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Welcoming the Wind Industry to SE Alberta


Renewable Energy in SE Alberta
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Welcoming the Wind Industry to SE Alberta

There are many things we do well in Alberta. Alberta’s economy and the livelihoods of many Albertans are based on farming, ranching, oil and gas, health, and retail sectors. Our cultural identity is heavily rooted in the oil and gas, farming, and ranching sectors, as evidenced by the names of popular Alberta sport teams – the Oilers and the Stampeders – and the lyrics of many of Alberta country music singer Corb Lund’s songs.

However, over the last decade or so, as Alberta has weathered the bust cycles associated with oil and gas downturns, many are stressing the importance of greater diversification for Alberta’s energy sources and economy.

As a proud Southeastern Albertan and researcher of the socio-economic impacts of energy for rural communities and regions, I am thrilled that the Alberta Government has recently awarded two out of three Renewable Electricity Program (REP)[1] contracts to wind farm projects in Southeast Alberta. It was an honour to be present for the announcement in Calgary on December 13th, 2017 made by Alberta Premier Rachel Notley. For many in SE Alberta this is welcome news; others remain skeptical and question if this is news that is too good to be true.

As we consider what these projects mean for the SE Alberta region, and Alberta more broadly, it is important to engage in well-informed, nuanced, non-partisan discussions. Too often our conversations about energy are polarized. Our knowledge of energy, and its impacts on us and our communities, is often informed by our own unique contexts – if we work in specific energy industries or are supported by someone who does, if our companies service and supply the industry, if we receive land lease payments or royalties, or if our municipal tax bases rely on the industry. We also form opinions of energy industries based on negative events such as pipeline leaks, bird and bat deaths from wind turbines, or environmental contamination from fracking.

Our unique contexts assist in forming our own confirmation biases and we then choose to support or vilify certain energy industries based on those biases. Many people cherry-pick data to support or oppose views on energy that serve them best. Some try to tell us that we must choose between the economy (oil and gas) or the environment (renewables and reducing carbon emissions), but I believe we can, and should, choose both.

ALBERTA EXCELS IN ENERGY! I see that every day working with industry (both renewable and non-renewable), economic development professionals, industry supply chain companies, economists, energy industry associations, academic institutions, landowners with energy leases, government, and municipalities. Alberta has some of the highest standards and regulations for energy, and some of the most innovative people working on further improving processes and decreasing emissions. Alberta’s energy expertise, high standards, and a made in Alberta Climate Leadership Plan[2], along with some of Canada’s best solar and wind resources, are now attracting renewable energy development, innovation, and investment.

Many large energy companies, like Suncor[3], recognize this and have created renewable energy divisions. These large energy companies recognize that Alberta’s energy landscape is changing. As our demand for energy increases, so too does our need for increased energy sources. Renewable energy sources, like solar and wind, offer an opportunity to diversify Alberta’s energy sources, compliment other energy sources such as natural gas, support rural municipal tax bases and landowners, and provide jobs for our energy workers and regional companies in the supply chains of these industries.  

In March of 2017,I wrote a report for the Southeast Alberta Energy Diversification Strategy (SEEDS) group (available on the SEEDS website www.seedsalberta.ca) exploring the emerging renewable energy industries in Alberta, specifically solar and wind. This report indicated that as of the end of December 2016 in Alberta 85 large-scale (over 1MW) solar and wind energy projects were on the Alberta Electric Systems Operator (AESO) queue; 35 of these projects, or over 40%, totaling 3,720.6 MW were proposed for the SE corner of Alberta[4].

Using formulas developed by the Canadian Solar Industries Association (CanSIA) and the Canadian Wind Energy Association (CanWEA)[5] estimating the impact of every 150MW of solar and wind development, the March 2017 SEEDS report states that if these 35 proposed projects went ahead, over the next two decades SE Alberta would benefit from $7.8 billion in investment, over 10,000 temporary construction jobs, close to 400 permanent, quality operations and maintenance jobs, $580 million in lease payments to landowners, and over $765 million in property tax revenue for municipalities in SE AB.  

Using those same formulas developed by CanWEA and CanSIA in the above-mentioned SEEDS report, the estimated impacts for the two newly announced REP wind projects in SE AB could be:

 201 MW Capital Power wind farm in Whitla

  • $423,440,000 million in investment
  • 188 full-time equivalent temporary construction jobs
  • 13 permanent operations and maintenance jobs
  • $22,780,000 million in lease payments to landowners over 20 years
  • $41,540,000 million in property tax payments to the municipality over 20 years

248 MW EDP Renewables wind farm near Oyen

  • $522,453,333 million in investment
  • 232 full-time equivalent temporary construction jobs
  • 17 permanent operations and maintenance jobs
  • $28,106,667 million in lease payments to landowners over 20 years
  • $51,253,333 million in property tax payments to the municipality over 20 years

With both projects combined that’s an estimated impact to SE AB of:
  • $945,893,333 million in investment,
  • 420 temporary full-time equivalent construction jobs
  • 30 permanent operations and maintenance jobs
  • $50,886,667 million in lease payments to landowners over 20 years
  • $92,793,333 million in property tax payments to municipalities over 20 years.

Additionally, the supply chain of the wind industry in Alberta is comprised of over 65 industries including various trades, engineering, transportation, and logistics industries[6]. As with any capital project, these 2 projects will create temporary construction jobs, around 420, that will benefit the many industries in SE Alberta. Additionally, upwards of 30 permanent, good paying, quality, local jobs will be created in operations and maintenance.

