Integrated Energy Futures Program

Imagine the value of being able to look out to the year 2050 and beyond and know:

• What will be the quantity and composition of Canada's energy demand? 
• What will be the sources of primary energy and the relative shares they contribute to Canada's energy supplies? 
• What will be Canada's exportable surpluses of energy and where will Canada rely upon energy imports? 
• What impacts will Canada's energy production and consumption have on land use, water, greenhouse gas and other air emissions and other societal factors? 
• What technology and investment choices must we make in the near term to generate desired results over the longer term?
• What policy options and regulations are more likely to lead us to a favorable outcome?

These are but a few of the questions that will be explored through the Energy Futures Network "Integrated Energy Futures Program". Utilizing the Canadian Energy Systems Simulator (CanESS), each program will engage a broad ranging group of energy experts is defining a range of plausible energy futures for Canada, consider projections running out 50 to 100 years into the future and assess what options are available to Canadians from physical limitations through to possible policy implications.

The Integrated Energy Futures Program will begin with the exploration of five elements of Canada's energy economy:

• Canada's overall supply demand balance in 2050
• The role of demand reduction in meeting future energy needs
• Transportation fuel mix options for the coming century
• Flexible and robust electrical grids for the 21st Century 
• Carbon capture and storage options for GHG emission mitigation

Each of these five initial explorations will engage Founders in collaborative scenario definition, will utilize the newly developed Canadian Energy Systems Simulator (CanESS) to provide quantifiable outcomes for those scenarios and culminate with an interactive forum where options and implications will be examined. A final report will be available to all Founders and participants.

The Integrated Energy Futures Program will be of particular interest to Government department and agencies, to corporations and their industry associations and to NGO’s where decisions that will shape Canada’s energy future are of long term strategic importance.

Led by a core group of seasoned professionals with expertise in energy and innovation systems, the Energy Futures Network (EFN) is committed to enabling critical transformations in energy supply, delivery and utilization systems. EFN does this by bringing together knowledgeable and influential players from industry, government and research organizations to explore necessary breakthroughs and to establish action plans for their realization.

The CanESS simulator (being developed in co-operation with whatIf? Technologies) is a new and powerful tool in helping to rapidly explore a wide range of energy systems scenarios over the long term – allowing for iterative exploration of possible future outcomes whether in a workshop setting or individual use. CanESS is unique in its physical economy approach, providing coherent scenarios to explore the long term impacts of ongoing transitions in the energy economy. This approach complements more conventional econometric energy models that focus on near term international energy prices and energy policies.

To enable the exploration of the first five defined areas of interest, including completion of the CanESS simulator will require an estimated $850,000. EFN is seeking a group of Founders who share our vision and sense of urgency and are prepared to contribute financially to move the Energy Futures Program forward.

Background

Canada is home to vast sources of energy that span coast to coast. With our mix of conventional sources such as oil, gas, coal and hydro, unconventional sources such as oil sands, and alternative and emerging sources such as wind and biofuels, Canadians have a wide variety of energy options to meet our rapid population and economic growth.

Looking at the range and magnitude of Canada’s resources and our growing contribution to the global energy picture, Prime Minister Harper has declared Canada to be an ‘emerging energy superpower'. Claiming that role – especially a ‘green’ energy superpower – brings long term obligations along with significant opportunity.

If Canada, its governments, industries and citizens are to make the energy superpower vision a reality, an assessment of our energy options must be undertaken – undertaken in a way that looks at the energy system as an integrated whole and considers the implications of different choices on our energy future. We need to look at the ‘green energy superpower’ vision not as a ‘given’, but an opportunity that can be either seized or squandered.

Why simulation based Programs? Why CanESS?

Current growth in the energy sectors is an exciting contributor to Canada’s economy. The energy sector underpins much of the Canadian economy – through investment, jobs and taxes, and through reliable and affordable energy inputs to our homes and businesses. Investment and policy decisions that will have profound long term implications should be made with broad input, with an appropriate long term time horizon and with a fact based analysis of the possibilities, limitations and implications of those decisions.
Each source of energy that we rely on comes with recognized set of challenges relating to unequal regional distribution of different resource types, to the cost of converting resource into consumer energy and to the emission of CO2 and other by-products associated with both energy production and consumption. We are entering an era where traditional energy sectors can no longer live in silos, but are becoming significantly integrated as increasing volumes of non-traditional energy enter the mix and as we look for innovative solutions.
Shifts in the energy economy can only be observed over relatively long time periods due to the long lead times for major projects, the slow rate of capital stock turnover, and the time for new technologies to penetrate the marketplace. Thus, decision makers need long-term insights to balance the short-term demands of both investors and electorate in making decisions whose outcome will span decades.

EFN’s Innovation Forum methodology combined with CanESS will have the ability to look out to 2050 or beyond to project the long-term impacts of today’s energy decisions – whether they are technology, policy or investment choices. The cash values of the decisions that must be made are measured in the billions of dollars. The non-cash impact may be even greater.

In a fashion roughly analogous to the aircraft industry where no changes to an existing aircraft are made until those changes are first examined through simulations, CanESS provides the tools necessary to “test fly” potential changes in Canada’s energy economy to assess potential long term outcomes. EFN’s methodology enables broad participation to ensure a broad range of stakeholder groups and energy experts can contribute meaningfully to the range of issues and options being evaluated.

For the initial program, "Canada’s overall supply demand balance in 2050", the Energy Futures Network and whatIf? Technologies, will complete development of the Canadian Energy Systems Simulator and then "test fly" a range of different possible energy futures based on the choices that can be made individually, corporately or by our governments. Program Founders, complemented by other energy sector experts as appropriate, will participate in:

• Defining the range of questions to be examined, validating underlying assumptions and creating a list of possible future options, thereby establishing a set of scenarios the Canada’s energy future – after which CanESS will be used to assess the physically coherent outcomes of each scenario
• Participating in an Innovation Forum at which scenario results provided by CanESS will be examined and, as appropriate, new scenarios developed and tested with CanESS on a near real-time basis (CanESS turn-around is measured in minutes)
• Reaching alignment on important observations, implications and proposed action plans which will be included in a Program Report.

Based on EFN and Founder experience with this inaugural Program, a similar process will be used to undertake the four additional programs on the topic listed in the introduction – or other related topics as agreed to by Founders. Subsequent to the proposed development of CanESS and its validation through the EFN programs, a broad range of services utilizing CanESS will be made available to a broad user base as described in more detail below.

CanESS is unique in its detailed representation of physical stocks and flows of energy feedstocks and fuels and the technologies that produce and consume them. This physical economy approach is appropriate for examining coherent scenarios that explore the economic, social and environmental consequences as Canada transitions from an energy economy based primarily on conventional oil and gas to one based on a variety of renewable and non-conventional sources. CanESS simulations reveal trade-offs among options and tensions, challenges or gaps can be identified that may be resolved by new technology, policy alternatives, or changes in the behavior of energy producers and consumers.

This approach complements the more conventional econometric energy models that focus on the behavioural response of energy producers and consumers to international energy prices and energy policies and that are appropriate for short term policy analysis.

The nature of Canada’s diverse geography, geology and market forces suggest there will be regional variations for these energy options. As such, the assessment needs to be built on a good understanding of these regional differences and the opportunities (and infrastructure required) for cross-region and cross-sectoral integration. Because CanESS is being built upon regional building blocks, disaggregation of simulator outputs can be provided for regional analysis.

The EFN Innovation Program design is similarly unique in its on-line engagement of participants in refining the questions to be addressed, validating the underlying assumptions, reaching alignment of possible futures and establishing the scenarios to be examined. Where appropriate an interim workshop is held and/or interim report issued. Once the initial set of scenarios have been run through CanESS, a similar process allows participants to examine simulator results, provide feedback and reach alignment of additional simulations to be run in advance of the in-person Innovation Forum. The culmination is the Forum during which participants have the opportunity to interactively discuss scenario driven CanESS outputs, propose collaborative initiatives or policy alternatives and action plans to move forward. A final report will be issues which captures the input assumptions scenarios, key numerical and graphical CanESS outputs and the ‘move forward’ action plans.

CanESS based scenarios will never be predictors of the future. But by integrating them with the EFN Innovation Program methodology valuable information is made available to organizations to evaluate possible outcomes based an agreed-to set of scenarios and an integrated and physically coherent simulation of Canada’s energy economy – outcomes that can lead Canada on the path to becoming the ‘green energy superpower’ the Prime Minister has proclaimed.

Utilizing the CanESS Simulator

Upon completion of its development and use in the inaugural set of EFN Innovation Programs, CanESS services will be publicly available in a flexible array of options to meet the needs of users. Users will be able to select from a customized proprietary full service offering (issue definition through to an analytical report), participation in periodic thematic workshops or future EFN sponsored Innovation Forums, through to the fully supported installation of the Simulator for direct user access.

CanESS can easily run a wide range of user defined scenarios with results returned within minutes – allowing for iterative exploration of possible future outcomes whether in a workshop setting or individual use.

Services based on the use of CanESS (including direct access to CanESS itself) will be available to all interested parties such as government agencies, businesses, industry associations and non-government organizations on a fee-for-service basis in one of three ways:

a) Commissioned Studies: Some clients may wish to commission the development of customized scenarios for their particular organization. These studies may require the development of additional CanESS modules or the refinement of existing modules with sufficient structure for exploring themes of particular interest to the client. Service offerings will range from EFN and whatIf? providing basic assistance in developing and running scenarios for analysis by the client organization through to scenario development in response to client questions, running selected scenarios, analyzing results and providing a comprehensive report to the client. Costs will be on a fee-for-service basis.

b) Thematic Workshops: Periodic workshops and Innovation Forums for will be organized and hosted by the Energy Futures Network to explore various themes, where various scenarios will be developed and options explored. Each workshop or Forum will focus on a particular theme, for example: renewable energy, hydrogen economy, clean coal, oil sands, conservation practices, fuel switching, or electricity generation. Workshop participants will use CanESS to design, build and evaluate a series of scenarios in “real-time”, with learnings published in a post-workshop report.

c) Direct Access: Subscribers (fee schedule to be developed) can choose to have direct access to the simulator from Members’ desktops in order to develop an “in-house” scenario analysis capability. whatIf? will provide training and support services to such members on a fee-for service basis.

As a not-for-profit focused on helping to define required future innovation and integration along the energy value chain, the Energy Futures Network (EFN) is ideally suited to facilitate the development of CanESS and ensure its accessibility to all interested parties. Along with CanESS Founders, EFN can draw on the expertise of its affiliate organizations to bring in the latest thinking in future options, realistic transition timing and likelihood of occurrence.

Development of the Canadian Energy Systems Simulator (CanESS) will fill the need for an integrated energy framework. Making CanESS accessible to all stakeholders with an interest in examining energy futures for Canada – federal and provincial governments, industries, non-government organizations, and citizens – will make it a truly Canadian tool. Through the Integrated Energy Futures Program, EFN’s goal is to make to foster a shared understanding of the opportunities to be realized and the challenges to be overcome in ensuring Canada’s energy future.

Development of the Canadian Energy Systems Simulator

The simulator will be developed in partnership between a group of Founder organizations, whatIf? Technologies and the Energy Futures Network (a not-for-profit organization). Post-development services will be provided by the whatIf? and EFN.

The use of CanESS as part of EFN’s Integrated Energy Futures Program is not to cast a ‘plan’ for how Canada can optimize the use its energy resources or reduce its demands, but to better define options that may be pursued and the implications of those options when placed within a cohesive framework. The starting point for the development of CanESS is the Canadian Transportation Energy and Emissions Model (CanTEEM), developed by whatIf? Technologies for the Office of Energy Efficiency, Natural Resources Canada, the Office of Sustainable Technologies and the National Research Council. As illustrated, many modules for CanESS have already been completed, including modules for population / macro-economic context, transportation energy end-use, fuel production, feedstock production, greenhouse gas emissions and criteria air contaminants. Early versions of new modules for residential, commercial and industrial energy use have been developed as well. A forest biomass module is needed to complete the supply side modules. What remains is to refine each module and integrate them into the CanESS framework.

The whatIf? team has extensive experience in developing simulators. It is the creator of the whatIf? ® suite of modeling software and has developed more than 50 simulators in a wide range of fields including energy, urban planning, human resources, demographics, fisheries, agriculture and forestry. whatIf? has developed a workshop-based methodology that allows sector experts to shape the simulator by building and validating the relationships between elements that describe that sector and its relationship to other sectors. This system has proven to result in rapid development of valid modules which are then proof tested by “test flying” the resultant simulator module through a series of expert selected scenarios.

EFN Integrated Energy Futures Program Costs

• What has been done to date? Many of the building blocks for CanESS are already in place. This represents an investment of $500,000 that has been made by NRCan, NRC and whatIf? Technologies.
• How much is needed to complete the first five Program elements? The total cost of completing CanESS and delivering the first five Integrated Energy Futures Program elements is $850,000. Completing the simulator will include a review of the design of the existing modules, the design and implementation of the modules for residential, commercial, and industrial energy end-use, development of the forest biomass module, and full system testing. Each of the first five Program elements will include the process previoiusly described. It is planned that completion of full simulator development will be completed, tested and available for use by mid-2008 with the first Program element, Canada's overall supply demand balance in 2050, undertaken as part of the “test flight” of the simulator.

CanESS Founders

The Energy Futures Network is inviting organizations whose mandates would be furthered by the availability of CanESS and the Integrated Energy Foresight Initiative to become CanESS Founders. Founders will share the cost of completing the Simulator and will participate in reviewing and refining the remaining modules. In this way, Founders can be assured that the CanESS has sufficient structure and flexibility to explore options and scenarios of interest to them.

The Energy Futures Network is seeking additional CanESS Founders who will commit a minimum of $100,000 each towards the development of CanESS.

The target for receiving these commitments is the end of 2007 so that work on the remaining modules can be completed by mid-2008. Commitments for a minimum of $250,000 must be received before the project will proceed.

On-Going Operations and Maintenance

Services provided by EFN and whatIf? based on CanESS will be made available to interested organizations on the principle of full cost recovery both for ongoing simulator maintenance costs and the costs of providing the full range of available services. Non-Founder organizations wishing to have access to the model and related services will be invited to become CanESS Subscribers An annual subscription fee of $10,000 has been set provide access to the simulator. Client scenario development and reporting, custom simulation runs, facilitated workshops and staff training for internal use will be on a fee-for-service basis.

Benefits for CanESS Founders

• CanESS subscription fees for CanESS Founders will be waved for a period of two years.
• CanESS Founders may participate in the design of CanESS and will be invited to the initial design workshop expected to be held in November, 2007 where they will be asked to identify scenarios of interest to them and where the structure of the model will be designed to accommodate those scenarios.
• CanESS Founders will be invited to participate in the first five Integrated Energy Futures Program Forums with the opportunity participate in background assumption review, scenario development and workshop participation where simulator outputs will be discussed and action plans developed. Founders will have access to all scenario simulator outputs and will receive a final program report.
• CanESS Founders may have a seat on the CanESS Advisory Board that will give guidance to the CanESS program.

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