Changes to Alberta electricity market

[ExtraSlow]

Can someone explain the coming changes to the Alberta electricity market? What's the situation now, what is proposed, and how will that incentivize different forms of electricity generation and transmission?
I know we have several utilities guys on the forum.

[HiTempguy1]

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Can someone explain the coming changes to the Alberta electricity market? What's the situation now, what is proposed, and how will that incentivize different forms of electricity generation and transmission?
I know we have several utilities guys on the forum.

Liberals are clearly in big coal's pockets:

https://nationalpost.com/news/coal-c...eport-suggests

Burn baby burn!

P.S Can we get that nuclear reactor finally? Pretty please??

[jwslam]

[Disoblige]

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Can someone explain the coming changes to the Alberta electricity market? What's the situation now, what is proposed, and how will that incentivize different forms of electricity generation and transmission?
I know we have several utilities guys on the forum.

Current system is an "energy only" market, which means utility companies only get paid for the energy that is produced/sold.

We're moving to a "capacity market" in 2021 which means generators get paid for available capacity they can provide as well as getting paid for actual production and delivery of energy.

This provides more incentive for investment into our utility system, or in other words, more attractive to put in new capacity especially with Alberta's plan to completely phase out coal for 2030 (unrealistic? probably). This means we need ~5000 MW of reliable energy to replace coal. Compared to other places, we have some of the lowest power price but this is bad for long term growth.

All things considered, this change should be bringing better long term prediction of energy costs due to less price volatility (price spikes in certain hours due to capacity shortage) and hopefully more environmentally friendly options for power. Alberta also has quite a bit of private co-generation so if they can sell excess power back to the grid, they can help the province's demand to an extent.

Questions that would be raised are:

- What happens to our bills in 2021? Technically shouldn't be higher than what we see now. If anything, it'll be more consistent
- Who will be the first people to invest?
- Can these renewable sources provide consistent power long term?

[DboyNismo]

Kenney does have 90 days to review the proposed changes and may scrap the capacity market, keeping the current energy-only structure. Capacity market was intended to ensure that participants still received a return on capital in an era where renewables were entering the market.

Since Kenney is most likely rolling back the renewable procurement program, the question stands whether the capacity market is needed right now.

[Xtrema]

An analysis by EDC Associates found the transition to a capacity market will procure additional electricity before it’s needed, requiring consumers to pay up to 40 per cent more — an extra $1.4 billion — for power in 2021-22 than under the existing market structure.

https://calgaryherald.com/opinion/co...rofound-change

It will be interesting what will be decided in 90 days.

Also, while our energy cost is cheap, it's really no cheaper than BC when you include all the fees*.

* If you keep it under 1350kwh/month.

[ExtraSlow]

Regarding renewables, I know I've been hearing that they were roughly on-par with costs to build new natural gas fired plants. I thought that meant without government subsidy, but I'm not sure. Anyone know what new utility scale solar costs are?

- - - Updated - - -

Also, so the capacity market should encourage new generation infrastructure, which may reduce price volatility, although possibly at a higher "floor" price? Is that right?

And lastly, has anyone been talking about making consumer / residential power prices time-dependant like industrial power is? Aren't our largest spikes in demand driven by summer residential AC loads? Makes a lot of sense to me, but would require changes to metering equipment.

[Xtrema]

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Also, so the capacity market should encourage new generation infrastructure, which may reduce price volatility, although possibly at a higher "floor" price? Is that right?

That plan is pushing all the investment that's happening right now.

https://www.aeso.ca/download/listedf...-LTA-Final.pdf

Expect those wind and solar projects to disappear if UCP ends it without using other incentives. Also we are also running a deficit right now. As I post this, there is ~400MW flowing from BC/Montana and it's not even hot yet.

[HiTempguy1]

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Also, so the capacity market should encourage new generation infrastructure, which may reduce price volatility, although possibly at a higher "floor" price? Is that right?

Ah yes, charge us more overall so we can have a steady bill. WTF kind of logic is that??! Especially at a 40% price premium.

One can only pray UCP does the right thing. We have enough natural gas to make cheap, clean electricity for a long time, which will help us with cost savings/revenue generation so we can actually afford proper renewable resources (like nuclear) that are fully developed and ready to be implemented at no price premium.

[Xtrema]

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Especially at a 40% price premium.

Up to*. And like I said, energy cost is only 1/2 of your bill right now, majority of bill will still be delivery cost which I don't see how it will go anywhere but up.

Now nobody knows. We are definitely on deficit and projects are coming in to tackle that deficit but investment won't be here without market condition to support it.

I don't think NDP cancelling coal early was wise because it introduce a bad environment for investments. UCP doing a 180 will have the same effect because it kills the budding diversification that is green energy and regardless of cost, we need it to tackle deficit and solar is great for attacking day time deficit. And gas would be great to generate night time surplus for BC Hydro.

No expert, but I hope we find a middle ground somewhere.

[HiTempguy1]

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We are definitely on deficit

Nope. As of 2016.

https://globalnews.ca/news/3084840/a...r-electricity/

Alberta power prices are languishing near multi-year lows as a result of excess supply and slowing economic growth in the oil-producing province.

We are nowhere near a deficit in power generation, unless we are now due to the NDP closing coal plants. Which may be able to be restarted, or converted to gas.

The fucking boondoggles the NDP caused keep adding up. Well over $10bil in damages to the finances of Alberta above and beyond their crazy spending already. Holy crap.

As for "up to", have you ever seen government come under budget? It will most certainly be closer to 40% than closer to 0%.

