Canadian bank points to country's storage future

This week, President Biden has signed up the US to the the Paris climate deal. This has been heralded as Biden’s first clear break from the policies of former President Trump, and enables US politicians to once again be seen as leading on the climate crisis.

It also shines a spotlight on his northern neighbour. Canadian prime minister Justin Trudeau has received criticism for his environmental record, not least his support for the controversial Keystone XL US-Canada oil pipeline expansion. It was easy to focus elsewhere while President Trump was in the White House.

But now that Biden has come to power and is set to cancel US approval for Keystone XL, we will see more pressure on Canada to move away from oil.

In this article, we’re going to look at the country’s record on renewables and storage, and what we can learn about its plans from a large storage project.

Canada's climate policies

Judging Canadian energy policy purely on Keystone XL is unfair.

Yes, it has been controversial, and is a focal point for critics of Trudeau’s lack of urgency on climate change. But he has made some positive moves too.

In October, his government released a climate growth plan that committed CA$10bn ($7.9bn) to renewable infrastructure projects that it said would help Canada to stay in line with the targets in the Paris agreement.

In December, it raised this to CA$15bn ($11.9bn) to help it move to sourcing 90% of electricity from renewables by 2030. The country is currently on track to miss its 2025 maximum emissions target.

It also has a strong starting point to reach that 90%. Sixty-seven percent of Canadian electricity comes from renewables, mostly from hydropower, and 16% of its total energy.

Canada’s National Research Council has said it could cut its carbon emissions by a further 11% by 2030 with significant investment in energy storage.

Separately, Energy Storage Canada has reported that investing in 1GW of storage in Ontario would decrease ratepayers’ bills by CA$2bn by 2030 too.

Last week, those ambitions have started to materialise.

On 12th January, the state-backed Canada Infrastructure Bank (CIB) teamed up with Oneida Energy Storage to build a 250MW / 1GWh battery in Ontario. It is due to reach financial close in spring, and is part of CIB’s investment plan for renewables worth CA$2.5bn ($2bn).

We expect more where that comes from.

For example, the country’s 81GW hydro capacity could power the growth of green hydrogen in Canada. Its National Hydrogen Strategy includes a plan for CA$1.5bn ($1.2bn) federal investment in low- and zero-carbon fuels over the next five years, and would be a form of energy storage at times of electricity oversupply.

Trudeau is also looking to support a buildout of wind and solar to hit that target of 90% renewable electricity by 2030. Large batteries such as CIB and Oneida’s are going to be a key part of the equation as the country looks to tackle intermittency.

This may lead to other players doing storage deals in Canada too.

Utilities including EDP Renewables, Engie and NextEra are currently active in both the US and storage, and may look to make inroads into Canada. We also expect to see interest in storage from local firms including Boralex, Northland Power and TransAlta. We’d expect to see significant investments this year.

Trouble in store

But the growth of Canadian storage should not be taken for granted.

The country is set to miss its 2025 targets, and Trudeau heads a minority government that faces opposition to its climate plans. At state level, we see opposition to renewables and supporting infrastructure in Alberta, Manitoba, Ontario and other provinces that will make it more challenging for Trudeau to force through renewable growth plans.

And yet the US of the Trump years should give cause for hope.

Over the last four years, we have seen storage take off in the US, led more by the appetite of energy players than federal policies. Canadian companies have the wealth, infrastructure and nous to increase the country’s storage capacity between now and 2030. CIB and Oneida's battery will be the first of many.