Looking ahead at 2025 clean energy trends

The energy sector is always changing. Episode 149 of thinkenergy explores what to keep an eye on this year. Like political influence. How will the Trump administration's takeover reshape policies across the border? What are the potential impacts of federal and provincial elections here in Canada and Ontario? From energy strategies to affordability to decarbonization efforts. Listen in as host Trevor Freeman uncovers how politics influence the energy sector and what to expect from thinkenergy in 2025.

 

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Transcript:

Trevor Freeman  00:07

Welcome to thinkenergy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at [email protected] Hey everyone, and welcome back, and welcome to 2025. Happy New Year. I hope you all had a restful and relaxing break. I know I certainly enjoyed a little bit of time off with some friends and family, and it was nice to sort of recharge. But here we are at the start of a new year, at 2025 early January, the whole year is ahead of us, and there's lots of work to do, and being in the energy sector means there's lots of change ahead. On that note, today, we thought we'd dive into some of the areas that we think might shape or influence or be areas to watch for when it comes to energy in 2025. There's no such thing as a quiet or stand still year when it comes to the energy sector, 2025 will be no different. So, we thought we'd take a look at some of the things that we think might sort of hit the headlines or really drive change.  So, without further ado, let's dive into those areas. Area number one is politics. So, energy is political, and energy shapes politics, and politics shapes energy, and that's the same every year, but 2025 is shaping up to be a pretty significant year when it comes to political change that might impact energy policy. So, to start with, we are mere days away, a little over a week away as I record this from a new US administration. The Trump administration will take over on January 20, and like any change in administration and what is arguably the biggest economy in the world that will have an impact on climate change policy, energy policy, the flow of goods across borders. You know, there's talk of tariffs between Canada and the US. So just because it is in the United States, that doesn't mean it won't impact us here in Canada, so we'll be looking to see what change that does bring, what how that influences politics and energy policy and the flow of goods and all of those things that can impact what we do with energy. A little bit closer to home however, we also have some change potentially coming here in Ontario, at least, we are looking at potentially two elections this year. So, to start with, there's the federal election. It is very, very likely, almost a sure thing that we will see a federal election in the coming months. Justin Trudeau has recently announced his resignation, which will almost definitely trigger an election. So, we could be looking at a new government, or a new mandate for the existing government. So, what might that mean? Well, if the Liberal Party the current government, manages to get another mandate and remain in power, we kind of know what their priorities are. They've been going down a path for the last little while. They will probably continue to invest in clean energy infrastructure, they will continue to push for net zero goals and look for ways to support others to achieve net zero targets as well. If there's a change in governments, which the polling suggests is likely, and the Conservatives get into power, they are likely to look to prioritize affordability and resource sector competitiveness. They may also adjust timelines for emissions targets as a result of that. The one big thing that's worth mentioning, of course, is the price on carbon. This was brought in by the existing Liberal government, and they stand behind it. The Conservatives are very much campaigning on a platform of getting rid of the price on carbon, the Federal price on carbon that will have significant impact on energy policy and how things move. There are a few previous episodes that you can listen to that talk a little bit about that, and I'm sure we'll talk about it throughout the year as things play out. And finally, in this section, in Ontario, it's very likely that we might see a provincial election as well. All signs are kind of pointing towards a provincial election this year. So what could that mean? Well, similarly, our existing government has kind of made their energy policy known. We know what their focus is. So they are focused on expanding our traditional energy mix, so nuclear, some natural gas, as well as some investments in renewables in order to make sure that the grid can handle growth and electrification in that sort of rising demand that we're seeing. Should we see a change in government to one of the opposition parties? There may be more of a push for more renewable sources and lowering those carbon emissions faster than the current pace of change, at least based on what they are saying. So we'll keep an eye on that and how that comes into play. Obviously, energy is sort of primarily in the provincial jurisdiction here, so a change in government or a new mandate for the existing government would certainly have a big impact on energy policy. So area number one politics, area number two is energy affordability.  So Canadians have always cared about affordability when it comes to energy this has been sort of a driver in previous elections, but it is definitely top of mind now, as we are coming out of sort of a wave of inflation, supply chain issues, there's an affordability crisis, sort of across the economy in Canada, for many Canadians. So that definitely applies to energy as well. What does this mean? Well, it certainly will influence the way many people vote in the elections that I just mentioned. So look for Canadians to be wanting to know what those political parties stance is on energy and energy affordability. It may also impact the pace of adoption of decarbonization measures and electrification and some of those energy transition pieces that we're seeing. So if folks are struggling with the affordability of their bill. That means they are not likely to invest in large upfront capital cost items to change that. On the other hand, Canadians will be looking for ways to reduce their energy costs, and so maybe some of these items that might help reduce electricity costs will become more attractive to Canadians, they will also be looking for programs to help them with this, and the province just recently announced their new incentive structures, or the new iteration of save on energy incentive programs called the home renovation savings program here in Ontario, and Canadians will likely want to take advantage of that to help upgrade equipments, make their homes more efficient. There's a commercial stream for that as well, so businesses and institutions will also be looking to take advantage of that to address energy costs. So energy affordability will certainly be a driver, as it often is in 2025.  