Falling capital costs add to the appeal of wind energy in Alberta’s alternative energy mix

But transmission capacity and a deregulated power market remain significant hurdles

By Patrycja Romanowska

May 01, 2009

The Alberta government officially desires a mix of energy sources but shows little appetite for policies to make it happen. Currently, coal contributes 48 per cent of power in the Alberta grid. Natural gas comes second at 38 per cent. Next in line is hydro, which accounts for seven per cent of the province’s electricity. Wind follows at four per cent and biomass at one per cent. It took the government until this March to end six years of a consumer subsidy for natural gas that renewable energy producers claimed was undermining their quest for price competitiveness. This was less likely an energy policy move to encourage renewable sources and more likely a political response to economic conditions that eventually drove the provincial budget into the red. Gas rebates cost the treasury nearly $2 billion since 2002. But low gas prices during the 2008-09 heating season made the subsidy at least temporarily unnecessary and easy to eliminate without public protest.

When it comes to policies actively encouraging renewable power, the province’s only measure is assistance for bio-energy development, which has distributed $239 million since 2006 to projects rooted in agriculture. This sum is paltry in comparison to the billions being committed to carbon capture and storage, which will reduce emissions from coal but do nothing to encourage a shift away from using the fossil fuel. In fact, since getting the CO2 at a high enough pressure to put it in a pipe and stick it underground will require between 30 and 40 per cent more energy, the provincial CCS strategy will increase the use of fossil fuels.

This causes no end of frustration for Balaban and his renewable energy peers as each breeze reminds them about the emissions-free electricity – and resulting profits – that continue to be gone with the wind.

“The U.S. has been promoting renewable energy as a cornerstone to their economic recovery,” Balaban says. He laments that Alberta is not doing the same.

“An economic downturn is the time to make strategic long-term investments. Wind power is that opportunity. I have $1.5 billion of wind projects that are ready to be constructed. This would give significant economic benefit to the province at a time when a need for that exists, when we need some capital projects to be developed.”

Alberta political winds do not appear to be blowing in Balaban’s way yet. Increases to wind’s share of the provincial energy market are in the works. But deregulation policy, financial blows and slow additions to transmission capacity will ensure that it will be a while before wind power rises to its full potential, if ever.

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