Could 'behind the meter' ensure that energy costs for large industrial users remain competitive?
Brunswick News used to have an excellent archive included with its subscription that allowed customers to search all included provincial papers going back to the mid to late 1800s. I used it a lot for content in my weekly column.
When researching energy related topics, it became clear a main reason the New Brunswick government invested in electricity generation was to support economic development. There were stories about how early hydroelectricity projects were developed for the forest products industry. The nuclear generation facility at Point Lepreau was in large part to support the growth of industrial Saint John. The large coal-fired plant in Belledune - with enough space to build even more generation - was to drive economic development in the northeast. Some NB Power board members were opposed but the Premier was insistent.
Not at lot of that talk these days. Not much new generation being built specifically to support new economic development. Further, it seems increasingly clear that NB Power will need to have significant and ongoing rate rises to meet demand without any thought of new large loads.
So if you had in your head (as I have) that we should be producing a lot more electricity (and you could extend to natural gas) with the explicit purpose of attracting large energy intensive industries how do you do it? I want this to be the 1920s again with a focus on electricity as a driver of new economic development.
It is increasingly tricky to either mandate NB Power to offer large users very low rates or to provide some cash subsidies to bring down the effective rate. Taxpayers (i.e. voters) aren’t going to be too thrilled with their electricity rates going up 4-5% per year while the large industrial corporations get consistently cheap rates.
That brings us to behind the meter.
While there may be a more precise definition for our purposes here ‘behind the meter’ means a large industrial electricity user could either produce their own electricity or contract from a merchant provider to sell them the power directly without the involvement of NB Power. In all likelihood NB Power would could be involved in a variety of ways such as wheeling the electricity from point A to point B and providing other services. But the crucial point here is that the large user does not have to pay NB Power’s large industrial rate (for your interest our good friend ChatGPT tells me HydroQuebec’s largest customers pay less than $60/MWh all in). Further, the NB ratepayer (e.g. taxpayer) wouldn’t be on the hook for the investment and the risks associated with the investment.
Both New Brunswick and Nova Scotia have legislation allowing this in certain circumstances and, in fact, variations on behind the meter have existed for years. Households can produce their own power and in some cases even sell surplus back into the grid. The pulp and paper mills can produce their own electricity and, likewise, sell into the grid.
Why would any company want to take on the risk and hassle of behind the meter when they could just move to jurisdictions with cheap electricity rates? Well as we see with the rise of data centres, there are not as many places left offering cheap rates and lots of available or soon to be available electricity.
I would be interested to see how a jurisdiction might actually position itself as a location for behind the meter. In other words, actually pitch themselves as the ideal site for behind the meter electricity generation. Many questions would need to be answered including the type of electricity generation, who would be the targets, what would be the timelines.
But let’s say for the fun of it a place like New Brunswick or Nova Scotia put all the pieces in place to attract large industrial energy intensive behind the meter projects (data centres, green manufacturing, green mining, etc.) - could it work?
Why we don’t access the abundant shale gas in the province to create a low cost energy regime is beyond me - nimbyism holding us back …
A story of a vertical integration pendulum. Starting centuries ago, out of necessity, using water+gravity or wind to power all sorts of mechanical work, such as wheat or lumber mills, etc. In the 20th century, the source of mechanical power could be "outsourced" when electricity distribution became available. Now, especially with hyperscale energy demands (GigaWatt per site), things are swinging back toward being less dependent on the grid (outsourced energy partner) for reasons of cost, cost stability, reliability, and, in the case of AI compute, the ability to manage large load fluctuations that Grids struggle to stabilize voltage/frequency with.
I am not sure if long-term vertical-integration-focused minds at orgs such as JDI have ever been fully dependent on grids. I have always heard of different internal and external generation projects over the past 2+ decades. I hear the "Mills" at reversing falls in West SJ are >50% self powered by burning their own waste products.
Every month, there seems to be a new announcement that AI hyperscalers are buying all sorts of generation assets, including LNG and Nuclear, or making long-term power purchase agreements mostly considered behind the meter. If the Canadian laws allowed it, I am sure you may have had them (Microsoft, Google, etc) knocking at our door to purchase point lepreau :-)