Area number three is decarbonization. So decarbonization is here to stay, and we expect that to ramp up this year, for sure, to continue being a point of importance for Canadians. So the climate crisis won't disappear from the news. As I record this, we're, you know, seeing these really terrible images and stories coming out of the Los Angeles area about wildfires, it seems like that's a perennial thing. We see that every year now, that will continue, and that really does drive people to think about their own decarbonization journeys. We are still in the early stages of adoption for some of this technology. You know, heat pumps, home generation and storage, real deep decarbonization measures were in those early stages. So I don't expect, you know, massive steps forward in the next 12 months, but I think more folks are going to start thinking about and planning for their actions on this, and that's at the both the residential and the commercial level. So here at Hydro Ottawa, we're seeing a lot of our commercial customers take advantage of our Enercan funded Ottawa Retrofit Accelerator program, which really supports that sort of carbon pathway planning, that plan to decarbonization. And I think a lot of folks will start thinking, you know, what's my next move when it comes to decarbonizing? You know, if my furnace is getting to be a little bit old, am I going to put that heat pump in? You know, even if I don't do it in the next 12 months, I want to start thinking about what that looks like. So we expect decarbonization to continue to be a point of focus. We expect it to be a point of topic, you know, in these elections that we talked about, because that climate crisis is in front of our faces, always in the news, and that won't be changing. Area number four is clean electricity, grid modernization and energy efficiency. So in keeping with the previous point, decarbonization, electrification is one of the main tools to decarbonize, and we are moving to changing some of those end uses, from fossil fuel combustion to electricity. So things like heating our homes, our spaces, our water and transportation. You know, how we get around, what we drive, what sort of public transportation we take. The solution to these things, when it comes to climate change, is primarily electricity. So in order to make sure that we have enough electricity and that the electricity we have is clean enough to support that, we will see more movement towards this in this year. So just in December before the end of the year, December 2024, the Federal clean electricity regulations were finalized. And these regulations kind of chart a path to decarbonizing electricity generation in Canada by 2050 you'll notice that that's a change in date. The previous target was going to be 2035 but over the course of the last little while, the federal government has come out and said, yeah, look, we think it's more realistic to set 2050 as a target, so that is the new target. And the federal government's investing significant money behind this. There's $60 billion to help this general move towards decarbonizing our electricity generation, and to make sure that that's done in a way that keeps energy affordable for Canadians. At the same time, utilities across the country will continue to invest in grid modernization. So as well as infrastructure expansion, not just modernization, we're also building and growing our grids to keep up with the pace of change, but we need to also be able to leverage more DER's on the grid, so more distributed energy resources, small scale solar generation, things like that. So we will continue to see utilities make steps in that direction. They will look to levels of government to support those initiatives through programs and funding and regulatory change. So we will continue to see that change in grid modernization. I know it's definitely a big topic for us here at Hydro Ottawa. And finally, in this section, energy efficiency. Energy efficiency is not new. It's been around for for quite a while. In fact, it was the primary focus, kind of before we shifted a little bit more towards thinking about carbon. But we cannot fully decarbonize. We cannot fully electrify without significant energy efficiency. We just won't be able to affordably build the infrastructure we need if we're not using energy in an efficient way. So that will continue to be a focus. And in fact, I mentioned the new incentive programs from the province of Ontario that is very much designed to support ongoing energy efficiency measures. So, we will continue to see that as a focus in 2025 and our final area, area number five, is technology.  