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Alberta, Canada Renewables Seen Cheaper Than Coal in Next Decades

Alberta, which relies on coal to generate about half its power, would see electricity rates rise more slowly in coming decades if use of renewable energy increased, according to a study published today.

Prices for electricity would be 4 percent lower by 2033 with a transition to more wind, solar and hydroelectric power than a persistent reliance on coal and natural gas, according to a report by Calgary-based environmental research firm Pembina Institute and Clean Energy Canada, a Vancouver-based organization that promotes renewable energy. The price per kilowatt-hour in Calgary has averaged less than 10 Canadian cents (9 U.S. cents) in the past decade.

The Canadian province, which holds the world’s third-largest crude reserves, is reviewing renewable energy policies as exports from its oil sands face increasing opposition from environmental groups and lawmakers in the U.S. and Europe. The pressure to curb emissions from Alberta’s bitumen production threatens U.S. approval of TransCanada Corp.’s proposed Keystone XL pipeline linking the oil sands to the Gulf Coast.

Alberta, which boasts Canada’s sunniest weather and only harnesses about 1 percent of its potential wind power, has eliminated most incentives for renewable energy in past decades, making it difficult for investors to compete with fossil-fuel generation, the report said.

‘Real Barrier’

“Alberta could cut its reliance on high-polluting energy dramatically,” said Ben Thibault, electricity program director at Pembina and co-author of the report. “The lack of a renewable policy framework has been a real barrier.”

The province, whose farmers pioneered wind-power development in Canada two decades ago, is working on a new renewable energy policy, Energy Minister Diana McQueen said last month.

A 2013 NRG Research Group poll found that 68 percent of Albertans want coal plants phased out or shut down and replaced with natural gas and renewable energy, the report said.

A separate poll by Oraclepoll Research found that a majority of Albertans also are willing to pay higher prices for electricity generated by wind and solar sources.

Alberta electricity generators are focused on increasing the use of gas to meet growing demand for power in the province. The fossil fuel is trading at about a third of its 2008 peak, helping to boost its adoption in North America.

Natural gas for June delivery rose 11.4 cents, or 2.5 percent, to $4.619 per million British thermal units at the close on the New York Mercantile Exchange today, the highest settlement since May 7.

Copyright 2014 Bloomberg

Lead image: Alberta, Canada via Shutterstock

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