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Wind, solar and energy storage projects that would have more than met Alberta's average total power demand have been cancelled since the province’s moratorium on renewables, the Pembina Institute reports.
Almost 11 gigawatts (GW) of clean energy projects have been withdrawn from the development queue of the Alberta Electric System Operator (AESO) since October 2023, the Calgary-based clean energy think tank said in an analysis published Thursday.
Over 40 per cent of proposed renewables projects were shut down over the past two years, compared to 11 per cent of natural gas capacity in the same period.
Alberta, once viewed as an exceptional place for renewable energy because of its deregulated electricity market and favourable natural environment, has taken a U-turn on clean energy projects.
The provincial government put a moratorium on new renewable project approvals from August 2023 to February 2024. It then enacted rules including as heightened restrictions on where wind and solar projects can be built and now requires an upfront security for reclamation which is far larger than the one the oil and gas industry pays.
Albertans could ultimately be paying for the policy reversal, Will Noel, a senior analyst at Pembina and the main author of the analysis, said in an interview with Sustainable Biz Canada.
“It very well could lead to higher electricity costs; higher, more volatile costs.”
With a less amenable jurisdiction for investment, he foresees this trend continuing with jobs, investment and tax revenue potentially being lost.
Renewables hit hard by Alberta restrictions
The update is a follow-up to a report Pembina released in May that tracked the shifts in renewable energy development since the moratorium and regulatory reforms. The institute found 2024 was the first year to see a lower volume of projects in the AESO’s renewable project proposal list.
In October 2023, there was 31 GW of new electricity projects in the AESO’s queue, mostly in wind, solar and energy storage, and some natural gas. The total shrank to 19 GW as of August, with wind projects facing the steepest decline of 64 per cent, solar down 49 per cent, and energy storage a 28 per cent cut. The volume of gas projects, however, rose 32 per cent in the same period.
The cancelled clean energy projects could have satisfied 109 per cent of Alberta’s average total power demand, Pembina says, or 89 per cent of its peak power demand.
As a result, Albertans are losing out on the benefits of shielding consumers from the volatility of natural gas prices, Noel said. The province generates over 60 per cent of its electricity from the fossil fuel.
Renewables have been accused of contributing to high electricity costs, but Noel countered that electricity bills are largely increasing due to rising natural gas prices and the lack of modernized grid infrastructure. Wind and solar are intermittent energy sources, but proponents argue large batteries can cover such a shortcoming.
To meet Alberta’s growing hunger for electricity caused by a rising population, more data centres and electrification, additional natural gas generation is the likeliest candidate if wind and solar do not keep pace, Noel said.
Clean energy increasingly vital to investment, Noel says
Facing a hostile market, renewables developers are cancelling existing proposals and not enough new proposals are coming in to fill the gap, he said.
The number of projects could continue to decline or stagnate, a stark contrast to the conditions in 2023 when 92 per cent of the new renewables generation and capacity being added in Canada were located in Alberta.
The loss means jobs in the sector will vanish, along with millions of dollars in municipal tax revenue, Noel said.
Alberta could also lose out on investment, as access to clean energy is increasingly a pivotal reason to choose a project's location. Bell Canada, for example, selected Kamloops, B.C. to host three data centres because of this attribute.
“Clean energy is vitally important to attracting new business and new investment,” Noel said.
But it is not too late for the province to change tracks. Pembina lays out suggestions such as the provincial government fast-tracking development in areas where utility-scale renewable projects would be particularly well-suited, and promoting use of infrastructure like energy storage, distributed energy resources and demand-side management.
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