Canada: Alberta's First Renewable Electricity Program Competition Brings Record-Low Wind Power Prices

On December 13, 2017, the Alberta Electric System Operator (AESO) announced the results of the first round of the Alberta Renewable Electricity Program (REP) competition. The REP is intended to encourage the development of 5,000 megawatts (MW) of renewable electricity generation capacity to the Alberta grid to meet its goal of producing 30% of the total electricity generated annually in Alberta from renewable energy resources by 2030. For a description of Alberta's REP, please refer to our April 5, 2017 Osler Update.

REP Round 1 results

By all accounts, this "opening-round auction" was a huge success with the selection of four wind projects to deliver nearly 600 MW of wind generation, representing a large investment in green power in Alberta and resulting benefits for the industry and the Albertan workforce. The auction also brought record-low pricing for wind energy generation, which will keep power affordable for Albertans. The total value added is approximately $1 billion of private-sector investment in green power generation within Alberta.

Four wind projects developed by three companies were selected. These projects will add approximately 600 MW of power to the market, enough to power approximately 255,000 homes. This is 200 MW more than the 400 MW the Alberta government had originally planned to procure, yet the entire auction came in under budget.

The weighted average price of the power under 20-year Renewable Energy Support Agreements (RESAs) entered into with the successful bidders is historically low at $37 per megawatt-hour (MWh) or 3.7 cents per kilowatt-hour (kWh).

Selected projects

Three bidders were selected from a pool of 12 bidders and 26 projects, representing 3,600 MW of energy, that qualified to participate in the opening round of the REP. A list of all qualified bidders and information regarding the successful bidders and their projects can be found on the AESO website.

The successful bidders and their projects are as follows:

a.  Capital Power – the 201-MW Whitla Wind project located 60 kilometres (km) southwest of Medicine Hat.

b.  EDP Renewables Canada Ltd. (EDP) – a 248-MW wind farm approximately 50 km north of Oyen, located at the company's existing Sharp Hills project.

c.  Enel Green Power North America, Inc. (Enel) – the 115-MW Riverview Wind Farm and the 31-MW Phase 2 of Castle Rock Ridge Wind Power Plant, which are located near Pincher Creek.

As part of the bid requirements, these projects are expected to be operational by 2019, and must meet the Natural Resources Canada definition of renewable energy and utilize an existing transmission or distribution system.

All three companies have entered into 20-year RESA agreements with the AESO pursuant to which the winning projects deliver all electricity and renewable attributes or credits generated by the projects in exchange for fixed-price certainty on the power. These agreements are structured as a "contract for difference" for a 20-year period starting from the commercial operation of the relevant facility – if the bid price exceeds the Alberta power pool price, the AESO pays the generator the difference, and if the bid price is less than the Alberta power pool price, then the generator pays the difference to the AESO.

Pricing

The weighted average price of the power contracted under the 20-year RESA agreements is historically low at $37 per MWh or 3.7 cents per kilowatt-hour (kWh), and the range of winning prices varied between $30.90 and $43.30 per MWh. 

In contrast, Ontario has recorded FIT Pricing [PDF] at 13.5 cents/kWh, and LRP I results (as of March 2016) of a weighted average price of 8.59 cents/kWh among five wind contracts totalling 299.5 MW.

The bidders essentially bid their lowest acceptable cost for the proposed project, which benefits the market by creating a downward pressure on the cost of renewable projects. The renewable energy credits (RECs) are the form of support the government provides the bidders with for taking this risk. Additionally, RESA contracts have the benefit of creating predictable revenue streams for the province, while also providing protection to Albertans from upticks in electricity prices.

Future REP rounds

The Alberta government has indicated its intention to launch a second round of the REP in the first half of 2018, but no further details have been released. The AESO will continue to run competitions to contract subsequent tranches of capacity under the REP to coincide with the retirement of coal power plants in Alberta. While no details have been published, there is much speculation about a solar carve-out or other non-price-based qualification criteria in future rounds of the REP. To the extent that price competition is the sole or a significant feature of future REP rounds, the 3.7 cents per kWh benchmark set in REP Round 1 will be instructive for future bidders.

Impact on Albertans

The Alberta government has indicated that it expects the REP to continue to grow, creating more than 7,000 job opportunities for Albertans and attracting over $10 billion of investment in the provincial economy from investors within the province, country and abroad. Specific benefits for Albertans include:

  • direct employment totalling approximately 14,862 person-years and opportunities for local businesses;
  • $25.5 million in municipal property taxes;
  • $13.5 million in land lease payments to provincial land owners;
  • $3.6 billion in local spending relating to project development and construction; and
  • $137 million spent provincially in operations and maintenance.

The success of this initial auction is demonstrative of the great investment opportunities that exist in Alberta's wind power market, and renewable power market overall, and a major step for the Alberta government to meet its legislated target of 30% renewable energy by 2030. However, this will come at a cost for the subsidies under the RESAs of an estimated $10 million per year for this initial tranche of wind power capacity, in addition to the other costs arising under the Alberta government's Climate Leadership Plan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions