There’s been talk of significant changes in the transportation sector – in particular, the Canada Energy Regulator predicts that there will be three key shifts that affect passenger transportation fuel use: increasing vehicle fuel economy standards, increasing renewable fuel content (up to 15%) in gasoline and diesel, and, most significantly, an increasing share of battery-electric (BEV) and plug-in hybrid electric vehicles (PHEV).

Additionally, the Alberta Electric System Operator (AESO) recently published its 2021 Long-term Outlook. One interesting development is the AESO’s “clean tech scenario” which has electric vehicles consuming as much as 4,000 MW by 2041. Putting this into perspective, currently, the entire Alberta grid uses ~ 10,000 MW and it took the last two decades for all sectors in the province to change aggregate load by about 4,000 MW.

A potential increase in demand for electricity could mean increased electricity rates as well as increased emissions, depending on how the electricity is generated.

Below, we’ll explore what electrification is, its importance, the future of electrification and other common queries associated with electrification.

What is electrification?

Electrification refers to powering various processes through electricity rather than through fossil fuels. Examples of such processes include space heating, water heating and the powering of vehicles.

Why is electrification important?

Depending on what perspective you take, there are numerous reasons why electrification is important. In order to reach net-zero emissions by 2050, Canada will require electrification, according to Clean Energy Canada. Switching to electricity usage where possible means being able to take advantage of clean energy (e.g. energy generated through renewable means such as solar, wind or hydro) – it also means a maximum reduction of emissions.

The benefits of electrification don’t end with reducing emissions, there are financial benefits for considering industrial electrification. Electrically driven equipment has lower maintenance costs, as well as lower investment costs according to a McKinsey & Company article. In particular, sectors such as buildings and transport observe that electrical equipment is so energy efficient that the lifetime savings on energy costs make up for the current higher per-joule price of electricity.

What are the types of electrification?

There is full electrification in which all power demand is electrified, or in other words, all power-consuming processes are switched over to electricity.

Alternatively, there is partial electrification in which there is flexible switching between the consumption of electricity and fossil fuels – partial electrification is often seen in applications where low or medium temperature heat is required. Such electrification allows for companies to take advantage of electricity from intermittent renewable energy sites as well as the ability to switch to fossil fuels when electricity costs become too high.

What are the main challenges for electrification?

Below are the main challenges associated with electrification:

• Electrification doesn’t necessarily make sense in all regions – cold regions will have a much higher cost associated with electrification than warmer ones.
• Initially, there may be high costs associated with electrification. According to the American Council for an Energy Efficient Economy, electrification could increase consumer costs by $590–1,186 billion on a cumulative basis over the 2016-2035 period.
• In regard to electric vehicles, there is a lack of widespread electric vehicle charging stations/infrastructure.
• Increased electricity demand caused by electrification of industries can cause power prices to spike.
• Existing regulations and policies may favor one fuel over others (e.g., fossil fuels over electricity generated by hydro).
• The capital cost of fuel switching may deter companies from switching over to electric powered equipment.

How does electrification affect the electricity grid?

Predictably, electrification will place a high demand on the electricity grid – as such, upgrades in grid infrastructure are expected to occur in order to support electrification in the coming years. Increased demand that cannot be met with adequate supply will often lead to increased power prices, brownouts or even blackouts.

Will electrification make power prices higher?

Any event where electricity demand is increased can make power prices higher – however, using grid balancing practices can help curb any increased costs that are a result of electrification. An example of grid balancing practice is consuming excess electricity generated during peak periods of renewable generation.

Another way of curbing higher prices is planning ahead; since industry sectors and lawmakers know these changes are going to happen in the long term, it is expected that they will invest in electricity grid improvements, which could ensure we have enough power to meet the higher energy demand caused by electrification.

Is electricity demand in Canada growing?

According to NRCAN, electricity demand in Canada is expected to grow at an annual rate of 1% between 2014 and 2040.

Will electric vehicles put pressure on electricity grids? How will Canada’s electricity grid be affected by electric cars?

As stated by a CBC article, it’s estimated that in a clean-tech scenario that we’ll see, on average, 100,000 electrical vehicles registered per year over the next 20 years.

To put that into perspective, that could mean potentially adding electricity demand equal to the peak demand of two Calgarys. In a CBC article, Leo Tovar, a senior analyst with the AESO, says that “while EVs will drive energy demand, overall consumption in Alberta is expected to stay relatively flat with a modest half-percentage-point increase over the next 20 years — one of the lowest growth rate predictions in years.”

This is in part due to electric vehicles offsetting negative factors pushing down energy consumption, such as transitions to more efficient equipment and transitions to working from home.

What you may not know about electric vehicles is that they’re capable of powering buildings as well as the wider grid – in other words, they can do more than just drain the electrical grid.

As a CBC article explains, some models of electric vehicles (such as the Nissan Leaf and the Mitsubishi Outlander) are capable of bi-directional charging, where they can feed power from their batteries back into buildings and the electricity grid when plugged in.

As utilities are attempting to incorporate more clean energy (e.g. wind and solar power), electric vehicles with bi-directional charging capabilities offer extra storage and backup power that can help with maintaining electricity supply when variable power sources are not producing enough to meet demand.

Concerned about high electricity costs? Fortunately, there are options available for lowering your monthly power bills – one of the easiest methods is to compare the energy rates for all the retail energy providers in your area in order to find the lowest electricity rate.

Sites like EnergyRates.ca can make this process easier for you – simply filling in your required energy type and postal code will bring up the best rates in your area. Best of all, EnergyRates.ca works for all consumers whether you’re looking for commercial, industrial, or business energy services.

Additionally, our team can assist you with incorporating green energy (RECs and Carbon Offsets) into your commercial energy use  – you can read more about sustainable energy options on our site here.