works out, if the capital investment levels are not totally terrifying to a group like Capital Power as as they aren't, you know, they can they can manage the scale of investment required to build a small modular reactor fleet. The government is making good on their commitment to actually roll out a regulatory framework.

00:59:47:11 - 01:00:10:10

Chris Popoff

And then now you've got this outside player that says, Hey, we've got a ton of experience in actually operating these things and getting your workforce up to the point where it actually performs and will actually joint venture with you to to get that done. I mean, that's a really compelling story and I'm a deal curious person, so I would be part of that conversation if I could.

01:00:10:12 - 01:00:36:02

Chris Popoff

And it really is encouraging to see the leadership at at OPG and at Capital Power step up and say, well, why not us? I really love that attitude. And I think enough of the feasibility work has been done from a technical perspective and an economic perspective. It's been done and redone. We know it could work at certain sizes and investment levels.

01:00:36:07 - 01:01:06:04

Chris Popoff

I think what this is largely about is, is getting down to more detailed terms and conditions and what structures might be utilized to enter into joint venture arrangements and empower, take off agreements. It's an advanced stage of of negotiation, and I'm really encouraged to see where it goes. I hope this one actually connects and we get to see Alberta join the club.

01:01:06:06 - 01:01:27:09

Chris Popoff

I think it could be deeply integrative and and nation building too, to see something like this happen. It's very exciting, actually. We might might tone down some of the separation talks if we feel like we can actually get along with our our brothers and sisters in Ontario a little better through this That's Saskatchewan.

01:01:27:11 - 01:01:48:03

Chris Keefer

Great. I mean, it's it's a joke. I've been making them vis a vis the United States. But, you know, the Democrats and Republicans can find just about one issue that they can agree on, and that's become nuclear in the last four or five years. You know, it has been interesting being here on Ontario and watching the federal and provincial cooperation on nuclear and with Alberta.

01:01:48:03 - 01:02:16:02

Chris Keefer

Obviously, there's lots of tensions over these clean electricity regulations, federal kind of imposition or the perceived imposition of things like electric vehicle mandates, carbon taxes. But here again, you know, the federal government has really come around on nuclear. Alberta's warm to it. So it seems like an area where carbon targets, emissions targets, et cetera, can can potentially come together and align on it on a technology that all sides are comfortable with.

01:02:16:02 - 01:02:42:09

Chris Keefer

So very, very excited to see where this goes, which hit the one hour mark. Chris has been really a fabulous conversation. We've been sort of circling in each other's orbits on WhatsApp groups and things like that, but haven't yet had a chance, really have a virtual face to face or so I've truly it's been wonderful and I'm really looking forward to having you back in the not too distant future to to dig a bit more into this broader, you know, energy conversation around cheap oil.

01:02:42:09 - 01:02:57:05

Chris Keefer

And, you know, we've been zooming in really into some of the minutia of nuclear and a lot of the audience loves that. But I also love some of this larger sort of theoretical positioning. So really great to have found, I guess, like yourself, to to plan some future mischief with.

01:02:57:07 - 01:03:28:04

Chris Popoff

Absolutely. I'm looking forward to the tomfoolery we get into, sir. And I don't want to have quite a few of these. The more the merrier and happy to come back. I think we set the table for a really nice conversation around how nuclear can can hold hands well with renewables and and help a really complex energy market like Alberta decarbonize not just its electric grid, but that big beast, that thermal grid.

01:03:28:06 - 01:03:33:00

Chris Popoff

And can we dive into that with you? And thanks for having me on. It's great to be with you.

01:03:33:00 - 01:03:36:09

Chris Keefer

Awesome. Chris. Absolutely. Take care. Okay. Bye for now.