“Renewables can provide greater reliability for the electricity grid because of the nature of their distribution.” – Jeyakumar
By Binnu Jeyakumar, Director of Pembina Institute’s electricity program
Alberta’s electricity sector is undergoing a substantial transformation. There’s no stopping it; the sector is changing worldwide. The change is driven by cheap renewable energy, aging infrastructure, declining coal value and the need to better manage the health impacts of air pollution.
That last factor is one of the main reasons the federal government, under Prime Minister Stephen Harper, legislated the first national coal phase-out in 2012. It is why many states and countries are seeing coal plant retirements and its replacement with renewable energy.
This isn’t our first rodeo. Alberta went through a significant market transformation when the province deregulated the electricity market almost two decades ago. We must adapt to change and we need to adapt thoughtfully and in an evidence-based manner. The good news is that industry, government, consumer associations and civil society are working together on this complex transformation.
However, it’s easy for misinformation to spread in times of change. Some of the myths being perpetuated fly in the face of global trends, so here are a few facts to keep in mind.
The economics of the electricity sector today is very different from 10 years ago. Renewables are cheaper than ever before. The cost of wind power is half what it was when Ontario first rolled out its green energy policies. Coal power can no longer compete with renewables and natural gas. This has resulted in early coal plant retirements, especially in North America.
We need to look at the full balance sheet of costs for Albertans. The health savings from preventing coal pollution far exceed the costs of retiring coal plants. Renewables also help lower wholesale electricity prices, because their operating costs are nearly zero.
Renewables can provide greater reliability for the electricity grid because of the nature of their distribution compared to our traditional fuel sources. We can make smart changes in the electricity sector to ensure we go with the most economic solutions. For example, Alberta uses a competitive market process to add renewables to the grid.
This led to the procurement of some of the cheapest renewables in North America late last year. Similarly, the capacity market can be designed so that only necessary power plants are built and the system has incentives to be efficient.
The changing electricity sector presents new opportunities for Albertans. You can invest in community energy projects, seek more energy independence, have a greater say in how you use electricity, and benefit from increasing energy efficiency.
It has been a long time since the electricity sector held so much promise — probably not since Thomas Edison & Co decided to expand the electricity grid beyond small urban centers. So let’s roll up our sleeves and seize this opportunity for the benefit of Albertans.