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.
“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.
This article was originally published by DeSmog Canada here and was republished with permission.