[HiTempguy1]

https://globalnews.ca/news/4382750/a...ectricity-use/

2018

Alberta set a new summer record for electricity consumption on Thursday, using 11,163 MW of power, according to the Alberta Electric System Operator.

2017 https://www.neb-one.gc.ca/nrg/ntgrtd...ls/ab-eng.html

Alberta is the 3rd largest producer of electricity in Canada and has a generating capacity of 16 458 megawatts (MW)

[Xtrema]

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Nope. As of 2016.

https://globalnews.ca/news/3084840/a...r-electricity/


We are nowhere near a deficit in power generation, unless we are now due to the NDP closing coal plants. Which may be able to be restarted, or converted to gas.

The fucking boondoggles the NDP caused keep adding up. Well over $10bil in damages to the finances of Alberta above and beyond their crazy spending already. Holy crap.

As for "up to", have you ever seen government come under budget? It will most certainly be closer to 40% than closer to 0%.

So you are quoting a 2016 article over Feb 2019 forecast report released by AESO and current grid stats?

http://ets.aeso.ca/ets_web/ip/Market...DReportServlet

[HiTempguy1]

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So you are quoting a 2016 article over Feb 2019 forecast report released by AESO and current grid stats?

http://ets.aeso.ca/ets_web/ip/Market...DReportServlet

You are telling me Alberta, LAST YEAR, set a peak usage of 11, 600MW and we have 16,500MW of capacity available, and somehow we are in an electricity deficit?

What are you smoking? Do you not understand peak usage and generating capacity? Are you suggesting we've LOST 5000MW of generating capacity?

They are forecasting almost 100% margin when factoring in everything that has been announced. 70% with approved. And 20% with no intertie and current in construction projects.



We are perfectly fine, and the situation would look much better with coal plants. Likely, they could be brought back online if the economics are there and the UCP reverses the NDP electricity boondoggle.

[M.alex]

current - generators get paid when they produce real electricity

proposed - go to a system where some revenue comes from producing electricity and some comes from promising to be available when needed (even if you're never needed)

reason - jamming in a lot of renewable growth impacts system volatility (price swings) so the new market design mutes price swings because it rams in a lot of supply and impacts how generators can offer it into the market

impact - consumers will pay $1-2 billion more per year for electricity

solution - no more policy mandated renewable growth means the current design can stay intact, which the UCP is looking at doing

[Xtrema]

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You are telling me Alberta, LAST YEAR, set a peak usage of 11, 600MW and we have 16,500MW of capacity available, and somehow we are in an electricity deficit?

What are you smoking? Do you not understand peak usage and generating capacity? Are you suggesting we've LOST 5000MW of generating capacity?

They are forecasting almost 100% margin when factoring in everything that has been announced. 70% with approved. And 20% with no intertie and current in construction projects.



We are perfectly fine, and the situation would look much better with coal plants. Likely, they could be brought back online if the economics are there and the UCP reverses the NDP electricity boondoggle.

Please review the list of projects that will help us hit 70% and count how many would be under the crosshair of Kenney if his follow thru with his rhetoric and how many of those projects would be dropped off if the capacity market doesn't exist.

https://www.aeso.ca/download/listedf...-LTA-Final.pdf

For now, you can't beat NG generators in term of cap cost. And if EV price parity hits by 2025 as estimated, expect to blow this forecast out and even if we hit 70%, we could only hit 60% due to extra load.

And how likely will it hit 110% now if Kenney only approves gas generators going forward? Will we get hit with lawsuits again and pay tons of money for nothing like the early coal cancellation? This is why I hate NDP for that ideological move removing coal too early and got us down a more expensive road. Original PC's plan would have been more gentle transition.

[ZenOps]

I'm doing my part to green the earth, just bought my first solar panel - A 5 watt.

[M.alex]

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Please review the list of projects that will help us hit 70% and count how many would be under the crosshair of Kenney if his follow thru with his rhetoric and how many of those projects would be dropped off if the capacity market doesn't exist.

https://www.aeso.ca/download/listedf...-LTA-Final.pdf

For now, you can't beat NG generators in term of cap cost. And if EV price parity hits by 2025 as estimated, expect to blow this forecast out and even if we hit 70%, we could only hit 60% due to extra load.

And how likely will it hit 110% now if Kenney only approves gas generators going forward? Will we get hit with lawsuits again and pay tons of money for nothing like the early coal cancellation? This is why I hate NDP for that ideological move removing coal too early and got us down a more expensive road. Original PC's plan would have been more gentle transition.

The reserve margin doesn't really mean anything because it's just an arbitrary weighting of supply divided by peak demand (and what's worse is Alberta's peak demand is winter but majority of system stress events are spring/summer, so it isn't really even correlated to system stress in Alberta)

The AESO's reserve margin includes all projects past a certain, but they obviously all won't be built. Right now on a gross (non-discounted) basis our reserve margin today is almost 70%. As you apply different weightings it goes down as low as 20%. (i forget the exact weightings the AESO uses in their reserve margin)

Alberta has been in a supply glut since the late 2000s and that isn't going to change anytime soon.

Coal retirements are required by federal legislation by the end of 2029; there's perfect transparency of the retirement of these legacy assets so developers will come and build in Alberta because that's their job (identify jurisdiction with potential to build a lot of MW and then build a lot of MW)

[dirtsniffer]

Put everything into Nat gas. Renewables are only driving costs up

[ShermanEF9]

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P.S Can we get that nuclear reactor finally? Pretty please??

It'll be the only way to satisfy the needs and wants of most Albertans.