A Renewables Powerhouse

New research finds that wind and solar power with battery storage is set to produce cheaper electricity than natural gas in Alberta and Ontario

Key Takeaways

  • In Alberta and Ontario, wind can now produce electricity at lower costs than natural-gas-fired power with even more cost reductions on the horizon. Tweet this
  • Solar power is already cheaper than natural gas power in Alberta and is on track to be 16% less expensive by the end of the decade. Tweet this
  • Even when the costs of battery storage are included, both wind and solar are cost-competitive in many scenarios. Tweet this
  • Power plants typically operate for decades, so decisions made now will have repercussions for many years into the future. But until now, many forecasts used by decision makers were based on data that’s out of date or from other countries. This study offers Canadian, province-specific information. Tweet this

Executive Summary

In 2023, a few things are impossible to ignore. One is climate change: from floods to heatwaves, it’s clear the climate clock is ticking. Then there’s energy: whether it’s $2 gas or higher home heating bills, powering our lives has gotten pricier.

These two realities—climate change and volatile energy prices— have a common denominator in fossil fuels. They also share a common solution. In Alberta and Ontario, wind can now produce electricity at significantly lower costs than natural-gas-fired power— with even more reductions on the horizon.

Even without carbon pricing, wind power is set to be 40% cheaper than gas-fired-power in both provinces by 2030. Solar power, meanwhile, is already cheaper than natural gas power in Alberta and is on track to be 16% less expensive by the end of the decade. What’s more, wind and solar costs are expected to decline by as much as 40% by 2035, compared to relatively flat costs for new gas deployments, according to new research from Clean Energy Canada based on work commissioned from Dunsky Energy + Climate Advisors. The analysis is among the first to examine the location-specific costs of building new clean power in these two provinces. The study also explores the costs of using battery storage to complement this wind and solar power, finding that, even with storage included, wind and solar is still highly cost-competitive with natural gas.

These results are important for a few reasons. For starters, Alberta and Ontario are both in the midst of transforming their power grids. Alberta is phasing out polluting coal power, while Ontario has plans to decommission aging nuclear plants. Currently, both provinces are planning for natural-gas-fired power to play a leading role in filling this gap.

The federal government has committed to new regulations that would require Canada’s grid to have net-zero emissions by 2035. This policy is a fundamental pillar of Canada’s plan to meet its Paris Agreement climate targets. And in a world that’s increasingly valuing low-carbon products, it will be key to maintaining and growing Canadian industry’s low-carbon competitive advantage.

But because power plants typically operate for decades, the choices made today will have substantial ramifications for 2035 and beyond. Building new natural-gas-fired power plants means locking in emissions—and costs—for many years to come. There is also the risk that fossil fuel infrastructure is retired before the end of its economic lifetime and becomes a stranded asset—a liability taxpayers would likely pay for.

The implications of these electricity choices are compounded by another important factor: electrification. A lot more of the energy we consume is going to come via a plug, from our home heating systems to the cars we drive. In fact, achieving net zero by 2050 will require Canada to roughly double its electricity capacity to meet demand. Both Alberta and Ontario’s grid operators are investigating pathways to a net-zero power grid, but many of the forecasts have been made using data that is out of date or from other countries. The province- specific data in this report can thus help utilities make more informed choices.