The Alberta government wants electricity providers to commit to selling electricity at a fixed price 24 hours in advance, called the “day-ahead market,” to help control costs.
Affordability and Utilities Minister Nathan Neudorf says the province wants to build power plants — not consumers — to shoulder the cost of adding more transmission where supply is low. This would include the costs of both adding transmission capacity where the system is overloaded and building new lines to new power plants further away from the existing network.
“We want more sustainable energy and we want lower costs and affordability, but we're also recognizing that what we need is reliability,” Neudorf said in an interview Wednesday.
The proposals, which are part of an overhaul of Alberta's for-profit, deregulated electricity market, have angered renewable energy producers, who say the provincial government has not met its commitments to the industry and existing solar power generation. Wind installations at financial risk.
Vittoria Bellissimo, president and CEO of the Canadian Renewable Energy Association (CanREA), says Alberta's existing system allows companies to borrow money to build knowing they must have a smooth revenue stream to repay those loans.
“I'm very concerned that this is not a welcoming environment and we don't want to burn existing capital to the ground,” she said of the government's proposed changes. “If we scare off investors in one area of our economy, that bleeds into others, and that's going to be really problematic.”
Many of those projects are bankrolled by ATB Financial, a provincial Crown corporation, which as of last March had $927 million in outstanding commitments on renewable energy projects, according to the corporation.
Legislation coming in spring 2025
In 2023, Premier Daniel Smith tasked Neudorf with overhauling Alberta's electricity market — something nearly all stakeholders agree on.
Players say market design is out of date due to the rush to phase out coal power to reduce greenhouse gas emissions, the rapid growth of wind and solar power in the province and rising consumer electricity bills.
Tuesday, Neudorf wrote to the Alberta Electric System Operator (AESO). Calling for restructured energy market rules by the end of 2025. In the letter the government wants a day-ahead market, and to implement up-front and non-refundable transmission payments from new power generators, depending on how close they are. Transmission lines with capacity. The details are yet to be decided.
Although Neudorf plans to introduce enabling legislation at the spring 2025 meeting, he says most of the changes will come through regulation.
The minister asked AESO to strengthen power interactions with nearby jurisdictions, including the previously planned upgrades to BC, operating the Montana line independently of the BC line, and replacing equipment on the Saskatchewan tie. instructed, Neudorf said.
Duane Reed-Carlson, industry consultant and chairman of EDC Associates Ltd, said many of the minister's requests reiterated what AESO and industry players wanted.
Currently, AESO covers the costs of building transmission lines where electricity is generated, and those costs are passed on to consumers.
However, he said, the changing nature of power generation has led to overbuilding transmission in the northern part of the state and lack of capacity in the south.
If the province encourages generating energy where the transmission system already has capacity, producers can factor that into the decision of where to locate, Reed-Carlson said.
He said the change could help ensure Alberta consumers are more insulated from “grid alerts” — when electricity use surges exceed supply and the regulator can ask the public or industry to unplug appliances and turn off lights to prevent blackouts.
According to AESO data, there have been 78 grid alerts between 2006 and October 2024. In April 2024, a significant lack of power prompted AESO to ask suppliers to cut power to some customers, leading to some temporary blackouts.
Taxing supplies by adopting a day-ahead market should also help prevent electricity prices from rising, Reed-Carlson said.
This means that power producers have to commit to selling their electricity at a fixed price for the next 24 hours and face financial penalties if they decide not to provide the promised electricity at the promised price.
Reed-Carlson says Alberta imports more electricity than any other province, and it may be more economical to generate more and sell it to neighboring jurisdictions.
Critics say the proposed market would hurt wind and solar
However, proponents of renewable energy projects are confused about the new direction.
That would create an uneven playing field that penalizes larger, larger power plants like natural gas generators, and more distributed sources of energy like wind, solar and storage, says Jason Wang, senior analyst for the Pembina Institute's electricity program.
“It doesn't necessarily increase reliability and is certainly not the most cost-effective way to build the grid of the future,” Wang said.
Low-carbon power generation is also cheaper, he said. The rise of electric vehicles, artificial intelligence and other power-guzzling data centers will also drive demand.
Bellissimo of the Renewable Energy Association said adopting the changes in the proposals would move Alberta in the opposite direction from provinces like B.C. and Ontario, which are pushing renewable energy generation to bolster supply.
The proposals could make it financially impossible to build wind and solar projects in Alberta in the future, she said.
Bellissimo found that in the third quarter of 2024, Alberta's renewable generators were in transmission congestion 45 percent of the time, meaning they couldn't get their power to market.
Construction of new transmission lines has been delayed, she said, and now AESO may be adding more costs to renewable producers with a day-ahead market, none of which the proponents considered when building the plants.
“1,000 cuts feel like death,” she said. “You can't bring your product to market and get paid what you expect to get paid, and then you're going to have more costs added.”
After the government imposed a seven-month moratorium on the approval of new renewable energy projects last year, Neudorf said the industry had to signal that the system would change to protect consumers.
He said similar changes are taking place in some US states.
