Nova Scotia Races For Coal Exit Amid Billions in Costs and Energy Challenges

Nova Scotia has less than six years to shed its centuries-long dependence on coal, a deadline that comes with a price tag in the billions of dollars.

Meanwhile, continuing to burn coal has become not only untenable in a rapidly warming world, but also unaffordable as prices of the dirty fuel skyrocket.

“It’s going to take a village to get this done,” Nova Scotia Power President Peter Gregg told a legislative committee in April. His platitude referred to Nova Scotia’s legislated goal of shuttering all coal plants and transitioning to 80% renewable sources of energy by 2030. Gregg, the C$1.7-million man leading the shareholder-owned power company, and Karen Gatien, Nova Scotia’s deputy minister of natural resources and renewables, promised the attending politicians that this remains “an achievable goal”.

Today, renewable sources like wind and imported hydroelectricity make up 43% of NS Power’s energy mix. Coal and petcoke still account for 36% of the total, down from 60% 20 years ago, which gives the utility bragging rights to “one of the fastest transitions to green energy” in Canada.

But when it comes to the ambitious goal of moving to 80% renewables in under six years, “far and away, this is the hardest”, said the executive director of clean energy at the Nova Scotia department of natural resources, Keith Collins, a civil servant who has wrestled with decarbonization in Ontario, the United Kingdom, and Manitoba. His assessment was blunt: “Nova Scotia is hanging off the end of the continental grid and the gas grid,” he said. “It’s got one million people, it doesn’t have high incomes, it doesn’t have its own hydroelectricity. Fix that!”

To wean off coal by 2030 “is genuinely a huge challenge for the province”, he added.

Electricity consumers in the province have seen their bills rise 14% over the past two years and data reveals that 40% of Nova Scotians are considered “energy poor”—defined by Statistics Canada as spending more than 6% of after-tax income on heat and lights.

Lisa Hayhurst, a member of a tenant advocacy group pushing for a power bill discount for low-income households, said it’s too expensive to heat her one-bedroom 1980s-built apartment. “The windows and insulation are of poor quality, meaning it is very cold in the winter and very hot in the summer,” Hayhurst said.

Though her apartment has four metal baseboard heaters, she can only afford to use one. “Even just using that one heater sporadically during the winter, I can have an energy bill of $300 to $400 for two months,” she said.

The more than C$600 million Ottawa and the province are spending to help people install heat pumps and improve the energy efficiency of their homes is one way to prevent greater rate shock in the future, said David Miller, Nova Scotia’s executive lead for electricity. “What really matters is the overall energy bill for a household,” he said. “We need to move the needle on that—not just by changing how electricity is priced but by focusing on how people consume energy generally, whether that’s heating oil, gasoline for their vehicles, or how they heat their homes and hot water.”

Nova Scotians face two major challenges as 2030 nears: Getting off coal, and doing so without triggering a surge in power rates.

A Chronic Coal Dependence

Nova Scotia’s coal history dates back to the 1700s, when it was mined at Louisbourg by French settlers. But most of Cape Breton’s coal mines have been closed for decades. What remains are the power plants that coal spawned, leaving a legacy of pollution and high fuel costs for Nova Scotians who are still importing the fossil fuel and paying a hefty premium for it.

Time and again, planned coal alternatives have under-delivered to Nova Scotians.

The massive generating station at Muskrat Falls, which delivers hydroelectric power to the island of Newfoundland via a transmission line called the Labrador Island Link (LIL), also sends electricity to Nova Scotia through a $1.7-billion subsea cable called the Maritime Link. But due to software problems with the LIL,  the first hydro delivery to Nova Scotia arrived four years late and was only a fraction of what was specified in the 35-year contract between the two provincial utilities.

So from January 2018 until the line was officially commissioned in 2023, NS Power was forced to buy expensive coal to replace the cheap hydro, driving up fuel costs. Since this February, make-up deliveries have been averaging 175%, but still, the original target of displacing 20% of fossil fuels with Labrador hydro is not being met. NS Power communications advisor Hannah Langille said in an email that year-to-date deliveries from Muskrat Falls displace about 17%, and the company expects it will be 2025 before 20% is achieved.

It’s frustrating, it costs us money, but we can’t ‘magic’ that,” Keith Collins told the legislative committee in April.

Nova Scotia Premier Tim Houston’s government slapped a C$10-million fine on NS Power for being late to meet a legislated target of generating 40% of electricity from renewables despite a three-year deadline extension. The utility is appealing the fine.

The Muskrat Falls situation raises further concerns when corporate relationships come to light. NS Power is owned by Emera Inc., a publicly traded company generating profits for shareholders. Until this June, Emera was also an investor and 40% owner of the glitchy LIL.

This gave rise to hypothetical (but far-fetched) scenarios where NS Power might sue its parent for driving up costs to ratepayers. Instead, Emera sold its equity interest in the LIL for $1.19 billion. In a May 28 news release announcing the deal, Emera said it would use the cash to pay down debt and “and support its investment opportunities in its regulated utility businesses.” It owns regulated companies in Florida, New Mexico, Nova Scotia, and three Caribbean countries.

