Canada

Canada

'Wind can compete in merchant Alberta', CanWEA claims

Wind power has a future under an Albertan government committed to ending the province's renewable energy auctions, the Canadian Wind Energy Association (CanWEA) believes.

CanWEA regional director for the prairies, Evan Wilson, speaking at the association's Spring Forum in April
CanWEA regional director for the prairies, Evan Wilson, speaking at the association's Spring Forum in April

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The United Conservative Party (UCP) was elected to office in Alberta, Canada last week, having pledged to remove "costly" subsidies for clean energy and instead usher in "market-driven green power" in its manifesto.

CanWEA said it "looks forward to working with the new government to ensure market-driven approaches are in place" to aid wind power development.

Evan Wilson, CanWEA’s regional director the prairies (Alberta, Saskatchewan and Manitoba), told Windpower Monthly given the low prices achieved in the province’s three tender rounds, wind could compete in a merchant environment.

In the first of three previous auctions, a national record low price of C$30.90/MWh (US$24.21/MWh) was achieved, Wilson noted.

Meanwhile, on average, deals were struck for around C$40/MWh (C$30.90-43.30/MWh in the first tender, with narrower ranges in rounds two and three).

These prices are below the average pool price of C$51/MWh for the year-to-date when the second and third tender results were announced in December 2018, according to the Alberta Electric System Operator.

"If wind can be built at these prices, then that provides a pretty good hedge against pool prices," Wilson said.

"Because of their lower cost, renewables will be able to compete. (We see) support for continued renewables development," he added.

Wilson suggested power purchase agreements (PPAs) with large-scale energy users — an increasingly common type of contract agreed for wind farms south of the border in the US — or trading accredited offsets could also ease wind into the merchant environment.

The UCP has vowed to scrap the carbon tax introduced by the outgoing New Democratic Party.

However, it plans to implement its own emissions reduction program, which Wilson believes could encourage contracts promising reliable revenue streams for wind power developers.

Under the new Technology Innovation and Emissions Reductions (TIER) regime, which is planned to come into force on 1 January 2020, large industrial emitters must reduce their emissions intensity by 10% from their average performance between 2016 and 2018.

Emitters can reduce emissions at their own facilities, purchase credits from facilities that have exceeded their compliance targets, purchase credits from "emissions reductions occurring elsewhere in the Alberta economy", or pay a C$20/tonne penalty.

Wilson adds that this could incentivise clean energy PPAs or the purchase of credits from renewable energy projects, such as wind farms.

However, question marks remain over the feasibility of PPAs for Albertan wind farms and whether such projects can generate the appropriate offsetting credits, he admitted.

"I think the UCP are trying to signal that they still want an environment for renewables to compete on the market," Wilson said.

"We just need to get these details confirmed. The wind industry is keen to work with the UCP government," he added.

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