Concerns that have been stated wonder if these wind energy companies will hire local. Based on conversations I have had with renewable energy companies, they prefer to hire local as much as they can - especially for the construction jobs. These wind energy projects should have no difficulties finding skilled workers in SE Alberta. We have a renowned wind turbine technician program just down the highway in Lethbridge and many skilled energy workers in our region with transferable skills. A recent 15MW solar project in Brooks[7] employed Albertans almost exclusively, mostly from the Brooks area.

Additional concerns of renewable energy projects also often refer to the challenges Ontario faced with their renewable energy projects. Thanks to Ontario, governments and the renewable energy sector have learned a lot in the last few decades about policy, pricing, community engagement, and technology. This is what happens with many new industries, they start out with challenges that get addressed and improved upon as the industry develops. Lessons learned help inform decisions, policies, and projects in other locations.

In SE Alberta, successful round one REP companies Capital Power and EDP Renewables will each be investing millions of dollars towards constructing these two wind farm projects. Once constructed the power produced by these wind farms will supply Alberta with some of the cheapest prices for wind energy in Canada. Energy prices are volatile and fluctuate regularly, these projects are part of a 20-year contract with the Alberta Government under the Indexed Renewable Energy Credit (IREC) to provide wind energy at an average price of $37 MW/hr.

As Evan Wilson, Prairies Regional Director for CanWEA, illustrates in a recent CanWEA blog post[8] “when the wholesale price of electricity is below the contracted wind price, companies are paid the difference. But when it’s above, perhaps driven higher by volatile natural gas prices or carbon charges on fossil fuels, the wind producer pays the difference back to the AESO”.

Source: CanWEA[9]

I believe that these newly announced wind projects for SE Alberta are great news! Investing in wind energy, and other forms of renewable energy, will create employment opportunities, help diversify the economy, and lead to SE Alberta continuing on as a leader in energy. However, even though I believe these projects are great news, I am cognizant of the fact that no project, policy, or plan is ever perfect.

In a recent blog post on the C.D. Howe Institute webpage Blake Shaffer agrees that this low price for the first round REP announcements is good news[10]. “Winning firms sell their electricity into the hourly power market, receiving the prevailing price, and the contract pays the difference between that same hourly price and the fixed price set in the auction for 20 years. If market prices are higher, the firm pays back money. In effect, they receive a fixed price”. On the other hand, Shaffer cautions that the downside to low wind energy prices is that companies may focus more on the cost and volume of energy they generate, not the value of energy when they generate (i.e. the hourly market price). Wind blowing at night is much less valuable than wind blowing during peak electricity demand hours. Schaffer urges that this is taken into consideration for future REP rounds.

How wind energy is produced and sold is complex and discussions on energy need to be explored from multiple contexts and understandings so that we can excel at this form of energy as well in Alberta. I encourage everyone to have more well-informed, nuanced, non-partisan discussions on how we can all work together to ensure that the emerging renewable energy industry thrives in Alberta, and more specifically from my own bias SE Alberta. 

Welcome to SE Alberta Capital Power and EDP Renewables!

For more information on renewable energy in SE Alberta please visit the SEEDS website www.seedsalberta.ca or follow them on Twitter @SEEDSAlberta 

[1] Government of Alberta (2017) Renewable Electricity Program. https://www.alberta.ca/renewable-electricity-program.aspx#toc-3[2] Government of Alberta (2017) Climate Leadership Plan. https://www.alberta.ca/climate-leadership-plan.aspx[3] Suncor (2017). Report on Sustainability 2017. https://sustainability.suncor.com/2017/en/performance/renewable-energy.aspx[4] Sandra Moore (2017). Southeast Alberta energy diversification report: Our region, our jobs, our communities. Economic Development Alliance of Southeast Alberta: Medicine Hat, Alberta. http://www.seedsalberta.ca/uploads/1/0/9/3/109320257/southeast_alberta_energy_diversification_report_march_2017.pdf[5]CanWEA & CanSIA. (2015) Submission to the Alberta Climate Change Advisory Panel. https://solaralberta.ca/sites/default/files/canwea_-_cansia_final_submission_sept_30.pdf[6] Delphi Group (2017). Alberta Wind Energy Supply Chain Study. Prepared for CanWEA https://canwea.ca/wp-content/uploads/2017/09/Delphi-AB-Wind-Supply-Chain-Study-Final-Report.pdf[7]Elemental Energy (2017). Projects. http://elementalenergy.ca/projects/[8] Evan Wilson (2017). Made-in-Alberta procurement process harnessed competitive market forces getting the best deal for consumers. CanWEA https://canwea.ca/blog/2017/12/13/made-alberta-procurement-process-harnessed-competitive-market-forces-getting-best-deal-consumers/[9] Evan Wilson (2017). Made-in-Alberta procurement process harnessed competitive market forces getting the best deal for consumers. CanWEA https://canwea.ca/blog/2017/12/13/made-alberta-procurement-process-harnessed-competitive-market-forces-getting-best-deal-consumers/[10] Blake Shaffer (2017). Alberta’s Renewable Auction Sets a New Low for Prices, but Tweaks Are Needed in the Future. C.D. Howe Institute. https://www.cdhowe.org/intelligence-memos/blake-shaffer-alberta’s-renewable-auction-sets-new-low-prices-tweaks-are-needed

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