Canada’s Oil Rich Alberta Province Set to Become Renewables Powerhouse

Canada’s oil rich province of Alberta is preparing to undergo a major shift and become one of the country’s top renewable energy producers. The province aims to attract investments given its vast natural resources and business friendly regulatory environment. Canada’s renewables output is expected to grow from 19.6 gigawatts (GW) in 2021 to around 45 GW in 2025, primarily on the back of new onshore wind and solar energy projects. It should not come as a surprise as Canada’s energy mix is hydropower dominant, but Alberta being the pioneer is interesting as the province produces the majority of its electricity from fossil fuels.

The bulk of Canada’s renewable additions is set to take place in the western province of Alberta, known as the home to the country’s fossil fuel industry. Currently, Alberta holds only about 3 GW of renewable capacity. Large-scale projects in the province are scheduled to come online this year that will push Alberta’s capacity close to 10 GW before 2023. That total is expected to double by 2025, reaching almost 21 GW, nearly half of the country’s total.

If the projects go ahead as planned, the rapid growth will make Alberta Canada’s top renewable producer, and will double the output of Ontario, which is the current leader in renewable production.

The biggest advantages of Alberta are considered its unregulated power market, minimal regulatory barriers and its vas natural resources. All those factors make the province attractive for renewable developers and investors. Moreover, the province already has a workforce of industry professionals eager to adapt to clean energy.

In addition, Alberta’s government has set an ambitious net zero goal by 2035, 15 years ahead of the national target. Local authorities have already started to take concrete steps towards that end. The province has an unregulated power market. This has allowed private investors to seek green portfolios and build capacity faster than in other provinces. However, this can create supply issues during periods of extreme demand. The province will therefore need to deploy system flexibility to support the intermittency of renewable power generation.

Alberta’s electricity system is unique as companies can ink deals directly with private power producers to buy a set amount of electricity each year, either for use or for offset credits. This is attractive for fossil fuel companies looking to offset their emissions from existing operations in the province. The financial security provided by those contracts helps producers build out more renewable projects with fewer market risks, while purchasers get cheap renewable energy or credits to meet internal or external emissions goals.

Canada’s current renewable leader, Ontario, is unlikely to see major growth before at least 2025, in contrast to Alberta. The province’s lucrative feed-in tariff (FiT) allowed for a massive expansion of developments initially, but it expired in 2016. The introduction of corporate power purchase agreements (PPAs) in Alberta – a contract for a private operator to sell energy straight to the local grid at a set price – has incentivized developers.

Alberta’s clean energy portfolio is expected to reach nearly 20 GW of installed solar and wind capacity by 2025, more than double that of Ontario, which will drop to no.2 spot with 9 GW.

The Canadian power mix has been dominated by hydropower generation for almost a century. Hydropower has contributed between 60% and 70% of the country’s power needs since 2010, with the remainder predominantly supplied by coal, gas, and nuclear. Total onshore wind generation has grown in recent years but remains relatively insignificant, contributing only about 5% in 2021. With the wind capacity additions expected to come online by the end of 2025, that contribution will jump to almost 9%. Conversely, coal’s role in the power mix is set to drop as the country pushes out the carbon-heavy fuel. In 2010, coal-fired generation provided nearly 80 TWh of power annually, but that gradually dropped to around 30 TWh last year. By 2025, coal is expected to contribute 14 TWh, just 2% of the nation’s power needs.

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