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Alberta’s New Renewable Energy Incentives: A Template

All stick no carrot

With the new carbon tax rained down upon the Alberta populous, the new NDP Notley government needs less stick and more carrot. The party needs to realize, that new taxes in a recession is not the way to go, especially when the impact is directly upon the general public. Alberta is terminally dependent on the incineration of coal for 55% of its energy needs and has no hard plan to replace this.

If the new provincial government wants real energy diversity and change they need an incentive program. The new provincial climate change policy announcing a pledge, not legislation to eliminate coal-fired plants by 2030. This is too far away, not realistic, and is typical of parties that are seeking soundbites.  BUT with an actual incentive program, one whose duration is short at 4 years could get us 20% of the way along. A program like this is long enough to know if it’s working, short enough to be accountable in the next election.

To put this into a world perspective as of 2016:

China has the most renewable power: 43,200 Megawatts

Germany: 38,400 Megawatts

United States: 27,800 Megawatts

Alberta’s goal is to achieve 22.5% of the United States 2016 total capacity by 2030. Lofty goal..

Right now Alberta has no incentives, no green programs and nothing in the works. It’s been 305 days since the NDP has been elected and nothing has been done, other than press releases. Its fair to say, the NDP is all easy tax increases but when it comes to real work to research these changes promised, they have been lacking.

These are some statistics pulled from the AUC and the AESO;

Generation Gigawatt Hour (GWh) Generation Share By Fuel

Coal

44,442

55%

Natural Gas

28,136

35%

Hydro   1,861 2%
Wind   3,471 4%
Biomass   2,060 3%
Others*      373 0%
Total 80,343 100%

As above, 90% of Alberta’s energy comes from non-renewable sources. Also consider the majority of proposed alternative energy projects do not make it to market… How is the government going to replace at least the coal portion in 14 years, without an large incentive program? Even current imports of power are only a sixth of coal.

Generation Capacity Megawatt (MW) Capacity By Fuel
Natural Gas   7,080 43.6%

Coal

  6,258

38.5%

Hydro      900  5.5%
Wind   1,459  9.0%
Biomass      447  2.8%
Waste Heat*        98  0.6%
Total** 16,242 100%
Source: AUC and Alberta Electric System Operator (AESO).

 

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Proposed Generation

As of August 2015

Type   Number of Projects  Total Capacity (MW)
 Renewables  20   2,480
 Thermal and Other  41   7,793
 Total  61 10,273

Looks promising, but how many of these projects have been on the books for years? Or how many are just expensive brochures and never-never plans that will never come on line?

 

Customer Usage Estimates

Number of Customers  Usage (GWh)
2013 2014 2010 2011 2012 2013 2014
Residential 1,373,960 1,405,894 9,071 9,333 9,412 9,678 9,927
Farm 83,369 83,816 1,708 1,828 1,800 1,836 1,865
Commercial 169,981 172,609 13,748 14,207 14,596 14,778 15,155
Industrial 37,807 37,607 27,076 27,294 27,474 27,838 28,432
Total* 1,665,117 1,699,926 51,603 52,662 53,283 54,131 55,379

The above chart suggests that a targeted incentive program to commercial and industrial customers, IE: building owners and commercial power generators would have to greatest impact and be the easiest to manage and monitor.

Propose the government focus on a small but achievable goal to add the equal to 20% of the current total coal capacity (6,258 MW).

Call the program

The Alberta Commercial Energy- Incentive Program (ACE-IP)

The incentive program would consist of a mix of grants, tax exemptions, rebates and low interest loans to business that install solar or other “green” energy or upgrade to more energy efficient systems. The rebates, grants, tax exemptions would equal 75-85% of the total cost. Similar to Colorado’s successful program. The NDP would finance this though a commercial bond offering. Solar costs have decreased exponentially over the last few years, that trend is expected to continue. See chart below of the decreasing costs per watt.


alberta-solar-cost-perwatt

 

Source: Investor presentation nov 2015

 

The cost?

To hit this 20%, the total megawatts would have to be 1,251.
Assuming solar only, at $0.42 cents a watt, 1 million watts in a megawatt (MW), this would be $420k per MW times  1,251 = $525 million total 100% cost. OR at 85% incentive, $446m.

But this assumes full 100% efficiency at capacity. At 20% efficiency, a 85% incentive this would cost $2.23 billion. Cost would be over 4 years to just $557m. On a population cost, it works out to $557.00 per person, per year for 4 years. Not bad to replace 20% in four years, and probably less because solar cells are still decreasing in price.

 

 

Source: Trebuchet Research

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