WIND

Is Alberta’s time as a renewables hotspot ending?

Canadian province Alberta last week ended a six-month moratorium on approvals for renewable energy projects — and brought in strict rules that threaten its status as a destination for wind and solar investors. This is already damaging investor confidence.

RICHARD HEAP

March 5, 2024

  • Alberta ended a six-month ban on wind farm approvals last week
  • But it brought in rules that will dramatically curtail installations
  • Alberta projects were 92% of new renewables in Canada in 2023

 

It is tradition in the UK and Ireland that women can propose marriage to their partner on leap day (29th February).

But the tradition hasn’t made it to Canada, where the only thing that Alberta Premier Danielle Smith was proposing was strict new rules on wind, solar and other types of renewable energy generation. A six-month moratorium on approvals for renewables projects of more than 1MW headline capacity in Alberta ended on 29th February, but it was swiftly replaced by new stringent rules on clean energy in the province.

The moratorium has caused uncertainty for developers and investors. Many will choose to focus their efforts elsewhere, but those that remain will be forced to grapple with rules that severely restrict where renewables projects can be built.

The rules came into force just after leap day, on 1st March, and include:

  • The Alberta Utilities Commission will take an “agriculture first” approach when it evaluates the best use of land for renewable energy projects; and will refuse approvals for projects on prime site unless they can coexist with farming uses.
  • Wind farms will not be permitted within 35km of protected areas and “pristine viewscapes” that will be designated by the province.
  • Renewables operators will face changes to how transmission costs are set for their projects, where more details are due to be announced in the coming months.
  • Developers will have to put up project bonds to cover costs of decommissioning their renewable energy projects at the end of their life cycle.
  • Municipalities will automatically have the right to take part in AUC hearings.

These changes are undermining Alberta’s status as one of Canada’s leading provinces for growth of wind and solar power.

The Canadian Renewable Energy Association has reported that the country had 21.9GW of installed wind, solar and energy storage capacity at the end of 2023, which rose 2.3GW (or 11.2%) in 2023.

Of that 2.3GW, 92% was installed in Alberta, including almost 1.7GW of wind and 329MW of solar. The province now has nearly 4.5GW of installed wind capacity and 1.6GW of solar, putting it second only to Ontario (5.5GW of wind and 2.7GW solar). Around one-third of the electricity used in Alberta now comes from renewables.

However, that growth has prompted Smith to take action to curtail wind and solar so expansion happens only in a “limited and well-defined way”.

She also gave the optimistic soundbite that the province would “continue to lead the country” in its attractiveness to renewables investors – although the industry’s hostile initial verdict on last week’s reforms told a different story. One developer branded Alberta a “banana republic” in the Canadian media for its short-term anti-renewables policy decisions, for example.

First, Smith’s positive quote does not reflect her administration’s track record of hostility to renewable energy sources. Smith said wind and solar can play roles in Alberta’s energy mix, but added that the technology is “intermittent and unreliable” and has clashed with Prime Minister Justin Trudeau over his policy of removing carbon emissions from electricity generation by 2035. Smith prefers 2050. There is no indication that promoting wind and solar will remain high priority in Alberta, and this can only harm investor appetite.

Second, there are major practical concerns about the “pristine viewscapes” mandate. There is little clarity over what a “pristine viewscape” actually or how the rule is going to work in practice, but an estimate from Pembina Institute is that the 35km exclusion zone threatens to rule out around three quarters of land for wind farms. That’s huge.

In addition, if we assume that “pristine” means landscapes that are unobstructed and natural then that would rule out many sites with the best wind conditions.

Third, concerns about whether renewables can operate alongside agriculture, as well as the criticisms of its intermittency and unreliability, hark back to a bygone age. The wind sector has shown wind farms can predictably supply power and work alongside the agricultural sector. Smith’s concerns appear to be stuck in the past – even if it a past that some fellow leaders in North America, including US presidential candidate Donald Trump, are bringing back into the present.

And fourth, the prospect that developers have to put up a bond or security to cover the cost of decommissioning projects at the end of their life cycle then it will only add to up-front capital expenditure. This threatens to make it more expensive to finance new wind farms.

Rick Smith, president of the Canadian Climate Institute, warned that these strict new rules will “throttle a booming industry, increase electricity rates, and drive away investment” by developers and corporates that want to power their operations with “low-cost, clean electricity”. Meanwhile, developers including BluEarth Renewables have said they would be better devoting their time and effort elsewhere.

Alberta has some of the most attractive renewable energy resources in Canada. But that is not enough when developers and investors cannot be confident in the stability of the regulatory regime. This all suggests that Alberta’s time as a renewables investment powerhouse is coming to an end.