By Michelle Stirling © Jan. 2018

In the Jan. 9th, 2018 edition of the Edmonton Journal, Sarah Hastings-Simon of Pembina Institute recently beat the drum for the low prices of the late 2017 renewables auction in Alberta claiming that these low prices are in line with wind and solar performance world-wide.  Forgotten in all the applause is the fact that even if wind and solar were free, the integration costs could be more than all other forms of generation, once past a certain point.

A recent report by Duane Reid-Carlson of EDC Associates indicates that this low-cost auction may be unprofitable for at least one winner; and future auctions will likely be much higher.

To get this ‘cheap’ power on the grid, Alberta utilities have had to phase-out coal and be paid compensation.  Compensation will cost Albertans billions “…a total of $97 million annually over 14 years, beginning in 2017 — for a total cost of almost $1.36 billion.” No one talks about the cost of helping coal communities and families whose futures have been destroyed.

On top of the coal phase-out compensation, there are the on-going costs associated with the dumping of coal Power Purchasing Agreements (PPAs) back into the Balancing Pool.  This occurred as a direct result of the Alberta Climate Plan and carbon tax, as coal is a high emitter of carbon dioxide.  The carbon tax immediately made these contracts unprofitable.  Though described as a ‘secret Enron clause’ by the NDP government, in fact the ‘change of law’ clause that allowed for this dumping has been an integral part of World Bank recommendations for energy contracts since the late 1990’s.

According to the Independent Power Producers Society of Alberta website “ …the Balancing Pool is losing money every day….losses are being paid by a loan from the Government of Alberta…estimated in the 2017-2018 GoA budget to reach $2.25 billion. The interest alone is estimated at ~$400 million.”

National Bank, the AESO and even TransAlta anticipate that power prices will triple in Alberta to $50-60 MW.  Power producers have been granted special permission from Ottawa to convert coal plants to natural gas. This will require additional natural gas supply pipeline infrastructure, cost unknown. Wind/solar integration to the grid is about $1 Million/MW. The coal-to-gas plant conversions will be ‘cheap’ – about $50 million each compared to building a new natural gas plant like Shepard in Calgary ($1.4 billion).  However, these conversions are not as efficient at reducing carbon dioxide – which is what this whole effort was supposed to be about, wasn’t it?

Or was it about establishing a foothold in the market for carbon trading – like the cap and trade systems of Quebec, Ontario and California?  After all, you don’t need wind and solar for power – you are really building a natural gas plant as environmentalist Robert Kennedy said.  The wind and solar farms just generate trade-able Renewable Energy Certificates …and peaking plant profits.  (at your expense)

Pembina Institute has been funded by the Oak Foundation out of the US which has a stated mandate to push cap and trade systems.

Did anyone ask Albertans if they wanted to pay billions of dollars for decades-long contracts for a less efficient, more expensive, tax-subsidized power system that won’t reduce carbon dioxide emissions by much? To create a cap and trade option that will make some corporations and people rich – but will make Albertans poor?

Are we really “saving the planet”?

Hastings-Simon claims wind is ‘reliable’ – AESO stats show wind had only a 34.6% capacity factor in 2016. Wind is so erratic that if we add the proposed 5,000 MW wind, we would face random ramps of 80% or higher one or more times per week.  That’s like turning 6.5 Shepard Natural Gas plants (800 MW capacity) from off to full and off again.  From a CO2 perspective, this defeats the purpose of adding wind.

Wind Aware of Ireland recently issued a report showing that their heavy investment in wind has had little impact on CO2 emissions.  Now they will be fined 600 million euros for missing EU GHG reduction targets. They found no cost-benefit analysis had been done. Same for Alberta.

Still rejoicing over the Alberta renewables auction?

Michelle Stirling is the Communications Manager for Friends of Science Society, a member of the Canadian Association of Journalists and the AAAS.


Insights on Cap and Trade:

Introduction to Ontario’s Cap and Trade

A Critique:

California Dimension: