Business Renewables Centre-Canada Disappointed by Alberta Government Electricity Market Decisions

December 17, 2024

Jorden Dye, director of the Business Renewables Centre-Canada (BRC-Canada), made the following statement in response to the Government of Alberta’s recent electricity market announcement and direction letter to the Alberta Electric System Operator.

“We are disappointed the Alberta government has once again added new uncertainties to the renewable energy market. Clean energy is what will attract the businesses of the future to Alberta, but the direction we’re headed in is only likely to scare them away to other provinces and countries.

“The government’s proposed changes to the electricity market structure will make it difficult for wind and solar projects to operate profitably.  

“We now know that transmission costs will, to some extent, be passed on to developers. We don’t know the extent of that, though, and the missing details are likely key to project decisions for many developers. Unfortunately, it looks like the new transmission rules won’t come into effect until 2027, by which time many renewable energy developers will have made decisions to build projects elsewhere.  

“Another change that looks distinctly unfriendly to renewable energy developers has to do with how the government plans to address what’s called congestion. Congestion happens when the transmission grid can’t handle all the power being generated at any one time. There are a number of options to prevent this from happening, and the government appears to be considering the stick, not the carrot, option. This includes punishing projects that were built under legislation that prohibited congestion in the system. These projects must be allowed to exist without impact and should be connected to the grid as originally guaranteed.

“During consultations on options for the new market structure, the Alberta Electric System Operator released analyses of various structures. The market design proposed by the AESO will leave renewable energy projects unable to make a profit after 2032, according to the government’s analysis (see page 21). The government is making these choices fully aware that this model won’t work for renewables. What they’re preparing to saddle Albertans with is an electricity market ill-suited for the 21st century.

“We’ve been asking the government for a year to provide the industry with certainty and some reasonable regulations that work with the realities of a modern grid. Other provinces and countries have faced this challenge and seem to know how to make that work. Renewable energy could help the provincial government reach its net-zero status by 2050. But only if it actually gets built here.

“It’s vital that we inject some energy back into Alberta’s renewables market. This year marks the slowest rate for power purchase agreements since we began tracking them in 2019. Last year, we saw 1,000 megawatts in deals. That dropped to 52 MW this year. Clearly, the uncertainty has had an impact.

“The frozen Alberta market has implications for ratepayers. PPAs add substantial wind and solar power to our electricity grid and support the development of renewable energy beyond what the companies directly need, meaning additional affordable energy is fed into the provincial electricity grid reducing costs for all Albertans. Thirty-four per cent of new installed generation since 2019 was made possible by corporate renewable energy procurement.”  

Quick facts

Solar and wind projects overwhelmingly utilize low-value agricultural land, with 70 per cent of solar projects located on low-suitability agricultural land, according to a BRC-Canada submission to the Alberta Utilities Commission. No solar projects have been completed on high-quality agricultural land. (Low-suitability agricultural land is rated as classes 4-7 in the Land Suitability Rating System, used by the Alberta government to rate the suitability of land for agricultural spring-seeded small grains and hardy oilseeds.)  

According to the BRC-Canada Deal Tracker, from January 2019 to September 30, 2024, 3.31 gigawatts (GW) of renewable energy have been purchased through power purchase agreements (PPAs), enabling a total of 4.10 GW of project capacity. This equates to 12,400 gigawatt-hours per year of energy provided, leading to:

• the creation of 6,200 jobs,
• $6.4 billion in capital investment, and
• production of enough energy to power 1.7 million homes.

Alberta municipalities were paid $54 million in tax revenues by wind and solar projects operating in their jurisdictions this year, according to a BRC-Canada analysis. This is almost double the amount paid one year ago.