How Did Alberta Achieve Record-Low Green Energy Prices?

Albertans now enjoy the lowest-ever prices for wind energy in Canada, and a competitive auction process has been key to the province’s success.

In keeping with Canada’s Climate Leadership Plan to phase out coal-generated electricity in favor of clean power sources, Alberta implemented Phase 1 of its Renewable Electricity Program in December 2017 by opening a bidding process and inviting companies to compete on building renewable energy projects throughout the province.

The three new wind energy projects that were announced as the winning bidders represent approximately 600 megawatts of energy capacity – enough to power approximately 255,000 homes – at an average cost of $37 per kilowatt-hour, which is a record-low price for wind energy generation in Canada. In contrast, other provinces have recently awarded long-term contracts to wind projects at more than double this price.

The companies behind these three projects have each signed a 20-year Indexed Renewable Energy Credit (IREC) agreement with the Alberta Electric System Operator (AESO) to continue providing predictable revenues while protecting Albertans against hikes in the rates they pay for power. The terms of the IREC state that when the market price is lower than the contracted price, the AESO will pay the energy generator the difference; in contrast, when the market price is higher, energy generators must pay back the difference to the AESO.

Competition for the Next Two Rounds Is Now Open

Alberta has 1,479 megawatts of wind energy, the third-largest installed capacity among all Canadian provinces. Wind currently supplies about 6 percent of the province’s electricity demand. However, Alberta’s ambitious target of generating 30 percent renewable electricity by 2030 has pushed it into the leading position for new wind energy development in Canada.

Alberta’s government has recently announced details for the next two rounds of competition in its Renewable Electricity Program. Eligible projects for both rounds are limited to new or expanded renewable electricity generation projects located in Alberta, and must achieve commercial operation no later than June 30, 2021.

As companies continue to bid on renewable energy projects, Alberta will be well-positioned to succeed in its goal of procuring 5,000 megawatts of new renewable energy by 2030.

According to expert estimates, meeting this objective will result in:

• $3.6 billion in local spending on project development and construction;
• $137 million in operations and maintenance spending in Alberta;
• 14,862 person-years of direct employment; and
• $25.5 million in municipal property taxes and $13.5 million in land lease payments to Alberta land owners, as well as opportunities for local business.

“[This] announcement reflects a competitive and sustainable wind energy industry that is well-positioned to meet Alberta’s ambitious renewable energy goals, said Evan Wilson, Prairies regional director of the Canadian Wind Energy Association. “Alberta has always been a leader in Canadian wind energy development, and will continue to be the largest market for new wind energy for at least the next decade. The wind energy industry looks forward to working collaboratively with the Alberta government, the AESO and host communities as we move forward with the projects.”