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Dive into alternative energy scenarios, transmission decisions, Kyoto protocol impact, reliability strategies, incentive programs, public perception, and success criteria. Explore the evolution of natural gas, hydrogen technology, and energy-efficient capital stock. Understand the critical role of transmission connections, green tags, and offshore wind in shaping the energy landscape. Uncover the challenges and opportunities in the transition towards a diversified energy mix.
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Diversifying the Mix: A Workshop on Alternatives to Conventional Generation Technology Westin Hotel Ottawa, Ontario November 25 2002 Session 2: Economic Fundamentals Michael Margolick, Senior Associate GCSI-Natsource LLC www.gcsi.ca www.natsource.com
Outline • A scenario • Transmission • Kyoto and green tags • Reliability and storage • Incentives and programs • Public attitudes and the market GCSI-Natsource LLC www.gcsi.ca www.natsource.com
A scenario • natural gas prices up [2 years] • air quality/climate change [2 – 5 years] • hydrogen technology [5 – 10 years] • mass production and energy infrastructure [10 – 20 years] • capital stock is energy-efficient [5 – 100 years] GCSI-Natsource LLC www.gcsi.ca www.natsource.com
Transmission • Independent transmission decisions essential to • Decide on connection, yes or no • Build the connection • Define the point of interconnection • Allocate costs • Set terms of operation • Utility-scale connections for utility-scale plants GCSI-Natsource LLC www.gcsi.ca www.natsource.com
Kyoto and green tags • Benefits must be monetized – optics and voluntary green purchases limited • GHG survey: ~US$10/tonne CO2 in 2010 • Effect of DET on renewables depends on market structure – avg vs marginal cost pricing GCSI-Natsource LLC www.gcsi.ca www.natsource.com
Reliability and storage • Run-of-river and wind: generation system impacts small if transmission adequate • Storage hydro: great advantage • Contribution to load serving should be treated statistically • Offshore wind will drive hydrogen technology GCSI-Natsource LLC www.gcsi.ca www.natsource.com
Incentives and programs • Canada is well behind US and EU • Programs atomized and restrictive • Tax-linked incentives • side-effects • lag technological change • high transaction costs • uncertain outcomes • Technology, not Canadian technology • Key role to buy down risk – industry is conservative GCSI-Natsource LLC www.gcsi.ca www.natsource.com
Public attitudes People do not understand relative magnitudes Green energy is good in the abstract a small business concept tainted if built by big oil and utilities GCSI-Natsource LLC www.gcsi.ca www.natsource.com
A definition of success: “nothing special” The industry will be successful when alternate energy becomes just another source of undifferentiated wholesale electricity commodity GCSI-Natsource LLC www.gcsi.ca www.natsource.com