So there is no year anymore, in fact, maybe there never was where technology doesn't continue to grow and expand and evolve in ways that we couldn't even imagine. And it does seem like the pace of change is picking up, but I think that's kind of normal. So we will see technology that supports or augments the energy transition continue to evolve in 2025 and the ways that technology influenced that really, you know, we have an idea on some of them, and it'll be interesting to look back in 12 months at what we know in December 2025, that we didn't even know here today in January. So a couple specific areas. You know, we're seeing EV technologies continuing to involve we will see continued EV adoption throughout the year. Year over year, over the last five years, you know, EV adoption in Canada has increased steadily. In July of 2024 you know, zero emission vehicles hit almost 14% of market share, we can expect that to continue increasing. As that happens, you know, more charger technology out there, more sort of, not just the physical charger, but the ways that those chargers interact with the grid more control over that to make sure that we're managing charging in an appropriate way. The role of AI is really going to be interesting to watch this year. So AI, of course, is all over the news across all sectors of the economy, but certainly in the energy sector, it has a role to play, and there's kind of two facets to that. The first is the role that AI might play in helping us manage our energy costs, our energy usage, and that's both at the consumer level. So, what will AI help me do in my home, to manage my energy costs, to manage the sort of cleanliness of my energy? Let's say I want to really focus on just, you know, green energy when the grid is at its cleanest and try and avoid it when it's maybe more carbon intensive. What's the role of AI in that this is likely a multi year stretch. I'm not saying that we're going to sort of have all those questions answered by the end of this year, but I think we will see movement in that direction over the course of this year, and then also at the utility level. What's the role of AI in helping utilities manage the grid? You know, understanding where there are feeders that are increasing or that are getting near capacity limits and needing to shift. Again, this is not a 12 month exercise. This is a multi year exercise, but I expect we will maybe see some movement in that direction. The other way that AI and the increasing role of AI will impact the energy sector is just purely from an energy needs perspective, so AI is an order of magnitude higher when it comes to the amount of computing power that is necessary. So that, you know, the kind of stat that gets thrown around is that a chat GPT search uses about 10 times more energy as a standard Google, you know, search, a search engine search. So with all of this stuff going through AI, we're seeing more computing power needed. So that means, you know, bigger, more dense data centers that have larger cooling needs, which means more energy requirements. And, as much as we're seeing electrification drive demand up for electricity AI usage and data center usage is also driving up demand. And, so we're seeing larger load requests. You know, utilities are having to figure out, how do we provide way more power than we've had to previously, to some of these new customers and customers that are wanting it kind of overnight, like, hey, we're ready to build a data center like tomorrow. Can you supply us with a significant amount of power? So that will certainly be a driver. The last little piece of technology that I want to mention there's, you know, we could go on for hours on this topic is when it comes to sort of home generation and storage, especially storage. Solar panels have kind of been around for a while now. We've seen that really precipitous drop in price when it comes to solar technology, and that continues, but home, or sort of behind the meter storage, is really becoming a thing that is more realistic than it has ever been before. So, the incentive programs that I've brought up a couple times here in the province of Ontario now provide an incentive to put in a behind the meter battery in your home, and the role that those will play, we're only just beginning to see, you know, helping customers manage their energy costs. You know, charge that with your solar panels and then use the battery during peak times, or charge it during off peak times and use it during peak times. You know, managing costs redundancy and resiliency, and, you know, helping you out with a bit of a bridge during times of outage will be really important. And you know, we're seeing that at the at the household level, but we're also going to see that on a much bigger scale, at the commercial level. So, commercial customers are also looking at what's the role of battery storage to help them manage costs, and then even one next level, up at the grid level. So, we are seeing large scale battery storage projects that will support sort of grid management, help manage peaks for utilities so that they can, you know, defer or delay or reduce the size of that infrastructure builds, you know, if they can manage to rely on batteries for those handful of times a year when we spike into those peaks, then that helps out with grid planning. So those are some of the technology pieces that we expect to see really kind of flourish or take it to the next level in 2025 again, all of these things are not short term projects, 2025 we'll see some change, but these are, like, multi year things that will go on beyond that. So those are the areas that we think will kind of drive change, or be areas to watch for this year. You can likely expect some conversations on the podcast about that over the course of the year, because certainly they will be making news, and there's some really interesting folks working on some really interesting things when it comes to those areas. But, was there anything that we didn't identify that you're kind of keeping your eye on? Is there anything that you think we should be keeping your eye on, or that you're keeping a look at? Feel free to let us know you can reach out to us at [email protected] As always, we love to hear your thoughts and feedback. We love to hear kind of your ideas for topics or episodes that we should do or guests that we should have on the show. We're going to continue to explore with format this year. So we'll definitely keep talking to some really smart folks, we will throw out a few more of those kind of explainer episodes where we try to demystify a complex or maybe unseen topic when it comes to the energy sector. But, whatever we do, we look forward to having ongoing conversations with you guys and hearing your feedback, and this is the kind of stuff that we just love talking about. So thanks for listening. Happy New Year, and we look forward to chatting to you next time.  Thanks for tuning in to another episode of the thinkenergy podcast. Don't forget to subscribe. Wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or a guest, you can always reach us at [email protected]