When the winning bids for Alberta’s renewable power auction
were announced in December, jaws dropped.
The winning projects were approved at a record-breaking low
price of C3.7 cents per kilowatt hour — the lowest price for electricity
anywhere in Canada.
“This is a game changer. Even the most optimistic observers
were shocked at how low the price turned out to be,” said Binnu Jeyakumar,
electricity program director at the Pembina Institute.
My, how the times have changed.
Nearly a decade ago a leaked voice recording showed federal
money earmarked for wind projects
was quietly redirected to subsidize Alberta’s oil patch.
About a year later the fledgling Canadian wind industry was left high
and dry with a federal budget that saw renewable energy as merely a
method of greening the oilsands.
That all changed with the introduction of
the NDP government’s Climate Leadership Plan in November
2015. The plan called for all coal-fueled generating plants to be phased out by
2030. Coal generating plants now produce about half of the
province’s electricity.
Renewable energy producers were so eager to get in on the
action that when the government agency that manages Alberta’s electrical
grid put up for auction 400 MW of renewable power last
year, bids by 12 companies totaled 10 times that much.
In the end, 600 MW — four projects with a total price tag of
$1 billion — were approved.
The recent winning bids revealed keen competition when it
comes to price. The successful bidders will produce wind power at prices much
lower than Ontario, and lower even than natural gas powered plants.
No wonder Premier Rachel Notley could hardly contain her
glee as they announced the auction results to the news media
in mid-December.
“The naysayers predicted that the price of this renewable
energy would probably come in high, about eight cents per kilowatt hour,”
Notley said. “In fact, our process was so competitive and so many companies
wanted to invest we got a 20-year price of 3.7 cents per kilowatt hour.”
More Wind Projects in Alberta to Come
In early February, the government announced two more bidding competitions will get
underway by the end of March with winners to be announced in December.
Round 2, for 300 MW, will require bidders to have a minimum
of 15 to 25 percent Indigenous equity ownership.
For round 3, 400 MW will be up for auction with the lowest
cost the most important determinant.
Robert Hornung, president of the Canadian Wind Energy
Association, was among the first to respond with kudos for Alberta’s
renewable electricity program.
“Today’s announcement is a clear signal that Alberta is
‘open for business’ for renewables,” Hornung stated in the media release,
praising the province’s “clarity and consistency.”
Alberta’s electricity market appeals to renewable energy
developers for several reasons — even aside from its abundance of wind,
sunshine and open spaces.
Notably, Alberta’s power generation and transmission is not
owned and managed by a Crown corporation. Instead, mostly private, for-profit
companies provide electricity to Albertans, allowing more room for new entrants
to the market. Government-appointed agencies oversee their operations and
ensure generating plants and transmission lines keep up with demand
for electricity.
And unlike many other provinces, Alberta does not rely on
hydro to generate electricity; it has usually been too expensive compared to
the power-generation mainstays, coal and natural gas.
The combination of these factors means Alberta presents a
big opportunity for wind and solar producers.
Wind Projects a Boon to Local Communities
Three companies will spend a total of $1 billion on the wind
farms, which will have the capacity to produce electricity for
255,000 homes.
All the winning bids, announced in December, were for wind
projects. Edmonton’s Capital Power, which was a big player during the coal era,
was awarded a 201-MW project in southeast Alberta; EDP Renewables of
Portugal won a 248 megawatt project also in southeast Alberta;
and ENEL Green Power North America, a division of a Rome-based global
power company was awarded projects of 115 MW and 31 MW near Pincher Creek in
southwest Alberta.
The projects will be a boon to local communities because
they will pay municipal taxes, fees to landowners, as well as provide jobs
particularly during the construction phase.
“We are very pleased about this project,” said Joan Hughson,
deputy reeve of Forty-Mile County which stretches southwest of Medicine Hat to
the U.S border and includes about 3,500 residents.
“This will be a very big
boost for our tax revenue because there is little industry here; it’s
mostly farming.”
According to Jerry Bellika, a spokesman for Capital Power of
Edmonton, its project, which features 56 wind turbines, will generate about $2
million a year in taxes for the county. Thirty landowners will receive annual
payments for the use of their land. In addition, neighboring landowners will
receive “goodwill payments.”
The $300 million project still needs approval from the
Alberta Utilities Commission but construction is expected to begin later this
year and be complete by the end of 2019.
Rome-based Enel Green Power has a North American division
headquartered in Massachusetts, and already has a wind farm near Pincher Creek
in the southwest corner of Alberta and will be building two more in the area at
the cost of $209 million.
When asked about plans to engage with the local community
about the projects a representative was vague about exactly what the company
planned to do.
“We are committed to hiring locally when the workforce is
available…we also always look for ways to support critical community
initiatives such as infrastructure, education, recreation, and more,” she wrote
in an email.
EDP Renewables did not reply to a request
for information.
Binnu Jeyakumar of the Pembina Institute said how the
companies engage with and contribute to the local communities will be among the
key factors when it comes to determining if these renewable energy projects
are successful.
“Good community engagement will be critical to building good
will,” she said. “Because there are a lot more renewable projects
to come.”
By 2030 it is anticipated that 30 percent of the grid will
be powered by renewables.
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