Renewable energy ideas charge ahead
One will require Indigenous equity participation in chosen projects
The mood at a renewable energy summit in Calgary was downright bullish Monday after the recent success of Alberta’s push to attract green energy developments to the province.
The first renewable energy auction last year ticked off a number of important boxes, attracting multiple bids, intense competition and the lowest prices for wind power ever seen in Canada.
Environment Minister Shannon Phillips announced two more renewable energy auctions will unfold this year, including one that will require Indigenous equity participation in chosen projects.
Together, the two new renewable programs will add 700 megawatts of power to Alberta’s grid — capable of providing electricity to almost 300,000 homes — once winning bidders are announced in December.
But can the success of the first round be replicated?
Four wind developments were chosen last year with 600 MW of generation, attracting $1 billion of investment, creating 740 jobs and offering average power prices of just 3.7 cents per kilowatt-hour.
Proponents and project financiers believe it’s within the province’s grasp again.
“I don’t see why not,” said Chris Moscardelli, director of the energy group at Societe Generale in New York, who spoke at the Alberta & Saskatchewan Renewable Energy Finance Summit.
“With the favourable market environment we are in today from a financing perspective and the capital costs of the equipment … coming down, I don’t see any reason why we wouldn’t be able to achieve a similar result.”
If the province attains these low prices again, it will be well on the way to its goal of seeing Alberta develop 5,000 megawatts of renewable energy generation and attracting $10 billion of private investment.
In the first round, the certainty of government-backed contracts was a key part of its success. Alberta essentially provided a guaranteed price to developers through an indexed renewable energy credit.
Support payments from government were initially expected to be about $2.4 billion over 20 years for projects chosen in the first auction, but will cost less than $230 million, according to the Alberta Electric System Operator, which runs the province’s power grid.
The Notley government has a broader goal of seeing 30 per cent of electricity in the province coming from renewable generation by 2030 as it also strives to phase out coal-fired power plants and reduce greenhouse gas emissions.
The first round of bidding exceeded expectations with a dozen separate players pitching 26 projects, offering a total of 3,600 MW.
Phillips said the record prices seen in December have “essentially set a target for people to chase, and that means you’re going to have more competition.”
Several factors are pushing renewable prices lower.
Improving technology — wind costs, for example, have fallen by two-thirds in the past eight years — the relatively low cost of capital, and the competitive aspect of the auction are all playing a role.
Robert Hornung, president of the Canadian Wind Energy Association, believes there will be tremendous interest in the next two renewable electricity auctions.
Players who weren’t chosen in December will want to see their proposals back in the running, while new participants will enter the chase.
“I think we will see prices that are competitive with what we saw the first time,” Hornung said. “There’s a lot of excitement. Alberta has clearly become the primary destination for such investment in Canada at this time.” But there are still skeptics. A statement from the United Conservative Party caucus said it remains concerned “the NDP’s policy of ‘investing’ in unreliable forms of electricity will eventually result in major increases in electricity costs for Albertans — just as we are seeing in Ontario.”
Details of the upcoming auctions are still being developed, but AESO’s Mike Law told the conference that as part of Round2 — seeking 300 MW — the grid manager will recommend a minimum level of Indigenous equity ownership of 15 to 25 per cent.
A third auction to procure another 400 megawatts will be run simultaneously, with the winner chosen strictly on the price.
Further information on the program will be released this spring.
For First Nations already interested in joining the transition to green energy, Monday’s announcement was a significant step forward.
Ownership of a project will provide new development opportunities and jobs, and will also increase acceptance toward such energy infrastructure in the province, said Treaty 8 Grand Chief Rupert Meneen.
“When I look at getting into any kind of economic development, it’s about putting our people to work,” he said in an interview.
Likewise, Guy Lonechild of the First Nations Power Authority thinks the 300 MW available in the second auction will become a “tremendous catalyst for Indigenous communities right across the province of Alberta.”
“Wind and solar are just so competitive, right,” he said. “The timing couldn’t be better.”
Some groups are already set to join the bidding process.
The Kainai/Blood Tribe has already been working on a “shovel ready” wind project that could be built on the First Nation in southern Alberta.
“We have everything in place. We have the expertise, we’ve built some capacity to have the financing in place, we’re ready to go,” said Chief Roy Fox.
“We are biting at the bit here — the same as some of my fellow chiefs and leaders. There are only 300 MW available, so I guess it’s game on.”
In Alberta’s transition to renewable electricity, the game is now on.
More power auctions are in the works and 2018 will determine if last year’s record prices were a one-off, or the first of many more to come.