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A Look at Alberta's '30% Renewables by 2030' Target

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Recently, Alberta environment minister Shannon Phillips announced that 30 percent of electricity consumed in Alberta will come from renewable sources by 2030.

In order to meet this goal, the government will support the construction of 5,000 megawatts (MW) of additional renewable energy capacity through the purchase of renewable energy credits (REC) from builders or through “contract-for-differences” agreements, which would top up developer revenues when power prices fall.

In order to be eligible for the support, the projects must be:

  • based in Alberta

  • a new or expanded facility

  • 5 MW or greater in size

  • and, compliant with the Natural Resources Canada definition of renewable sources

The details of the program (pricing, term, process, etc.) have not been announced, but are expected in November. According to recent reports, the generation projects are expected to be completed and connected to the Alberta Electric System Operator (AESO) grid by 2019. The funds to pay for the incentive program may come from the province’s carbon levy, which takes effect on January 1 and is expected to bring in $3 billion in fiscal year 2017-18.

So, will 5,000 MW of additional renewable capacity actually get us to the 30 percent target by 2030?

Let’s assume the following:

  • Average AESO load in 2030 is about 12,330 MW (assumes a 2 percent annual increase from the 2015 load)

  • Existing hydro capacity is 894 MW with actual yearly output around 40 percent of capacity, so 358 MW average hourly

  • Existing wind capacity is 1447 MW with actual yearly output around 35 percent of capacity, so 506 MW average hourly

  • New hydro capacity is expected to have availability around 40 percent

  • New wind capacity is expected to have availability around 45 percent due to improvements in efficiency and technology

  • New solar capacity is expected to have availability around 30 percent

So, 30 percent of 12,330 MW means that Alberta needs to generate an average of 3,700 MW per hour from all renewables. The existing renewables (wind & hydro) are expected to provide 864 MW (358 MW hydro + 506 MW wind). This means that the remaining 2,836 MW will have to be provided by the 5,000 MW of proposed renewable capacity. This requires a renewable generation technology with an availability of more than 56 percent. None of the technologies mentioned by the government (wind, hydro, or solar) come anywhere close to this, so either the proposed generation additions are too low, or the goal will not be met.

Interestingly, if all 5,000 MW of proposed additions had 45 percent availability (wind), then the total average hourly renewable output would be 3,114 MW (864 MW existing + 2250 MW new). This would be enough to meet the 30 percent goal if 2015 load grew at an annual rate of 0.8 percent annually. The long term average load growth has been 2.7 percent and only 4 of the last 15 years have been below 1 percent.

What does it all mean?

There is still a lot of information to be released by the government – and the details will be very important. This brief analysis shows that the answers provided so far have been incomplete. The issue is expected to ramp up as we get closer to November, which is when the full program is expected to be unveiled. 

Stay tuned to the Direct Energy Business Blog for the latest policy and regulatory updates. 

Posted: September 27, 2016