Renewables Market: Alberta Where are we? Whats to come? Ben - PowerPoint PPT Presentation

Renewables Market: Alberta Where are we? What’s to come? Ben Thibault, BSc, JD Electricity Program Director e: bent@pembina.org | tw: @ThibaultBen

Leading Canada’s transition to a clean energy future The Pembina Institute advocates for strong, effective policies to support Canada’s clean energy transition. 2

Projected supply mix 3 Source: AESO, 2014

Energy-only, merchant market • All wholesale, non-BTF electrical energy must flow through power pool (wholesale spot market) • No central procurement • No capacity market — generators paid only for MWh, not MW • No locational prices — province wide spot market • Price floor/ceiling: $0/MWh — $1000/MWh 4

Price-setting in energy-only market No Wind 500 MW 1,000 MW 5 Source: MSA, 2010

Wind’s price depressing effect Low wind 15 Hourly pool price (¢/kWh) Average pool price 15 10 High wind 5 0 1 7 13 19 Hour of day

Average revenue rate, by fuel 25 21.4¢ 20 Average price (¢/kWh) 15 11.2¢ 9.8¢ 10 8.3¢ 8.0¢ 7.7¢ 5.5¢ 5 0 Peaker Cogen Hydro Gas Entire pool Coal Wind

Additional barrier to RE investment Downside market risk à debt financing hard for any project, especially renewables, Cost = upfront capital Revenue = future, downside risk, no pricing control whereas gas investment’s risk is buffered (for the generator). • Cost = operating (fuel prices) • Revenue = determined by operating cost

Supply situation: status quo 100000 90000 80000 Annual Generation (GWh) 70000 60000 Gas Cogeneration 50000 Combined Cycle 40000 30000 Coal 20000 10000 0 9 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Accelerated coal phase-out 100000 90000 80000 Annual Generation (GWh) 70000 60000 Gas Cogeneration 50000 Combined Cycle 40000 30000 20000 Coal 10000 0 10 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Growing renewable energy • Considerable proportion of stakeholders suggested RPS in their submissions • Varying degrees of ambition, but evidence we can reasonably push beyond 30% energy by 2030: • Flattened wind profile with greater geographic diversity • Wind and solar profiles pair well • Important details: • Counterparty? • RECs? Contracts for power? • Strong interest in distributed / community-owned • How does this pair with existing market design? 11

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