Werner's Blog — Opinion, Analysis, Commentary
How much more electricity does B.C. use when it gets cold?

Coastal British Columbia, where most British Columbians live, rarely gets really cold. Vancouver and Victoria are the two Canadian cities where the Canadian winter visits sparsely. Newfoundlanders in St. John's, where recent snow storms dumped over a meter worth of snow, can only laugh at Vancouverites when they shut down city operations when 5cm snow accumulates. Yet, poor home insulation in British Columbia quickly drives up electricity bills when temperatures drop into the minus Celsius grades. In my recent blog on electricity demand in British Columbia I explained patterns of electricity use. The same empirical analysis can also quite easily shed light how much cold temperatures cost British Columbians.

The unit of analysis is heating degree days (HDD), which in Canada is defined as the number of degrees that the temperature is below 18°C—the temperature below which buildings need to be heated. I have estimated the Megawatts that are needed for each extra HDD for all of British Columbia. The result is \[ L \space [MW] = 4.28 \cdot \mathrm{HDD} + 4.11 \cdot \mathrm{HDD}^2\]

Let's consider some numbers. The average temperature in Vancouver throughout the year is actually 11°C, which means 7 HDD. The needed load is then 231 MW. In January, the average temperature in Vancouver is about 5°C, which means 13 HDD. Electricity demand now ratchets up to 750 MW. When temperatures drop to the freezing point, 0°C equals 18 HDD. Now demand increases to 1,409 MW (i.e., 1.4 GW). A January day that is 5 degrees colder than normal can thus increase electricity demand by 659 MW. Over a 24-hour period, that comes to 15,816 MWh across BC. The cost for one MWh of electricity to British Columbians is about $118 (in 2019), so if all of the extra demand was paid for by households, this would come to about $1.87 million. If it gets really cold and temperatures fall from +5°C to –5°C, demand climbs by 1,522 MW, or 36,540 MWh over the course of a day. Such a cold day will costs British Colombians about $4.3 million.

What an additional HDD costs each individual household will vary depending on the type and size of building. My own household is probably quite typical in size and electricity consumption. Going from +5°C to –5°C increased my home's electricity use by about 40kWh over a 24-hour period. As is the case for most BC wood-frame homes, its insulation is not particularly good. BC Hydro's Step 2 tariff determines the marginal rate for most households in the winter, which is 14.17 cents per kWh. My extra 40 kWh for heating thus cost me an extra $5.67. If there is a cold spell that lasts many days, some households in BC will feel the pinch. Lowering your thermostat, in particular in rooms that aren't occupied, can help reduce heat losses and save money.

My above analysis is pretty unsophisticated and suffers from a number of caveats. The weather data I use is calibrated only for Vancouver, as I do not have regionally disaggregated load data from BC Hydro. While there is probably a high correlation of temperatures across the regions, sometimes they can differ significantly. Another problem is that temperatures vary over the course of the day, and thus the temperature variance matters. Because the HDD equation above is quadratic, the deep dips cost disproportionately more. When temperatures fall evenly across the day this will cost less than when temperatures fall more at night and are higher during the day. Lastly, there is also thermal intertia. Thus the duration of cold spells can influence demand as well.

As climate change has a measurable long-term impact on local temperatures, some may think that this will dampen electricity costs over the course of the year. That argument may be premature because of two effects. First, if temperatures rise, electricity demand for cooling (air conditioning) will increase in the summer, offsetting potential lower costs in the winter. However, the non-linearity of the demand for electricity when temperatures fall may significantly reduce any saving potential when temperatures become more volatile. Empirically speaking, higher average temperatures in the winter reduce electricity demand while higher temperature volatility in the winter increases electricity demand. On balance, climate change may well lead to an increase in total electricity demand. British Columbia's winter-peaking electricity demand may start morphing more into the double peak pattern we see in Ontario, where electricity demand is lowest in the spring and fall and highest in the winter and summer.

Posted on Friday, January 31, 2020 at 10:20 — #Energy | #BC
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© 2020  Prof. Werner Antweiler, University of British Columbia.
[Sauder School of Business] [The University of British Columbia]