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Alberta’s Wind Energy Industry

Renewable energy source blowing at full tilt

Bull Creek Wind Facility in Chauvin, AB.

While China, the United States and Germany have been among the top wind-generating countries for several decades, wind energy is a relatively new contributor to the power mix in Canada. Alberta’s wind energy industry finds itself in the sweet spot of its evolution as the lowest cost option for new electricity generation, with green-light support from the provincial government, technological advances, millions of dollars in domestic and international investment, and indigenous partnerships.

One of the first commercial wind farms in the country was installed in 1993 on Cowley Ridge in southern Alberta, the province’s windiest quadrant. Today, Alberta ranks third in Canada with, according to the Alberta Electric System Operator (AESO) that manages and operates the power grid, an installed wind energy capacity of 1,445 MW with 19 wind farms. These wind farms produce enough electricity annually to power 625,000 homes, about nine per cent of Alberta’s electricity demand.

Recognizing wind energy’s myriad environmental and economic benefits, the Alberta government has created instrumental programs for its advancement. The November 2015 announcement of its Climate Leadership Plan committed to phasing out two-thirds of coal-generated electricity and transitioning to renewables, primarily wind power, by 2030. These renewable energy sources – wind, geothermal, hydro, biomass, solar – are expected to comprise 30 per cent of Alberta’s electricity production, tripling today’s number.

To support the government’s target, AESO held competitive electricity supply auctions; the first round of procurements were awarded in December 2017, and the second and third rounds announced in December 2018, as part of Alberta’s Renewable Electricity Program (REP). Previously, wind energy projects competed in the Alberta power pool bidding in on an hourly basis; the lowest cost bid that fulfilled the demand requirements were directed by AESO to provide electricity to the grid.

“The trouble with that was the volatility, because of the different prices bouncing around an awful lot throughout the day,” says Evan Wilson, the Canadian Wind Energy Association’s (CanWEA) regional director for the Prairies. So although wind is affordable, “financiers were risk averse to lending hundred of millions of dollars to the projects because the market was too unpredictable,” says Wilson.

As a result, both the auction and the structure of the contract were revamped to deliver the lowest cost of renewable electricity to the province at a predetermined capacity at a fixed price. “It’s a well-designed policy,” says Binnu Jeyakumar, director of clean energy at the Pembina Institute. “It provides certainty for investors by providing a 20-year contract, and it protects the consumers against risk if the electricity prices were to increase.”

The successful companies in Round 1 will develop 600 MW of renewable electricity to power 255,000 homes; this is 200 MW more than planned due to exceeded expectations of developers’ bid prices. It set a pricing record in Canada, with an average price of $37 per Mwh, and $39 per Mwh in the last two competition rounds, compared to an average price of $50 per Mwh in the 2018 power pool. By comparison, the average price for Ontario’s Large Renewable Procurement in 2016 was $85 per Mwh.

The first round attracted $1 billion of investment from a majority of international companies and is expected to create about 740 jobs. Wind farms are a tremendous economic injection into the hosting rural communities through the creation of construction jobs, permanent positions in operations and maintenance, and revenue sharing with landowners, among other benefits. Portugal’s EDP Renewables Canada Ltd. will build a wind project 50 kilometres north of Oyen; Italy’s Enel Green Power North America Inc. will build two wind projects outside of Pincher Creek; and, Edmonton’s Capital Power will build 60 kilometres southwest of Medicine Hat. Projects will be operational by the end of 2019.

Noteworthy in the second round was that each of the three projects required a minimum of 25 per cent indigenous equity ownership, with France’s EDF Renewables Canada Inc. partnering with the Kainai First Nation, and Ontario’s Capstone Infrastructure Corporation with the Sawridge First Nation. “It was really interesting to see the geographic diversity of where the wind farms will be developed and where these different communities are located,” says Wilson. So successful were the bids that the earmarked 300 MW of capacity grew to 360 MW, to power 150,000 homes. The projects will be operational by mid-2021.

Says Wilson, “These projects allowed entrepreneurial communities with the financial resources to develop and bid them in. The intention is that the partnership stake leads to significant economic development, job training and employment over the 20-year contract and beyond that will show dividends well into the future.”

With the Paul First Nation, Ontario’s Potentia Renewables Inc. will build the 113 MW Stirling Wind Project near Lethbridge in partnership with Calgary’s independent renewable energy company Greengate Power Corporation. Founded in 2007, Greengate is a formidable example of the Albertan entrepreneurial spirit operating successfully in this sector.

This isn’t Greengate’s first rodeo. In fact, Stirling is its third wind energy project in development. In fact, of the 1,445 MW of installed wind energy capacity in Alberta, Greengate contributed one-third, or 450 MW, with the 300 MW Blackspring Ridge in Vulcan – the largest operating wind energy project in Canada at the time of its completion in 2014 – and the 150 MW Halkirk in the County of Paintearth, 40 kilometres southeast of Stettler. These two projects represent approximately $1 billion of investment and provide power to more than 200,000 homes.

With the growth of renewable energy projects, landowners and environmentalists have expressed concern about their impact on habitat and wildlife, such as the protection of native prairie grasslands and wetlands, and birds’ migratory patterns. Alberta Environment and Parks finalized the Conservation and Reclamation Directive for Renewable Energy Operations in September 2018, ensuring development proceeds in an environmentally-responsible manner. Its reclamation requirements also outline what’s needed to restore the area at the end of a wind farm’s life.

Says Jeyakumar, “Many of these issues are already protected under different acts and this directive was specifically created because there was no explicit standard for renewables. The standard is stringent and closes the gaps and makes it really clear what the implications are.”

Technological advances have made wind energy one of the lowest cost options available. In fact, U.S. financing advisory and assessment management firm Lazard reports the cost of wind has fallen by 67 per cent since 2009 due to technological improvements. And when it comes to wind, the technological advances are straightforward – taller towers allow for longer turbine blades. By lengthening the blades, there’s an exponential increase in the kinetic energy they can extract from the wind, thus significantly increasing energy output.

“There’s also better ice-handling, which in a hockey country is a good thing,” says Wilson, referring to improved methods of ice removal to optimize the turbines’ operational abilities.

The Round 3 projects, won by TransAlta and Potentia, will produce 400 MW of renewable energy, to power about 170,000 homes. AESO has begun consultations on upcoming REP competitions but the future of the wind energy industry is uncertain until after the provincial election in May 2019; a changing of the guard is a concern.

“Growth in renewables used to be primarily driven by environmental considerations but that has changed. Like computers, the technology continues to significantly improve and renewables are now the lowest cost source of new electricity. With our world-class solar and wind resources, supporting renewables in Alberta simply makes sense,” says Dan Balaban, Greengate founder, president and CEO.

“Alberta has always required renewables to compete for the lowest cost outcome, making the province, arguably, one of the most exciting places in the world to invest in renewables.”