Renewable power market booming in Alberta: experts

Alberta has become a destination for renewable energy projects due to the unique electricity market and prime weather in the province, experts say.

The province will see $3.75 billion in investment in the renewable sector by 2023, said Nagwan Al-Guneid, the director of Business Renewables Centre (BRC) Canada, which is now producing two gigawatts of clean energy, more than enough electricity to power all the homes in Calgary, Lethbridge, Medicine Hat, and Red Deer combined.

“It's very exciting times to see this boom,” Al-Guneid said.

The BRC Canada, a group that works to make it easier for corporations to enter the renewables market, was established in 2019. BRC set a goal of reaching two gigawatts of energy generation by 2025, but have reached the goal three years early.

“We want it to be ambitious and bold, but we want it as well to be realistic,”Al-Guneid said

The new investment will create 4,500 jobs in the province, and BRC is seeing companies such as Amazon, TC energy, and RBC coming to Alberta to invest in the renewable sector.

The reason these companies are flocking to Alberta to invest in renewables is due to the unique electricity market in the province, Al-Guneid said.

Alberta has a deregulated electricity market, Al-Guneid said, which is unique compared to the rest of the country. It allows for those looking to buy energy to go directly to private power producers to buy the electricity they produce per year, either for their own use or for credit.

In other provinces, buyers must go to the government or through a government agency to purchase power, but in Alberta the direct purchase agreement draws a lot of private-sector investment to the province, Al-Guneid said.

The Alberta market allows for companies to easily buy power purchase agreements (PPAs) or virtual power purchase agreements (VPAs). The companies aren't powering their building through solar or wind energy, but rather paying to support the creation of renewable energy which will then hit the energy grid for broad use. 

“This market helps companies to strike a deal with a wind or solar developer in Alberta without the need of a utility company. So, it's a direct transaction. And we are the only jurisdiction in Canada that allows this type of mechanism — the power purchase agreements,” Al-Guneid said.

Companies which aren’t based out of Alberta can enter into VPAs with Alberta energy creators. What those companies get through the exchange is a Renewable Energy Certificate (REC), Al-Guneid said. The certificate allows companies to claim they have helped produce renewable energy, which helps to de-carbonize Alberta’s energy grid.

Sometimes municipalities will join and do a PPA with an energy developer, which Al-Guneid said is known as aggregation. The communities don’t have enough of an electricity load as a giant company, but when they come together they can purchase energy in large qualities.

So far Al-Guneid said there aren’t many municipalities selling the energy.

Jeremy Barretto, a lawyer who deals with regulatory laws around renewables, said historically Alberta and other provinces were building renewable projects with government incentives or subsidies. This has rapidly changed in recent years.

“Specifically in Alberta where renewable projects — so wind projects, or solar power projects — are being built with no subsidies and with private companies entering into agreements to buy the power,” Barretto said.

“That’s what I would say has led to a surge of new projects being financed, approved, and built in the province.”

Barretto said the increased focus on things such as climate change, carbon taxes, and the environment has led companies to look at buying renewable energy toy to meet their corporate sustainability and environmental goals.

The lawyer works across Canada, but companies which are buying power are very focused on purchasing in Alberta.

“There's been billions of dollars of investment in renewable energy put into Alberta from private companies in only the last few years. And I don't see that trend stopping, [what] with the increased focus on climate change and environmental matters and the fact that Alberta is still the best market to invest in,” Barretto said.

Sara Hastings-Simon, a professor at the University of Calgary and an expert in energy, innovation, and climate policy, said the companies which are investing in this sector are looking to be leaders and want to make sure their money is going to create new renewable energy projects and new development that wouldn't have happened otherwise.

“We're seeing more entering into contracts into power purchase agreements with developers, so they make a commitment to purchase the energy and the renewable attributes for an extended period of time — 10 years, 20 years — [which] depends exactly on the details of the contract,” Hastings-Simon said.

These agreements allow the renewable energy developer to obtain financing and build out the project, Hastings-Simon said.

The expert said there are large companies in Alberta which are part of the large emitters program that will purchase some of this energy to reduce their emissions to help meet their requirements with the carbon tax.

Weather

The sunny and windy weather are great for renewable opportunities in the province, said Al-Guneid, and the solar and wind energy in south and central Alberta is expanding rapidly.

“That’s where we see most of the renewable energy development to date, but I would say that both resources are strong enough across much of the province to enable that geographic diversity in a generation,” Al-Guneid said.

With advancements in renewable energy technology, Hastings-Simon said producing solar and wind energy are much cheaper than they have been in the past.

Wind turbines have been getting larger and taller, Hastings-Simon said, and they are able to capture wind speeds that are higher as they build higher up, which increases the amount of energy generated.

“You used to have needed a bunch of turbines to capture, to generate the same amount of energy that one takes today. And that can bring down the cost quite a bit,” Hastings-Simon said.

In 2021, around eight per cent of Alberta's electricity came from wind and solar, and in 2019 only five per cent came from those same sources, Al-Guneid said.