While Alberta renewable energy producers warn of billions in lost investments, and a veteran oil and gas writer suggests “political intrigue” behind the decision, Alberta Premier Danielle Smith has come up with a novel way to blame Ottawa after her government slapped a seven-month moratorium on new wind and solar projects over a megawatt in size.
Smith says the federal government is preventing development of the natural gas backup she apparently thinks the renewable energy systems would need, The Canadian Press reports.
Smith, whose government surprised the province’s renewable energy industry last week by announcing the freeze, told her province-wide radio call-in program Saturday that backup plants powered by natural gas are needed for when wind isn’t blowing or the sun isn’t shining, CP writes.
But, she said, the federal government doesn’t want Alberta to add any new natural gas electricity plants to the grid.
“So I’ve told them, how can I bring on additional wind and solar if I’m not able to secure the reliability of my power grid by being able to bring on natural gas peaker plants? That’s the heart of the problem,” Smith said.
“No one is proposing any new natural gas plants because the federal government has created so much uncertainty in the market.”
That rationale was confusing for one of the province’s leading energy economists, as well as a representative of a renewable energy industry group, who said there’s no requirement in Alberta’s market for generators to be able to supply power 24-7.
“If somebody adds solar to the grid, you don’t need to add backup to compensate for it,” said the University of Alberta’s Andrew Leach.
“It just adds a source of cheap electricity for times when it is sunny outside,” explained. “Essentially, you bring your power to the market every hour and see what it sells for.”
Leach said it’s possible the addition of cheap wind and solar energy could discourage natural gas-powered projects by lowering the price of electricity. But he said the reverse is also true—that fossil fuel projects could discourage green ones if they’re less expensive.
He added that Alberta’s energy market, by law, operates on exactly that kind of free and open competition.
“Good gawd Premier, give yer head a shake,” Iron & Earth Communications Director Mike Spear advised on LinkedIn.
“We got screwed,” declared Mike Lambros, founder and CEO of Texas-based Proteus Power Developments LLC, which the Globe and Mail says had spent millions on the application process for the three solar farms it planned to build in Alberta.
‘Taking a Jackhammer to a Nail’
The province’s burgeoning renewable energy industry said it was blindsided by last week’s announcement and warned Alberta could lose billions of dollars in investment to the United States and Europe as a result. “Most troubling, some executives said, is that Alberta’s decision to pursue the pause will put it at a disadvantage in the competition for capital for emissions-reducing renewable energy, even as the effects of climate change worsen in Canada and globally,” the Globe and Mail reports.
“This sort of move obviously has a chilling effect on the investment climate for renewables in Alberta. Up until this surprise announcement, Alberta has been leading the nation in renewables growth,” said Dan Balaban, CEO of Greengate Power, the company behind Canada’s biggest solar farm near Vulcan, Alberta.
“Sure, the industry’s been growing quickly. It has been experiencing some growing pains, as with any fast-growing industry,” he added. “But I think putting a moratorium on new project approvals is a very extreme measure. It’s like taking a jackhammer to a nail.”
Balaban said any issues arising from solar and wind development in the province can be addressed without shutting down the application process.
“Right away, it makes the U.S. jurisdictions more desirable. It calls into question whether Alberta really is an open-for-business province,” said Jordan Dye, acting director of the Business Renewables Centre-Canada. “The other angle that’s important to consider is, right now there are major multinational corporations that do renewable development looking to enter the Canadian market, through Alberta. I’ve been meeting with a few companies over the last few months, and this calls into question the pace and decision to move to Alberta.”
Citing data from the Business Renewables Centre, the Globe says Alberta has seen C$4.7 billion in new renewable energy projects since 2019, and 2023 was on track to be a record year. “The centre said in a statement that the industry has created 5,300 jobs, and contributed millions of dollars in property taxes and annual payments to landowners.”
That’s in contrast to deadbeat fossils in the province that have steadfastly refused to remit more than $250 million in unpaid municipal taxes, creating deep hardship for rural municipalities trying to pay their bills and deliver services.
