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Energy Watch: Alberta ‘wasting’ wind power opportunity

ANALYSIS: In Alberta, the winds of progress towards more renewable energy are still when they should be gale force.

The province is actually a Canadian wind energy pioneer, having been home to Canada’s first commercial wind farm at Cowley Ridge since 1993. However, with absolutely zero incentives in place to encourage the multimillion-dollar investments needed for more turbines to bag the Alberta breeze, even home-grown wind power builders may soon start to lose interest.

“We want to see a better market in Alberta because there is such a great opportunity here,” Kent Brown, co-founder and CEO of Calgary-based BluEarth Renewables, told BNN. “We need to replace coal.”

That is, in fact, the plan. Roughly 4 gigawatts (GW) of total coal-fired electricity generation capacity is due to be retired province-wide over the next couple of decades. Meanwhile, as hundreds of thousands of new arrivals flood into the province every year, peak electricity demand on the Alberta grid is expected to grow by 2.5 percent annually through 2034. That will require at least 13 GW of new generation capacity to come online by then.

Ontario and Quebec both have substantially more installed wind capacity than Alberta (Ontario, in fact, has double the capacity of Alberta at approximately 2.86 GW). Much of that has to do with specific incentives in those provinces; long-term power purchase agreements being arguably the most important as they significantly reduce the cost of capital required to build those massive wind farms.

Without long-term contracts in place, wind power has struggled to find an economic footing in Alberta, especially in recent years. In 2013, for example, the average spot market price for electricity in the province was $80.19 per megawatt-hour (MWh), but according to a recent report in Wind Power Monthly, wind-generated energy earned an average of just $54.97/MWh last year.

Already the result has been a marked drop in the pace of wind power expansion in Alberta. In May 2012, nearly 5.7 GW worth of wind projects were being planned for the province. By August 2014, however, the figure stood at barely one third of its former level, just below 2 GW.

Despite the relative economic disadvantage, wind developers are doing their best to work within Alberta’s deregulated market. BluEarth is planning to have its 78 MW Hand Hills project online in Alberta in the near future and just this past spring, EDF EN Canada started generating power from its 300 MW Blackspring Ridge facility.

“I recall the words of a famous bank robber, when asked why he robbed banks, his answer was, because that’s where the money is,” EDF EN Canada executive Jon Kieran told a wind energy conference earlier this year, referring to his company’s first foray outside of the Quebec wind market. “Looking in the western provinces of Canada, you are really looking at the only power grids that are growing.”

Working within standard market forces is hard to do in Alberta right now, said BluEarth’s Brown, “but we like that because we kind of like to do hard things. We as a province are wasting an enormous resource and we should take advantage of that because others are and they are passing us by.”

There are relatively simple actions the province can take to top up the pace of wind turbine construction in the province without issuing direct financial incentives or, as is the case in Ontario, actually mandating long-term purchase agreements through a feed-in-tariff or FIT program. Among the more promising ideas put forward recently by the Canadian Wind Energy Association (CanWEA) is a so-called “clean electricity standard” that would impose a maximum greenhouse gas (GHG) emissions intensity level on electricity sold by retailers. That would necessitate building more renewable capacity to keep emissions intensity down during periods of peak demand.

Alberta could also raise the price it charges the province’s large emitters. Since 2007, those who emit more than 100,000 tonnes of carbon annually have been required to reduce those emissions by 12 percent or pay $15 per tonne of carbon emitted above that limit. That regulation expires at the end of this year.

There has been some discussion about raising that price, which would encourage Alberta’s largest emitters to sign long-term deals with renewable power producers, but recently anointed Premier Jim Prentice has said he would only be willing to do so if it was part of a larger regional effort, which seems unlikely.

For BluEarth’s Brown, Alberta’s attitude towards encouraging more wind power boils down to a simple question: “Is Alberta willing to take advantage of the opportunity it has, or do we want to just do more oil and gas? I think we can do both.” CTV Two CTV News CTV News Channel BNN - Business News Network CP24