Alberta's budding energy-storage industry is set to bloom. The renewables pause has cast a chill

Alberta's renewable-energy moratorium has put a spotlight on the future of wind and solar projects in the province, but there is another, related industry that has also been caught up in the province's sudden and controversial decision.

Energy storage.

The industry is nascent in Alberta — with just five small facilities totalling 90 megawatts of capacity connected to the power grid — but industry watchers believe it could be on the cusp of a major surge.

Companies have submitted dozens of applications to the Alberta Electric System Operator (AESO) for new projects, potentially representing thousands of megawatts' worth of industrial-scale battery storage that could come online in the next few years.

Many of those projects are in an early stage. Not all will necessarily end up getting built. Others, however, are nearing completion and due to be connected to the grid later this year.

At the heart of the boom in business interest are a few key factors: the declining cost of large-scale batteries, the increasing costs (both financial and environmental) of carbon emissions, and the rapid growth in renewable energy, which goes hand-in-hand with energy storage — both technologically and economically.

Prior to the provincial government's pause on renewables, the energy-storage industry had been working with AESO on modernizing Alberta's power purchasing and distribution rules to better fit with the role that large-scale batteries and other forms of energy storage could play on the grid.

That work continues, and the industry remains optimistic about future growth. But, at the same time, uncertainty surrounding the Alberta government's stance on renewable energy has spilled over into this sector.

What is energy storage, exactly?

Energy storage is a relatively new concept when it comes to Alberta's electricity grid, but it's something we're all familiar in our day-to-day lives.

Whether it's cellphones, laptops, or electric cars, we routinely charge up our devices when we're not using them so the electricity can be deployed when we want, later on. The idea of warehousing electricity so we can access it on demand is a pretty common concept, in that respect. But when it comes to the electric system, itself, this is a relatively new thing.

Right now, Alberta's electric grid includes only a tiny amount battery storage — five relatively small facilities, totalling 90 MW of capacity. (For context, total demand on the grid routinely exceeds 10,000 MW.)

Four of those five facilities belong to Enfinite, a Calgary-based company that has been the largest early entrant into Alberta's energy-storage market.

"Energy storage as a whole is becoming increasingly popular," said Jason White, Enfinite's chief executive officer.

"As we think about the intermittence of renewable energy, having some storage on the grid to back up that gap, let's call it, is valuable and I think a lot of companies are seeing that."

The business interest isn't limited to Alberta. There have been major energy-storage undertakings recently in Ontario, the United States and around the world.

So far in this province, Enfinite has limited its projects to a modest scale. If you're out driving on a rural road, you might whiz past one of the company's 20-MW storage facilities and not notice. The nondescript industrial facilities typically take up a small amount of space — just an acre or two — on an underused piece of rural land.

Stationed behind the chain-link fences, however, is some cutting-edge technology. Banks of high-capacity, lithium-ion batteries manufactured by Tesla are connected to a control system that is connected to Alberta's power grid.

In addition to its four 20-MW facilities connected to the grid right now, Enfinite expects five more to be connected by the end of the year, totalling 180 MW of battery-storage capacity.

Looking a little longer-term, Enfinite has also made applications for a 400-MW battery storage facility near High River and a 500-MW facility near Medicine Hat. Those applications are in Stage 2 (assessment) of AESO's six-stage grid-connection process.

"They're a lot bigger in scale, obviously," White said of the longer-term projects, noting the company wanted to start with smaller-scale operations before taking on the risk of a larger facility.

"We're getting a lot more comfortable with all the opportunities that energy storage can play in the market and I think that we're a lot more comfortable with the overall technology," he said. 

"We think now is the right time for those bigger projects."

Enfinite's projects are unlike a lot of other energy-storage operations, however.

Standalone vs. generation-connected

The facilities Enfinite has built in Alberta are standalone batteries with no generation capacity of their own. They simply take power from the grid, store it, and then send it back at a later time.

Other battery-storage projects are attached to a generating station so they can be charged directly and then pass the power along to the grid later.

TransAlta's WindCharger, for instance, stores power from nearby wind turbines in the Pincher Creek area. The 10-MW facility has been in operation since late 2020.

For new energy-storage projects attached to wind or solar generation, however, Alberta's pause on new renewables poses a problem.

"Our understanding is that, where storage is directly connected to a renewable facility, it's paused with the rest of the renewable facility," said Robert Tremblay with Energy Storage Canada, an industry advocacy group.

Standalone-battery facilities aren't affected in the same way, he said, but the pause has nonetheless cast a chill on the sector more broadly.

"I think this has shaken up the confidence of the industry a little bit," Tremblay said. "Just because batteries aren't paused now doesn't mean the industry necessarily feels comfortable."

Proposals and probabilities

While there are dozens of active entries on AESO's list of energy-storage proposals, there are also many projects that have been proposed and either cancelled or put on hold.

The status of projects changes all the time for all sorts of reasons such as financing, business viability, permitting, and so on. Just because a project has been proposed doesn't mean it will actually come to fruition.

The provincial government's pause on renewable energy has also prompted some companies to rethink their plans for energy storage in Alberta, said Jorden Dye, acting director of the Business Renewables Centre, a Calgary-based organization that helps match developers and buyers in the renewable sector.

Companies behind at least four Alberta projects that included both renewable generation and energy storage have hit the brakes on their plans, Dye told CBC News.

He stressed those companies have not cancelled the projects but are taking a "wait and see" approach as the industry seeks more clarity on the direction of the provincial policy.

The map below shows energy-storage proposals that were active with AESO, as of August.

