Alberta climate plan will mean utilities emissions cut, higher rates: study

By , on January 26, 2016


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CALGARY—A new study has found that Alberta’s climate change initiatives would result in big emission reductions but power producers would need significantly higher renewable rates to justify building wind and solar power.

The report, prepared by utilities consultant EDC Associates Ltd., looked at the impact of the NDP government’s plan to phase out coal power by 2030 and source 30 per cent of energy from renewable sources.

It found that the boost in renewables and the end of coal would mean a 45 per cent reduction in emissions, or 18.5 million fewer tonnes of carbon released into the atmosphere a year.

However, under the province’s privatized utility system, prices for renewable power would have to be between $60 to $85 per megawatt hour to justify wind power construction.

And if solar power were to make up 50 per cent of the renewables mix, power producers would need prices of between $200 and $300 per megawatt hour for solar, the study found.

Those high-rate renewable prices would fall under a separate pricing system that would encourage renewable energy installation.

The report also found that the early closure of coal power plants would mean power producers lose out on anywhere between $3 billion and $16 billion in gross operating margin, depending on how much future earnings are valued and how many years of lost production are compensated.

The NDP government has not made a clear commitment to compensate producers for the early closure of coal-fired power plants, but it has said it would treat producers “fairly” and not “unnecessarily strand capital.”

Allen Crowley, co-author of the study at EDC, said he wasn’t making any policy recommendations and was simply trying to figure out the impact of the new plan. His one recommendation was for the government to take things slow.

“The policy choices are so complicated that they really shouldn’t be going quite so fast,” said Crowley.

“It’s just too big of a thing. It’s a great, big, huge cruise ship that you’re pulling into harbour at 100 miles an hour. It’s not a good strategy.”