Research Report

POWER TO CHANGE: HOW ALBERTA CAN GREEN ITS GRID AND EMBRACE CLEAN ENERGY

James Glave
Ben Thibault
Copyright Date: May. 1, 2014
Published by: Pembina Institute
Pages: 28
https://www.jstor.org/stable/resrep00253
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Table of Contents

  1. Front Matter
    (pp. [i]-[i])
  2. Table of Contents
    (pp. [ii]-[ii])
  3. EXECUTIVE SUMMARY
    (pp. 1-1)
  4. ABOUT THIS REPORT
    (pp. 2-2)
  5. THE LAY OF THE LAND: HOW ALBERTA SOURCES ITS POWER
    (pp. 3-4)

    In early 2009, the Pembina Institute released Greening the Grid: Powering Alberta’s Future with Renewable Energy. The report outlined how the province could use proven technologies to harvest its abundant solar, wind, hydro, and biomass energy resources. It concluded that the province could transition its grid from one based on coal, to one based on cleaner and more diverse supply, including these renewable resources, within 20 years.

    Five years later, Alberta has made some progress in diversifying its electricity system and cutting energy waste.

    Since 2009 the province has almost doubled its installed wind power—adding more than 500 MW...

  6. THE MAIN BARRIER TO RENEWABLE POWER IN ALBERTA
    (pp. 5-5)

    Simply put, it is extremely difficult to finance a wind or solar farm—or, for that matter, a hydroelectricity or geothermal power plant—in Alberta.

    Renewable energy is a capital-intensive business. Once a given wind or solar farm is built, the developer can supply electricity at a very low operating cost for the life of the project— but in Alberta the first hurdle is the highest.

    The province’s deregulated market offers generators both pros and cons. On one hand, a supplier of any kind can directly contract with a customer, and any generator can risk making an investment and sell...

  7. A POWER SYSTEM PRIMED FOR CHANGE
    (pp. 6-6)

    As any economist will tell you, the price of a given product or service should accurately reflect its true cost and value. In the case of Alberta’s electricity market, we know that pollution represents a cost to society— through health impacts and degraded land and water. Although the costs of pollution are challenging to calculate, they are not impossible to quantify.

    Just over a year ago, a coalition of public health organizations—the Asthma Society of Canada, Canadian Association of Physicians for the Environment, and The Lung Association of Alberta and NWT—published a study with the Pembina Institute. A...

  8. A GROWING NEED FOR POWER: MIND THE SUPPLY GAP
    (pp. 7-7)

    Alberta’s appetite for electricity will grow in lockstep with its oilsands sector. The Alberta Electric System Operator predicts that 6,190 MW of new electricity generation capacity will be needed by 2022, and that 12,965 MW more will needed by 2032 (Alberta Electric System Operator, 2012).

    When it comes to significantly reducing greenhouse gas emissions while meeting increasing supply needs, non-emitting renewable electricity is hands-down the most competitive and effective solution. Once a grid is cleaned up, it can enable emissions reductions in other sectors (such as transportation via electric vehicles). Many technologies for carbon sequestration and transformation of waste CO2...

  9. THE RISKS OF BUSINESS AS USUAL
    (pp. 8-8)

    Alberta’s power industry is of course well aware of the looming demand-supply gap, and has a solution in mind: natural gas. As outlined in Scenario 1 on page 11, the industry expects to ramp up gas generation in the coming years. However, though it may be economic today, gas is far from the panacea that the power industry is holding it up to be.

    History shows that natural gas prices are notoriously volatile. The fuel is currently cheap, but with increased demand in the United States and a move to export natural gas through liquefied natural gas terminals, it is...

  10. ONE PROMISING PATH: A RENEWABLE ENERGY POLICY FRAMEWORK
    (pp. 9-10)

    Alberta’s generation-demand gap presents the province with an unprecedented opportunity to seriously slash greenhouse gas emissions, lower public healthcare costs, and create new business and investment opportunities.

    Around the world, a number of economic, environmental, and security imperatives are accelerating the global adoption of renewable energy. Last year, investors poured $254 billion into solar, wind, and other clean power sources. (Pew/ Bloomberg New Energy Finance, 2014). In large part due to massive and ongoing clean energy investments in China, wind and solar—once expensive boutique technologies—are now competitive with fossil fuels in many jurisdictions.

    Solar module prices have plunged...

  11. METHODOLOGY
    (pp. 11-15)

    To understand the degree to which provincial policies could reduce coal’s share of Alberta’s power-generation mix, we modelled three scenarios, which we have called Continued Fossil Reliance, Clean Power Transition, and Clean Power Transformation. We will discuss each of these, along with their results and impacts. For a discussion of our approach to effective capacity, price modelling, and greenhouse gas projection, please refer to the Appendix.

    Our Continued Fossil Reliance scenario assumes a business-as-usual approach to power demand and production in Alberta. We have based it on two publicly available forecasts of electricity demand and generation supply—those of the...

  12. RESULTS
    (pp. 16-18)

    Under a Clean Power Transformation scenario, within two decades Alberta could reduce its reliance on coal-fired power for grid electricity from today’s 63.8 per cent to a mere 3.6 per cent of energy, without switching to heavy reliance on natural gas. Figure 6 demonstrates the much larger diversity of supply capacity in the two clean power scenarios.

    This shift would deliver an impressive 69 per cent reduction in annual carbon pollution from the province’s power sector relative to business as usual, as shown in Figure 7. It would also substantially decrease air pollution, improving public health outcomes and lowering healthcare...

  13. RECOMMENDATIONS
    (pp. 19-19)

    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...

  14. APPENDIX
    (pp. 20-21)
  15. SOURCES
    (pp. 22-24)
  16. Back Matter
    (pp. 25-25)