Nova Scotia’s Clean Electricity Solutions Task Force‍

On February 23, 2024 the Government of Nova Scotia released the final report of the Clean Electricity Solutions Task Force (the “Task Force”), Modernizing Energy from Transition to Transformation.The Task Force was struck by the government in April 2023 to “explore ways to modernize Nova Scotia’s electricity infrastructure and regulatory environment,” with a focus on:

• Examining electricity infrastructure needs for reliability, capacity, and storage to meet climate change goals; and
• Reviewing the Nova Scotia Utility and Review Board Act in terms of electricity generation, transmission, and rates.

A public call for submissions was issued by the Task Force on August 21, 2023 with a submission deadline of October 15, 2023. The Task Force also met directly with sector stakeholders, Indigenous representatives, technical experts, customers, and environmental organizations.

The Task Force’s final report makes 12 recommendations to the government. The key recommendations relate to:

• Creating a Nova Scotia Independent Energy System Operator (NSIESO) that would oversee open competition for procurement of all new infrastructure, including for generation, transmission, distribution, and storage. The NSIESO would replace and assume all systems operations functions currently provided by the Nova Scotia Power System Operator (NSPSO), which presently operates as part of Nova Scotia Power Inc. (NSPI);
• Creating a standalone Nova Scotia Energy Board (NSEB), responsible for regulating electricity, natural gas, pipelines, enforcement, and retail gasoline, separate and distinct from the Utility and Review Board (UARB), where the NSEB would oversee the new NSIESO; and,
• Amending the Public Utilities Act and the Electricity Act to encourage a wholistic systems approach to the management of electricity generation, transmission, end use, and enable transparent competition for new generation.

In response to the report, Nova Scotia's Minister of Natural Resources and Renewables stated:

• “…the government accepts the recommendation for a new Energy Modernization Act which I plan to table in the upcoming session of the legislature. Among other things, this legislation will create an independent energy system operator and a standalone energy regulator;
• “…we support the independent energy system operator overseeing open competition for new generation and storage infrastructure. However, at this time, we will not consider extending that responsibility to transmission and distribution; and,
• “Recommendations 2 to 12 will require more consideration, analysis and conversations with affected parties. We plan to take a measured approach as we consider the best way to proceed.”

Commentary‍

The Task Force’s report and the government’s response set in motion significant, complex, and far reaching changes to Nova Scotia’s energy landscape. At this time, without knowing the details of the government’s implementation strategy (such as the order and pacing of change), it is not possible to assess the ultimate impact of the recommendations the government will be implementing. The province is seeking to achieve the multiple goals of clean, reliable, and affordable electricity, as well as meeting climate change targets to reduce emissions to at least 53 per cent below the levels that were emitted in 2005 by 2030 and achieve net zero by 2050.

However, opening new generation and storage infrastructure to competitive procurements will create a meaningful opportunity for third-party investment in clean electricity resources in Nova Scotia and offer opportunities for creative solutions, such as supporting the province’s Green Hydrogen Action Plan as well as green ammonia, to address Nova Scotia’s ambitious goals of 80% renewable electricity and the phase-out of coal by 2030. Importantly, these reforms could support the development of green hydrogen/ammonia as well as associated onshore and offshore wind under terms that reduce risks for Nova Scotia ratepayers and enable the province to realize the economic and environmental benefits of these investments.

Further, as more Independent Power Producers (IPPs) and other third-party competitive entities (e.g., aggregators of demand response, Distributed Energy Resources, etc.) enter Nova Scotia’s market, there could be opportunities and reasons for NSIESO to enable dispatch through market prices to efficiently balance real-time supply and demand, and potentially maybe even be the system operator across Atlantic Canada.

What is clear at this time, is that the most significant element of the proposed transformation is the creation of the NSIESO. This change represents a dramatic shift away from the dominant role that NSPI currently plays in operating, planning, and providing electricity supply for the province.

This shift will present implementation challenges, for example:

• Considering NSPI’s ownership and operation of most of the province’s key electricity infrastructure, there is significant potential for duplication, overlap, and redundancy of roles and responsibilities with NSIESO with regards to system planning and assessing resource needs; and
• The resources (i.e., people, tools, systems) needed to undertake system operations and planning functions are highly specialized, creating potential of NSPI and NSIESO to compete over staff, possibly creating challenges with securing adequate staff.

In light of these challenges, a clear allocation of Mandates, roles, responsibilities, and provisions for transparency between the two entities will be critical to minimizing any duplication and redundancy. Furthermore, staging the transfer of key functions and responsibilities from NPSI to the NSIESO would be a prudent course of action to avoid potential handover issues and short-term resourcing constraints.

Related to ensuring the success of a new NPSI-NSIESO system paradigm, as well as building confidence in IPPs to participate in future procurements, will be establishing an appropriately empowered and resourced Nova Scotia Energy Board to oversee the two entities. As noted by the Task Force, a feature of the new regulator should be “Stronger and expanded Board authority to drive increased accountability and enforce compliance with legislation, regulations, government policy and Board orders.”

Overall, Power Advisory’s view is that the government must provide a clear and detailed plan to stakeholders on the timing, sequencing, and key milestones for implementing the proposed sector transition, especially given the actions required to meet the province’s 2030 electricity goals. Clarity on the path forward is needed to foster investor certainty and confidence well in advance of any future generation and storage competitive procurements.

Ultimately, as has been the experience in other jurisdictions undertaking major energy sector changes, the success of Nova Scotia’s proposed market transformation will hinge on the impact on customers (who are also voters) in terms of electricity rates and quality of service. The Minister recognized this in his statement on the Task Force’s report, noting that the province’s goal is to transform the “electricity system for the benefit of all Nova Scotia ratepayers.” The government must continue to keep ratepayers in mind throughout the entire process of evolving Nova Scotia’s electricity system.

Please contact Power Advisory if you have any questions or would like any additional information.