I have become frustrated at a lack of detailed information on electricity and fossil fuel. Electricity is not energy – but a currency. It is generated using fuel, and it is a convenient way to deliver energy to a user. The source may be fossil fuel, it may be hydro power, nuclear fuel, or renewable sources such as wind or solar power. In almost all cases, the only way that an average user can get renewable energy is through the use of electricity.

I recently heard someone tell me that electricity was a high quality fuel that should not be used for heating – that is what gas is for… That comment is another misconceived idea, likely based on the source of electricity in the US or in many of the European countries. The US burns large amounts of coal to generate electricity and at an efficiency of about 35%, it makes little sense to use it for heating when one can burn gas at a much higher efficiency where the heat is needed. But Canada is a little different, and many parts of the US are moving into the same category. Electricity in Canada is largely hydro. In particular, Quebec, Manitoba and BC have systems that generate almost all needs using hydro. Even Ontario is moving quickly to join the group of provinces with clean electricity. At present, Ontario uses nuclear power for about 40% of their electricity, and under their new legislation, they will soon have a large amount of new renewable energy, as well as the elimination of their coal fired generating plants.

We need to look at the entire picture. The person that commented to me on the quality of the fuel asked what would happen when we run out of electricity – and I was tempted to ask the same question about what will happen when we run out of gas…

Electricity and natural gas are the two methods of getting energy delivered to most homes. There are good uses for both, but to determine what they are, we need to look at the entire picture. Gas is a commodity that is subjected to relatively constant flows, and prices change relatively slowly. The wholesale price of electricity is another matter. Electricity prices on wholesale markets can vary by as much as an order of magnitude (10 x) in a single day, and changes of 100% in a day are common. It is often worth looking only at price for a number of reasons. Low priced electricity, because of the way that power systems are operated is often quite “green” and it may well be less costly than natural gas at the same time. Ontario actually exports significant quantities of electricity most nights to Quebec at prices that are less that they are paying at the same time for natural gas. This makes little sense, but reveals a problem with the market. There is a great amount of price elasticity in the supply of electricity, but on the demand side, there is almost none. Very few people look at the cost of electricity on a real time basis, choosing instead to wait for the bill to arrive at the end of the month. The issue is at the root of a number of problems. It appears that Enron may have realized that there was money to be made because by removing electricity sources from the network, the price would go up, and very few loads would react.

There is no such thing as a high quality or low quality fuel – it is all energy. What counts and what is really going to count in the future is the GHG emissions associated with the energy that is selected for use…