Nova Scotia Power Is Single-Handedly Reversing Our Province’s Solar Progress
Alexander Ross and Samantha Shannon are the co-authors of the SAIP newsletter, where this piece first appeared. They combine their experience in the renewable energy industry and data journalism to cover topics related to renewable energy and investing.
Nova Scotia Power (NSP) literally has all the power in Nova Scotia. It’s a monopoly: a regulated utility supplying energy to the entire province.
Its proposed fee increase for solar customers–announced on January 27, 2022–will affect the more than 4,100 Nova Scotian households invested in solar energy and an industry that’s already jumped through so many provincially regulated hoops to get where it is.
NSP’s decision could reverse almost a decade of progress. But this isn’t the first time NSP is delivering value to shareholders over Nova Scotians.
Initially built by the public, now generating private profit
Founded in 1919, NSP operated as a public utility run by the provincial government for 73 years. It was built through a combination of infrastructure development and acquisitions of local utilities. The foundation of Nova Scotia’s energy sector was funded primarily by taxes and people who paid for energy (ratepayers).
In 1992, these assets were sold under a privatization push by Premier Donald Cameron. Nova Scotia Power – as we know it today – was taken private for $192 million ($320 million in today’s dollars). But the combined equity in NSP was valued at almost $300 million, resulting in an approximately $108 million loss for the provincial government.
When NSP was listed on the market, 75 percent of shares were acquired by out-of-province investors, transferring wealth from the Nova Scotian public to private interests. Since then, NSP’s parent company Emera Inc has generated a 443 percent return for investors in capital gains, along with a 4 percent annual dividend yield – beating the broader Canadian market.
Working against provincial goals
Typically, the goal of privatization is to increase competition in the market and encourage innovation. But Nova Scotians have no choice in their energy provider and there’s a lack of innovation in the sector. So what does the future look like for Nova Scotians?
In line with the Sustainable Development Goals Act, Nova Scotia has committed to reduce greenhouse gasses by 53 percent below 2005 levels by 2030 and achieve net-zero emissions in Nova Scotia by 2050.
Electricity generation is the largest contributor to Nova Scotia’s greenhouse gas emissions, with NSP the main generator of electricity in the province. It needs to remain a focus sector on the journey to a lower-carbon economy.
An eye on the future, not the past
Our province’s success relies on achieving the right balance when it comes to the electricity grid, now and in the future. The NS Government has committed to powering the province with 80 percent renewable energy by 2030.
But right now, more than 50 percent of Nova Scotia’s generation capacity comes from burning coal and petroleum coke, which are among the most carbon-intensive sources of electricity.
Alongside creating obstacles for the solar industry, NSP is extending the life of carbon-intensive coal power facilities such as the Trenton Generating Station. The important role that energy and particularly coal have played in Nova Scotian history can explain part of this.
But the reality is that these high-carbon generation assets are increasingly uneconomical to run, and costly to retire, increasing financial pressure on NSP and standing in the way of provincial climate goals.
A growing industry to be proud of
The fossil fuel industry in the province is witnessing decreasing investment. Nova Scotia needs alternatives to provide jobs and economic growth.
Solar has been a bright spot in the Nova Scotian economy. Despite the pandemic, annual installations of solar photovoltaic (PV) systems in 2020 increased 35 percent, up from an already record-breaking 764 in 2019. More systems were installed in 2019 alone than the previous 17 years combined.
There are now more than 4,000 provincial solar installations and the annual installed capacity has increased to 8.5 megawatts from 6 megawatts. This is enough to avoid 8,484 tonnes of CO2 emissions per year, equal to the carbon captured by planting 853,501 trees.
The province has helped Nova Scotians install solar through tax credits and incentives, making the systems more affordable. The federal government, along with the government of Nova Scotia, and municipalities like Halifax have offered tax rebates, low-interest financing, and other incentives to help homeowners adopt solar. This has resulted in more than $30 million in private sector investment, spread across the province.
Nova Scotians – and the province – have been capitalizing on the return on investment from solar. Homeowners are able to reduce their electricity bills and carbon footprints. Plus, solar installation businesses are able to grow and hire. Hundreds of Nova Scotians now work in this sector, with dozens of businesses thriving and hiring locally.
Our economy will only continue to benefit from this growing industry.
Undoing clean energy progress
All this progress is currently in jeopardy. NSP’s decision to impose a system access charge of $8 per kilowatt on net-metered solar installations – where there previously wasn’t a fee – will block Nova Scotia’s solar momentum.
The proposed fee will cost homeowners installing a typical 10kw solar PV system about $960 annually, roughly doubling the payback period on the investment and likely putting solar out of reach for most homeowners.
Shareholders over Scotians
To put it lightly, NSP is crushing the business case for installing solar in the province, all the while extending the life of coal generation facilities. These actions are actively working against the province’s climate goals and ambitions of fostering a clean energy economy.
The drivers behind NSP’s actions are costs. Costs are increasing over time because of:
- Operating the electrical grid to meet net-zero emissions targets;
- Dealing with increasingly extreme weather;
- Hedging exposure to volatile fossil fuel prices;
- And, finally, the expectation of strong returns from shareholders.
Meeting all of these objectives simultaneously is putting pressure on NSP to increase top-line revenues. And both ratepayers and the solar industry are footing the bill.
There’s no denying the energy transition is expensive. The Nova Scotia government needs to negotiate a more equitable balance with NSP to increase the renewable energy generated in the province, while working to decarbonize the NS economy. This balance will be difficult but is the only way to generate long-term economic and environmental returns for both shareholders and Nova Scotians.
As Mark Sidebottom, Chief Operating Officer of NSP recently stated:
“Once we have a low carbon economy, it will attract more businesses and open up more job opportunities. We can create an environment where businesses want to develop. And beyond that, we’re contributing to a greener, more efficient lifestyle for our customers—a future where they can heat their home, and switch to electric transportation and know that they’re contributing to a low-impact solution.”
It’s critical to this growing industry, the economy of Nova Scotia, and earth’s climate that we don’t penalize renewable energy in the process of finding solutions. We need to continue building Nova Scotia’s clean economy, together.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected].