On November 17, 2021, the Government of Alberta introduced Bill 86, the Electricity Statutes Amendment Act (âBill 86â), which clarifies the integration of energy storage into the interconnected electricity system of the Alberta (“AIES” or “grid”) and allows an unlimited number of self-provisioning with export to the grid. The introduction of Bill 86 is the culmination of a number of years of stakeholder engagement, including: government commitment to energy storage; the Alberta Utilities Commission (âCommissionâ) distribution system investigation; and the Commission’s commitment to self-supply and export of power plants. Our two-part blog series summarizing the final report of the distribution system investigation can be found here and here.
Integration of energy storage
During the distribution system investigation, parties expressed concerns about how the current legislative regulatory framework for electricity in Alberta is hampering the deployment of energy storage resources. These concerns include:
- The absence of a legal or regulatory definition of energy storage resources in the current legislative and regulatory framework results in a lack of clarity and certainty as to how, when, where and for what purpose these resources can be deployed. . Many parties argued that legislative clarity is needed.
- Limitations on the ability of customers to self-supply and export electricity to the grid.
- The absence of specific tariffs for energy storage resources in the tariffs of the AESO and of the public distribution services.
- Lack of clarity or process regarding when and how energy storage resources can be considered wireless alternatives.
- Lack of clarity on how energy storage assets would be treated against a utility’s rate base, whether the utility owns the asset or obtains the services under a contract with an asset belonging to a third party.
If enacted, Bill 86 would provide much needed clarification on: 1) what constitutes an energy storage asset; 2) who can own an energy storage asset; and 3) participation in the electricity market.
1) What constitutes an energy storage asset
Bill 86 defines an energy storage resource as “a facility that uses a technology or process capable of using electrical energy as an input, storing energy for a period of time and then discharging power. ‘electrical energy as an outputâ¦ â. establishes a separate asset class for energy storage, whereas previously energy storage was considered a ‘unit of production’ when it discharged electrical energy and a ‘load’ when it discharged electrical energy. was charging or consuming electrical energy.
2) Who can own an energy storage asset
Bill 86 would allow energy storage resources to be owned by a private company (for their own use or for export to the grid); by a transport facility owner or utility; or by a distribution facility owner, or utility.
3) Market participation
Although owners of transmission and distribution facilities or utilities may own energy storage resources, Bill 86 would prohibit market participation for such energy storage resources. This ban is intended to facilitate the use of these utility-owned energy storage resources as wireless alternatives in transmission and distribution system planning. Conversely, all electrical energy from an energy storage resource owned by a private company entering or leaving the grid must be exchanged through the energy pool (i.e. must participate in the market).
Unlimited self-supply with export
Subject to certain limited exceptions, under the current legislative and regulatory framework, there is currently a general ban on on-site or âbehind-the-fenceâ generators from exporting excess electricity to the grid. The limited exceptions are:
- industrial operations with an industrial system designation (“ISD”);
- small-scale renewable energy sources (âmicro-generatorsâ);
- oil and gas installations using natural gas that would otherwise be flared; Where
- certain generators belonging to the municipality.
That is to say that currently, only generators on site or “behind the fence” meeting one of the exceptions described above can both: consume electrical energy produced on site without exchanging this electrical energy via the electrical pool; and, at the same time, exchanging any excess electrical energy produced on site with the energy pool (ie exporting it to the grid).
Prior to 2019, there had been ambiguity and uncertainty regarding the blanket ban on self-provisioning and how exceptions worked. However, in 2019 and 2020, the Commission issued several decisions clarifying that producers who operate ‘behind the fence’ (i.e. self-suppliers) and who produce and consume fuel are prohibited. ‘electricity on their own site to export the surplus to the energy pool. . A number of existing on-site generators were caught in the consequences of these Commission decisions, resulting in implicit abstention by the Commission pending legislative and regulatory changes. Bill 86 seeks to remove this blanket ban by allowing the unlimited export of excess electricity from auto-suppliers to the power pool, which was the policy supported by most stakeholders in Alberta.
It is important to note that the exemption from the obligation to exchange electrical energy via the energy pool for the portion of electrical energy consumed on site (i.e. self-supply, which is expressly defined in Bill 86) remains unchanged under Bill 86. All exempt self-supply electrical energy must be produced and consumed on the same land for the âown useâ of the consuming parties . For more information on “personal use requirements” see our blog here.
While Bill 86 contemplates and provides for high-level integration of energy storage into the grid, it grants considerable discretion to each of the following: industry, AESO, and ultimately , the Commission, on when and how the deployment of energy storage will be considered and implemented. While this discretion ultimately comes with some continuing uncertainty, there are also opportunities to develop effective policies in a number of areas, including:
- When and how will energy storage be used as a wireless alternative in transmission and distribution system planning?
- How are âhybrid assetsâ (ie;
- If and how the distribution of transport network costs, through any future changes to the AESO tariff, will ultimately be adjusted for auto-suppliers;
- Processing of energy storage in AESO and tariffs for public distribution services.
While there is still work to be done to clarify the framework for energy storage, Bill 86 addresses key policy decisions – perhaps more importantly the ownership of energy storage – that will enable the industry, AESO and the Commission to proceed with the development of more detailed policy and guidelines.
Regarding the authorization of auto-suppliers to export excess electricity to the grid, Bill 86 would allow auto-suppliers to efficiently deploy their generation assets in order to offer the possibility of fully realizing the economic benefits of this production.
At the time of writing, Bill 86 is scheduled for third reading on December 1, 2021. If passed, these changes are expected to come into force at the same time the related regulations come into force, with the aim of finalizing the changes in 2022.