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Wind, solar set to be cheaper than gas in Ontario, Alberta: report

A Renewables Powerhouse explores the economic competitiveness of wind and solar with energy storage against natural gas plants, concluding they are already up to par now and into the future. (Courtesy Clean Energy Canada)

A report from Clean Energy Canada suggests a combination of wind- and solar-generated electricity with battery storage is set to be an economical alternative to Ontario and Alberta’s plans to replace nuclear and coal with natural gas-fired plants.

A Renewables Powerhouse is published as Ontario’s government plans to decommission nuclear plants and the Alberta government seeks to transition out of coal-fired generation. Both provinces are set to use natural gas to cover the energy gap.

There is additional urgency from the Canadian federal government’s outline for a net-zero grid by 2035, which will require rapid phase-out of fossil fuel energy while also accommodating a rapid increase in electrification.

“Decisions around energy sources like standing-up new natural gas (facilities), that has repercussions for decades,” Evan Pivnick, clean energy program manager at Clean Energy Canada, told SustainableBiz. “So if we lock ourselves down that path today, those are going to potential costs that can become a stranded asset, or we’re locking ourselves down that path for years to come.”

Why the report was written

Clean Energy Canada created the report because it identified a lack of publicly available and transparent data about the prices of solar and wind in specific Canadian jurisdictions.

The Vancouver-based climate and clean energy program, part of the Morris J. Wosk Centre for Dialogue at Simon Fraser University, commissioned Toronto-based Dunsky Energy + Climate Advisors to develop updated data to help utilities make informed decisions about their grids.

There is also pressure to meet the country’s 2050 net-zero goal. New natural gas plants in lieu of renewables would hinder this objective.

Pivnick said the unstable price of natural gas combined with decreasing demand makes it an increasingly less economical prospect in the clean energy transition.

“Renewables won’t necessarily be the answer to every single energy need for Canadian grids, but knowing that they are vastly cheaper — in most cases or many cases — than natural gas is a really important starting point to evaluate what we need and what we should be starting to get.”

Power Advisory published a report in November 2022 arguing a net-zero grid in Ontario was possible by 2035 with a mix of renewables and battery storage. The Independent System Electricity Operator laid out a report for potentially decarbonizing Ontario's grid by 2050 at a cost of $400 billion.

The methodology

The study forecast the costs of constructing and operating renewable resources by calculating Levelized Cost of Energy (LCOE). It measures the average cost per unit of electricity generation from a facility over its lifetime based on the technology it employs.

Pivnick said LCOE shows the direction of the technology and what is driving cost reductions or increases.

Dunsky looked at global and North American studies that make a LCOE for energy technologies and applied them to Alberta and Ontario to look at their utilities and actual projects that have been stood up. Then they built ground-up cost assumptions to generate a specific cost forecast for each technology, specific to both provinces.

Wind, solar to be cheaper than gas

In its analysis, Clean Energy Canada found wind and solar are already cheaper than or competitive with natural gas per kilowatt-hour.

In Ontario, the LCOE is $0.08 per kilowatt-hour for solar and $0.05 per kilowatt-hour for wind. Without factoring-in carbon pricing, solar is pricier than natural gas, while wind is cheaper. By 2035, those are expected to fall to $0.07 and $0.03, respectively, making them substantially cheaper than natural gas at $0.15 per kilowatt-hour from 2023 to 2035 with a projected carbon price.

In Alberta, a $0.06 kilowatt-hour price for solar and $0.05 kilowatt-hour price for wind are already competitive with natural gas – before a carbon price.

Wind power is set to be 40 per cent cheaper than fired-power in both provinces by 2030, excluding carbon pricing.

The cost of wind and solar is expected to plummet by as much as 40 per cent by 2035, compared to relatively flat costs for new gas deployments.

Clean Energy Canada says even with variables like the sun not shining or the wind not blowing, renewables can stay competitive due to energy storage.

It anticipates innovations with batteries for longer-term storage needs. It points to Hydrostor’s compressed air storage technology as one development. It also looks to building connections between provinces with different resource profiles to maximize variable renewables.

For example, B.C. has substantial hydro power, while Alberta has wind and solar potential. By connecting the two provinces, their power potentials can be shared most efficiently.

The policy suggestions

To facilitate the suggestions in the report, Clean Energy Canada lays out four ways for the Ontario and Alberta provincial governments and the federal government to maximize renewables in Canada.

The first is prioritizing wind and solar investments over the next decade. Clean Energy Canada urges actions like predictable funding for “provinces and utilities to deploy innovative clean technologies that support greater shares of renewables.”

Governments are urged to have policy certainty, such as the federal government implementing the Clean Electricity Regulations.

Removing barriers for energy storage, and addressing regulatory and legislative barriers that limit the ability of storage technologies provincially are recommended.

The fourth prescription is to maintain up-to-date research on renewables. This means exploring opportunities to advance emerging clean energy technologies, long-duration energy storage, and engaging local industry to capture regional drivers and refine costing assumptions.

Pivnick said Clean Energy Canada will continue highlighting more jurisdictions and net-zero pathways for B.C., Ontario and Alberta.

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