How many of these proposals are likely to become reality?

That depends on whom you ask.

Forecasting the future

Predicting exactly what Alberta's deregulated energy market will look like in the future is an inexact science; it's impossible to say for certain which projects will come to fruition — and when.

The Pembina Institute, a renewable energy think tank, put together some educated guesses in a report that analysts started researching in 2022.

By the time it was published a year later, they realized their forecasts may already be out of date.

One model in that report was called the "High Storage Scenario," which assumed various incentives to encourage the development of more energy storage in Alberta. But when they looked at the most recent list of energy-storage applications to AESO, they realized even that scenario may have underestimated the amount of storage that may soon come online.

"We just put this report out in June and we were quite surprised to see this," said Jason Wang, a senior electricity analyst with the Pembina Institute.

Under the "High Storage Scenario," the Pembina report expected nearly 1,000 MW of energy-storage capacity by 2030.

But when looking at all the project applications currently at AESO's Stage 3 (regulatory preparation), Wang said the growth could actually come even faster than that, with roughly 900 MW by as early as 2026, if all those projects come through on schedule.

AESO, for its part, takes a more conservative view.

It wouldn't speculate about future energy-storage capacity in response to questions from CBC News, but the Pembina Institute noted that, in some preliminary modelling AESO presented to industry stakeholders earlier this year, it foresaw capacity growing steadily to about 500 MW by 2027 and plateauing from there.

Wang said actual growth in renewable energy has outpaced numerous past forecasts — not just from AESO, but a variety of sources — and he believes energy storage could do the same.

"This is a sector that's growing rapidly and our projections are probably going to be wrong again," he said.

"In the end, we're probably gonna see it grow even faster than we expected."

Beyond batteries

Batteries like those used by Enfinite are a common type of energy storage, but not the only one.

Pumped hydro is another commonly used method to defer the deployment of electricity to more favourable times.

In essence, this technology uses power during low-demand periods to pump water from a lower reservoir to a higher-altitude reservoir. Then, when energy demand is high, the water is released and gravity pulls it back down to the lower reservoir, spinning hydroelectric turbines along the way.

TC Energy is building a facility like this near Hinton, Alta., named the Canyon Creek Pumped Hydro Energy Storage Project, which is set to add 75 MW of "on-demand, flexible, clean energy" to the province's grid.

Other countries have built much larger facilities, such as Switzerland's Nant de Drance, which is capable of putting out 900 MW of electricity at any given moment and storing 20,000 MW-hours of energy in total — the equivalent of roughly 400,000 electric-car batteries.

Here in Alberta, hydro power is also being considered in conjunction with traditional batteries.

TransAlta aims to add 180 MW of batteries to its existing Ghost hydroelectric facility near Cochrane in a project dubbed WaterCharger that the company hopes to deploy by 2024.

And one other method of storing energy is also being considered in the province: compressed air.

Calgary-based Federation Engineering has proposed a 320-MW facility near Cold Lake that would store energy by compressing air in underground salt caverns, then release that energy by letting the air decompress through turbines to produce electricity.

Tariff troubles

As we've heard, new storage projects attached to renewable generation may be caught up in Alberta's pause on renewable energy.

But the standalone-battery projects also face a hurdle related to the fees they pay for buying power from the grid. 

"Basically, it's tricky to do that just because of the way the electricity tariff applies to storage projects," said Tremblay, with Energy Storage Canada.

In essence, he said, when batteries draw power from the grid, the fees they pay are the same as if they were a load on the system, which the industry believes isn't fair and ultimately makes standalone battery storage less economically viable.

"We're not consuming electricity, in general," Tremblay said. "We're taking it in, saving it for later and then giving it back. So we're more a part of the system than we are a consumer hooked up to the system."

The industry has been working with AESO on adjusting the tariff system to better accommodate standalone batteries.

"If those [tariffs] were to be changed or made to be more favourable for energy storage, I think more projects would get built," said White, the CEO of Enfinite.

Industry watchers say there are other reasons for optimism about the future of energy storage in Alberta.

Economic and technical advantages

Part of the reason electricity prices have been so high in Alberta lately is that a small number of companies control a large chunk of the generation, allowing them to raise their offer prices during periods of high demand.

If a new fee structure is indeed approved, Tremblay said energy storage projects would become more economically viable in the province.

Standalone batteries would then be better positioned to buy and store cheap power during periods of low demand and provide it back to the grid later on, introducing more competition to the market during periods of high demand.

"Bridging that gap between low prices and high prices lowers prices, overall, for consumers," Tremblay said.

Energy storage also offers some technical advantages, especially as more and more renewable energy has come online. One reason the Alberta government cited for its renewable-energy pause was the intermittent nature of wind and solar power, which has created concerns over grid reliability.

In addition to providing raw power to the grid, battery storage is also well positioned to provide ancillary services, which help the transmission system adjust, maintaining the correct voltage and frequency, especially when there are sudden changes in supply or demand.

"The main thing is that batteries are really quick to deploy," said Wang with the Pembina Institute.

"You have to have assets that can react in milliseconds, at times, and batteries are able to do that really well."

Storage can also reduce the cost of transmission infrastructure, Wang added, because it allows for more power to flow from intermittent sources on a given line by spreading out the load.

For White, the advantages of the sector outweigh the challenges and he expects "an influx of energy storage across Canada for the next long while."

"We're really excited about the space and think there's a lot of value," he said.

"There's a lot of ways to deploy it. It can do a lot of things. And I think that it's valuable for all of the stakeholders, whether it be the grid operators or the people that pay the bills. You know: you, me."