Big Oil might be quivering in their boots at the prospect of having to pay fair royalty rates to the province but the renewable energy sector is looking forward to the NDP in Alberta.
Fossil fuels have had a grip on the province that stifles energy innovation. Renewal energy companies are feeling more optimistic with the NDP. Despite much talk by the previous government, not much happened.
“For six or seven years, the previous government had white papers and round tables,” said Kent Brown, president of Calgary-based BluEarth Renewables Inc. “We were caught in the uncertainty and lack of decision making. The new government has a great opportunity to make some decisions now.”
One of the things holding back the development of renewable energy has been slavish devotion to the marketplace. Yes, free markets are great at determining the price of shoes but energy is a different matter.
Under Alberta’s deregulated electricity market, utilities have no incentive to develop renewable energy says Jared Donald, president of Conergy in Calgary. In Alberta’s energy market, customers get to choose which electricity utilities they want to buy from. With twice as many marketers as there are utilities, there’s no lack of choice. Albertan’s generally select the cheapest utility.
That’s fine for buying shoes as long as the shoes are not choking the atmosphere and threatening the planet. Fossil fuels are not like other consumer items. Alberta currently uses coal for 43 per cent of its electricity and natural gas for 40 per cent.
Jared Donald told the business section of the Globe and Mail that one crucial change the new government could make would be a shift away from the fully deregulated electricity market. Power producers charge fluctuating prices depending on supply and demand at any particular moment. This leaves utilities stuck on fossil fuels.
Deregulated fossil fuel energy means there is little incentive to build anything but the cheapest source, usually new natural gas-fired power plants. Solar, wind and hydro plants have greater up-front costs, and are thus harder to finance under the current regime, even though they require no fuel once they are complete.
“If you are uncertain about what the energy market is going to be, you don’t spend the big capital dollars up front,” Jared Donald. That provides an “incentive to make short-sighted decisions.” It will take government intervention to change the pricing and financing of electricity generation to encourage renewables, he added.
The wind energy industry, too, is keen on expanding in Alberta, but it also has issues with the market pricing of electricity said Tim Weis from the Edmonton-based Canadian Wind Energy Association.
One solution would be for the province to set a “clean electricity standard,” that would force power retailers to sign contracts with some renewable suppliers.
As the province with the youngest population in Canada, Albertans are ready for innovation. Cogeneration plants now produce 31% of needs. While they still use fossil fuels they also use biomass, such as livestock manure, to simultaneously generate both electricity and steam for industrial process. Cogeneration substantially reduces net greenhouse gas emissions.
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