Alberta set to buy 400 megawatts of renewable power
Coal phase-out, move to renewables could cost $4 billion to $8 billion
Alberta will hold its first auction for renewable power contracts early next year as the NDP government moves on its strategy of having 30 per cent of the province’s electrical supply coming from sources such as wind, solar and hydro by 2030.
The government tabled legislation Thursday enshrining the target in law but Environment Minister Shannon Phillips laid out details of the province’s plan in a morning speech at the Canadian Wind Energy Association’s annual conference in Calgary.
The province will hold its first competition in early 2017, which will see investors bidding to provide up to 400 megawatts of renewable electricity for 20 years, with the winning bidders likely to be announced about a year from now and projects up and running by 2019.
The government intends to use money collected from the existing carbon levy on large industrial emitters to fund an indexed “renewable energy credit” mechanism that will pay the difference between the bidders’ price and the pool price for electricity as a “top-up.”
Phillips said the system is aimed at keeping the price of the transition to renewables as low as possible without financing it through ratepayers.
“The way to get the best price is to ask the private sector what their best offer is, and that’s what we’re doing,” the minister told reporters.
The 30-per-cent target for renewables, compared to the province’s current level of 10 per cent, accompanies the government’s intent to phase out coal-fired power by 2030.
The initiatives are part of the NDP’s sweeping climate leadership plan, which also includes an incoming broad-based carbon tax, a cap on oilsands emissions and a reduction in methane emissions.
Phillips said she could not put a price tag on the move to 5,000 megawatts of renewable power at this point because of the competitive nature of the process.
But she stressed that the NDP has created a “made-in-Alberta” plan that won’t repeat the green power mistakes of other jurisdictions such as Ontario.
A recent study by Calgary electricity consultants EDC Associates suggested the coal phase-out and move to renewables could cost between $4 billion and $8 billion by 2030. The provincial plan is based on recommendations from the Alberta Electric System Operator.
AESO vice-president Mike Law told reporters the new system is designed to lower the top-up as power prices rise, while also avoiding windfall profits for renewable producers. He said the figures brought forward by EDC Associates are “on the high side.”
The government estimates the renewable plan will bring in $10.5 billion in private sector capital investment by 2030 and its announcement was met with enthusiasm by industry players.
“There’s been a tremendous amount of interest in the province from investors, given the targets that had been established. But I think what we saw today was a policy framework that can turn that interest into actual action,” said Robert Hornung, president of the Canadian Wind Energy Association. “I expect to see these competitive processes massively over-subscribed. You’ll see lots of people trying to participate in this process, and the more competition there is, the more cost-competitive it will be and the lower costs there will be for Albertans.”
Opposition parties were more skeptical, however.
Progressive Conservative energy critic Rick Fraser said he wanted to see more details, including regulations, noting that the legislation includes provisions for AESO to hold security or other interests in power projects in case of insolvency.
Fraser suggested a legislated target, and incentives, weren’t needed to boost renewables in the province in any case.
“Investment is not coming just because there’s legislation. Investment would’ve come anyways because wind is more viable, it turns a profit, solar is getting close to that point,” he said.