Rising Coal Costs

As for coal prices, people elsewhere in the world have been facing rate hikes of 100 to 150% because of Russia’s war in Ukraine, Collins said. “We are still in it: Coal today is still at $130 a tonne, two to three times what it cost in 2015-2016”.

This double whammy of late hydro and rising coal prices has led to a build-up of unpaid fuel costs, which in 2023 hit nearly $400 million for NS Power and, by extension, its consumers.

Iain Rankin, a member of the legislature and the former Liberal premier from 2021-22, expressed disappointment with NS Power’s plan to keep all eight coal units operating until 2026. “How much will these higher coal prices cost ratepayers?”, asked Rankin. Nova Scotia’s deputy minister of natural resources was unable to provide an estimate. Rankin said that when he was premier, NS Power had a timeline for retiring three of the eight coal-fired units prior to 2030. That is no longer the case.

NS Power’s president has said that coal plants can’t be “phased out” until new sources of renewable energy come online. “It will take significant investments on behalf of Nova Scotians to achieve this,” said Gregg, signaling power bills will rise.

New power sources like wind won’t be available before 2028-2029 at the earliest, and getting there will require an attitude adjustment among people opposed to big projects, said deputy minister Gatien. “I think there is a belief, ‘Why can’t they just go somewhere that wants them?’ And I don’t know where that place is, to be frank,” Gatien said. “What we have here in Nova Scotia is wind—great wind, both onshore and offshore.”

“That’s OUR big hydroelectric project…we are way too reliant on (fossil fuel) commodities where prices change … but it is going to take Nova Scotians to understand and accept that.”

The Zero-Coal Game Plan

The province published its clean power plan [pdf] to abandon coal last October, prioritizing wind, solar, batteries, electrification and load management. The plan is aligned with NS Power’s “Path to 2030”. Neither document includes a cost estimate for getting off coal.

Both plans required updates after the dumping of the $9 billion Atlantic Loop proposal to build an overhead power line to import Quebec’s increasingly limited hydroelectric power to the Maritimes. Without that project, Ottawa was reminded that with just 3% of the population and 55% of the country’s coal-fired emissions, Nova Scotia would “need federal help” to close its coal plants by 2030. Houston was quick to point out that during the last federal election campaign, Prime Minister Justin Trudeau provided $5.2 billion to keep Newfoundland and Labrador ratepayers’ bills from doubling after construction costs on Muskrat Falls soared exponentially.

Last October, Natural Resources Minister Jonathan Wilkinson agreed to help Nova Scotia. “After months of acrimony between the two levels of government and terse comments shared through letters and news conferences, politicians struck a collaborative and positive tone,”  CBC News wrote at the time.

Instead of the larger loop, Ottawa will help fund a second or twin transmission line between Nova Scotia and New Brunswick to carry power from future renewable energy projects. (An existing line has been operating at full capacity for years.) The new intertie would be operational by 2028 at an estimated cost of $800 million for the Nova Scotia portion, with the cost shared among the utilities and the Canada Infrastructure Bank, according to Emera President and CEO Scott Balfour. There is also talk of extending the line to import nuclear-generated electricity from Point Lepreau, New Brunswick.

And in addition to investing hundreds of millions of dollars to help Nova Scotians buy heat pumps, the feds contributed tens of millions to Mi’kmaw communities for eight early-stage wind farms. Last month, NS Power received approval to build a $354-million network of grid-scale battery storage systems after the project received $115.6 million from Ottawa.

Meanwhile, NS Power has set up a decarbonization deferral account to spread out the cost of paying for the coal-fired power plants as they become “stranded assets” on the utility’s books. Although that price tag remains confidential, the dollar cost will be in the hundreds of millions—and that’s not the only bill.

Next Steps

Next January, Nova Scotia ratepayers will begin shouldering the $400 million in accumulated fuel costs over the past five years. In a rare move, the provincial regulator is allowing NS Power to transfer $117 million to the provincial government, which will amortize the debt over 10 years to head off a 5.6% rate increase for consumers and a potential credit downgrade for the power company.

As the province prepares to add a total of 1,500 megawatts of wind energy to the grid, the Point Tupper coal-fired generating station will be converted to gas to avoid future power outages. A few other coal-fired units will be permitted to burn heavy fuel oil as back-up during storms and emergencies well past 2030.

As for Nova Scotia’s long-term goal of reaching net-zero emissions by 2050, Gregg says potential components include the development of offshore wind turbines and hydrogen fuel to replace gas at one coal-fired power plant. Both emerging technologies are dependent on governments establishing regulations so they can co-exist without harm to fisheries.

After a very public fight between the provincial government and NS Power over rising power rates, both are now “aligned” on achieving 80% renewables by 2030—a highly aspirational deadline even without considering the global supply chain issues and labour shortages faced by renewable energy projects.