Alberta’s government wants reliable electrical system, proposes market changes to get there

The Alberta government is taking steps to reform the province’s electricity market by implementing a day-ahead market system. This system would require electricity providers to commit to selling power at a fixed price 24 hours in advance, with the intention of controlling costs and ensuring reliability. Affordability and Utilities Minister Nathan Neudorf emphasized the need for sustainable energy, low costs, and reliability in the province’s power sector.

One of the key aspects of the proposed changes is shifting the burden of adding more transmission capacity from consumers to power plants. This would involve the costs of adding transmission capacity where the system is overloaded, as well as building new lines to connect new power plants that are far from the existing network. The aim is to ensure that power producers bear the costs of expanding the transmission infrastructure necessary for their operations.

However, the proposed changes have sparked concerns among renewable power producers in the province. Vittoria Bellissimo, president and CEO of the Canadian Renewable Energy Association (CanREA), expressed worries that the government’s plans could jeopardize existing solar and wind installations and deter future investments in renewable energy projects. Many of these projects are supported by ATB Financial, a provincial Crown corporation, which has significant financial commitments to renewable power projects.

Premier Danielle Smith assigned Neudorf the task of overhauling Alberta’s electricity market in response to the need for modernization due to the phase-out of coal power and the increasing prominence of wind and solar power. Neudorf has instructed the Alberta Electric System Operator (AESO) to prepare new energy market rules by the end of 2025, with a focus on implementing a day-ahead market system and introducing upfront transmission payments for new power generators.

While the proposed changes aim to enhance the reliability and cost-effectiveness of Alberta’s electricity system, critics argue that they could disproportionately benefit certain types of power sources, such as natural gas generators, while placing renewable energy projects at a disadvantage. Jason Wang from the Pembina Institute expressed concerns that the new regulations could hinder the development of wind, solar, and storage projects in the province.

Despite the criticisms, Neudorf maintains that the proposed changes are necessary to protect consumers and ensure the stability of Alberta’s electricity grid. He cited similar reforms taking place in some U.S. states and emphasized the need for industry stakeholders to adapt to the evolving energy landscape. Ultimately, the government’s goal is to strike a balance between promoting sustainable energy development, maintaining affordability, and guaranteeing the reliability of the province’s power supply.