Overview of Electricity Sector

Just as it relies on the extraction of fossil fuels to power its economy, the province of Alberta is also heavily dependent on them for electricity production. In 2015, coal and natural gas generation accounted for the vast majority of its roughly 16,242 MW of installed capacity [i]. At the end of 2014, Alberta had over 4,600 MW of cogeneration online, meaning that most of its natural gas and biomass generation produces both electricity and steam/heat for industrial process [ii]. Because of its high dependency on fossil fuels, Alberta’s electricity sector is the most carbon-intensive in Canada, burning more coal for power than all the provinces and territories combined. In addition, it generated 47% of all Canadian emissions in the electricity and heat generation sectors in 2014 [iii]. Aside from fossil fuels, Alberta also draws power from renewable sources, including wind, hydro and biomass.

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Alberta has the only competitive wholesale electricity system in Canada [v]. Adopted in 1996, The Electric Utilities Act stipulated that all generators connected to the grid must bid each day for hourly dispatch in a spot market that matches demand with supply on a lowest-cost basis [vi]. While the Alberta Electricity System Operator (AESO) claims that deregulating Alberta’s electricity market has brought about a more diversified supply mix, critics argue the current regime provides little incentive to build anything other than natural gas plants and precludes the development of renewable technologies, which have greater up-front costs and are harder to finance despite the fact they have no fuel costs once completed[vii].

The former Alberta Progressive Conservative government was supportive of the supply mix status quo, however, the newly elected NDP has indicated it will seek an accelerated phase-out of coal-fired power. NDP premier Rachel Notley has referred to coal as “one of the single largest pollutants in Alberta” that “costs our health care millions of dollars every year and is a massive source of greenhouse gas emissions”. Accordingly, the NDP government introduced its Climate Leadership Plan on November 22, 2015, which pledges to phase out coal pollution and plants entirely by 2030 and replace two-thirds of coal-generated electricity with renewables, mainly wind power.

 

[i] Alberta Energy. 2015a. Electricity Facts. Retrieved 29 Jul 2015 from http://www.energy.alberta.ca/Electricity/681.asp

[ii] Alberta Energy. 2015a. Electricity Facts. Retrieved 29 Jul 2015 from http://www.energy.alberta.ca/Electricity/681.asp

[iii] Environment Canada, 2015. National Inventory Report 1990-2013: Greenhouse Gas Sources and Sinks in Canada. Retrieved 9 Aug 2015 from http://www.ec.gc.ca/ges-ghg/default.asp?lang=En&n=83A34A7A-1.

[iv] Environment Canada, 2015. National Inventory Report 1990-2013: Greenhouse Gas Sources and Sinks in Canada. Retrieved 9 Aug 2015 from http://www.ec.gc.ca/ges-ghg/default.asp?lang=En&n=83A34A7A-1.

[v] Alberta Electricity System Operator. 2015. Market. Retrieved 4 Aug from http://www.aeso.ca/market/153.html.

[vi] Alberta Electricity System Operator. 2015. Market. Retrieved 4 Aug from http://www.aeso.ca/market/153.html.

[vii] Blackwell, R. “Alberta NDP’s rise to power raises hopes for renewable energy”, The Globe and Mail, 10 May 2015. Retrieved 4 August 2015 from http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alberta-ndps-rise-to-power-raises-hopes-for-renewable-energy/article24359711/.

 

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