This report shows that it is technically feasible for Alberta to eliminate its very heavy coal reliance within 20 years, without simply switching this reliance to another fossil fuel. It acknowledges that natural gas will play an important role in the province’s electricity future, but as one of a wide range of sources. As a critical first step, the province must lower the barriers that limit renewable power.
Many would-be renewable energy developers will not overcome the fundamental project-financing barrier identified in this report unless and until policy helps to mitigate the price uncertainty in the province’s electricity markets.
This will mean introducing more opportunities for long-term power purchase agreements—legal instruments used in jurisdictions across Canada and around the world to define the terms for the long-term sale of electricity. Policy could help incent long-term agreements with creditworthy electricity users and/or retailers through the private sector. A series of recent reports, by KPMG and others, have identified such agreements as the “missing piece” needed to make renewable power work in Alberta and to begin diversifying the electricity system.
The government could turn to a wide variety of instruments to bring power purchase agreements to fruition. Of these, the Clean
Electricity Standard—a more market-oriented variation of the successful renewable portfolio standards in the United States—has attracted considerable attention and support (see sidebar, “The Clean Electricity Standard”). But any number of policy options or take-offs on the above concept could address the existing barriers.
Ultimately, the authors of this report would support any policy options that seek to achieve the following goals for Alberta’s electricity system:
- Level the playing field for renewable energy sources by accounting for the presently hidden pollution and greenhouse gas costs of fossil fuel generation
- Address the major hurdle to financing for renewable energy projects by providing some degree of long-term price certainty for the electricity generated
- Prepare the groundwork and dismantle regulatory barriers for the widespread market penetration of new, clean generation technologies—such as distributed generation and storage technologies that integrate renewable energy into the grid
- Allow renewable energy sources—including distributed generation sources—to fully realize the value of the energy they produce