Nathan Neudorf, minister of affordability and utilities, allowed as how the moratorium would be “a little bit of inconvenience now for the next few months” but was worthwhile to get things right for the long-term, CP writes.
Vittoria Bellissimo, president and CEO of the Canadian Renewable Energy Association, said Alberta should remove impediments to energy storage projects, like tariffs that she said could treat storage providers the same as energy consumers or generators. That way, she said green energy from solar and wind could be stored and released when it’s needed.
“The premier and others are under the impression that you have to have natural gas to make the system work, but you don’t,” Bellissimo told CP. “You need any type of resources that can time shift, and there’s lots of them out there.”
‘This is Not Orphan Wells’
Alberta has been a leader in renewable energy development in Canada, accounting for 75% of the country’s increase in solar and wind generation in 2022. In that year, 17% of the province’s electricity came from wind and solar, exceeding its 15% target.
A representative of Rural Municipalities Alberta has said that while farmers and municipalities get tax and rent revenues from renewable energy, members are concerned about possible cleanup problems, similar to issues they’ve experienced with abandoned oil and gas wells. They’ve also said they’re concerned about agriculture being displaced.
But there’s a crucial difference between the subsurface oil and gas industry that has left Alberta with a massive legacy of toxic tailings ponds and abandoned wells, and renewable energy projects that are built above-ground: With wind and solar, Bellissimo said last week, landowners hold surface rights, which means they get to decide whether an installation proceeds and under what conditions.
“This is not orphan wells,” she told The Energy Mix. “Landowners can refuse entry if they so decide,” and “they can decide when and how a renewable project gets installed,” through private, civil contracts that can include provisions for decommissioning or other assurances to address landholders’ concerns.
But CP says Smith told her radio audience on Saturday that a solar farm in her Brooks-Medicine Hat constituency in southern Alberta was covered for months with ice and snow, and wasn’t producing power.
“When we were in the winter,” she said, “several times the grid almost failed because we didn’t have enough power, and you can’t call up wind and solar on demand.”
Leach countered that some solar projects are built in order to capture peak summer sunshine, and wondered why the province would intervene if they made economic sense for the landowners and power producers.
“When you stop and think about that for half a second it’s incredibly ironic because, of course, you’re not growing a lot of canola in the snow and ice, either,” he added.
‘Held Hostage by Political Intrigue?’
While some analyses this week have cast the renewables moratorium as part of Smith’s opposition to the federal government’s forthcoming Clean Electricity Strategy, veteran Alberta energy journalist Bill Whitelaw has a different theory that he admits might “suffer a little from tinfoil-hat syndrome.” In an opinion piece this week, he asks whether the idea might trace back to the work of a five-member provincial panel, consisting entirely of oil executives and “nary a renewables person among them”, that was meant to advise on the province’s energy future. It was chaired by oilpatch veteran and Smith energy mentor David Yager.
“We all know the world needs long-term energy solutions that are responsible, reliable, and affordable,” Smith said in a February statement. “Now is the perfect time to create a panel of experts to look ahead to the future of our energy sector and how we can meet global energy needs in the years ahead.”
But “fast forward to July and the report is nowhere to be found in the public realm. Indeed, Albertans have been told the report is currently classified as ‘advice’ to the premier—a status that protects it from the inconvenience of the public’s prying eyes,” Whitelaw writes. “That sort of clashes with the whole spirit of advice to Albertans, which was the pretty explicit subtext when the panel was announced.”
There’s been no public information on who the panel consulted or what it advised, Whitelaw acknowledges. But “here is the $64,000 tinfoil-hat question: Did Yager’s report recommend the moratorium? Did it contain sufficient Gatling Gun rounds of ammunition, gussied up as recommendations, to start bringing renewables to heel in order to protect the legacy oil and gas sector? Is this really all about the premier’s determination to stare down Ottawa over contentious issues like clean electricity grids?”
In the end, “we don’t know. And we can’t know this because we’re not worthy enough to know the report’s contents,” even though the subsurface rights to oil and gas are supposed to belong to all Albertans.
This story first appeared in The Energy Mix.
