It has been a few days since Danielle Smith announced a pause on wind and solar projects and predictably incurred the wrath of the opposition and virtually every green industry from here to Ottawa. One argument put in place by the UCP is that regulations are not in place to account for orphaned facilities ie. installations that are owned by bankrupt companies. Smith also blamed Ottawa for potentially restricting natural gas generation in Alberta, for which there should be an equivalent amount of renewables. Both arguments are partially true but ignore a more fundamental problem.
Wind turbine output depends on wind speed and solar depends on direct sun light. The contribution of these renewables is negligible in the event of low wind speeds and overcast conditions. The ratio over time of the actual output of a renewable generating system to its rated output is the capacity factor or CF. For optimally placed installations this can approach 50% for wind turbines and 30% for PVS. The variability in output can range from virtually nothing however to +90%. Also, wind and solar installations have the same pattern of output over very broad areas. Cloud cover and wind speeds have the are the same values for hundreds of kilometres, therefore across Alberta, at the same time.
When Ontario did their renewable program, it resulted in renewables producing almost nothing for their grid on some days and on others they had to curtail solar and wind power or sell it at a loss. The OPG ended up compensating the renewable power generator for power that was unusable in the latter case. In the end, Ontario ended that program and elected to build out their nuclear capability.
The gold standard for power generation is whether it is dispatchable, which means that you can turn on a generation unit in response to needs. Hydro power is ideal for this since you can often let water build up behind a dam for days or weeks and bring the power online within a few minutes. Natural gas combined cycle generation takes a bit longer and coal generation takes longer than that. Quebec and BC, because of geography, have most of their generation capacity through hydro whereas Alberta and Saskatchewan require gas and coal generation for most of their dispatchable power.
The second classification for generation is baseline, which means that power output is relatively constant. Nuclear power is the best example of baseline power. Since the majority of the costs for nuclear power are in actually building the plant, you want to run that plant at 100% output to the end of its design life. To do this, you can decrease your price on off hours to encourage industries to run 24 hour shifts or store the power for higher demand times through batteries or pumped hydro, both of which are relatively expensive. Gas cogeneration in Alberta is for practical purposes baseline power. This is power which is created as a byproduct of oil production and about 1/3 of the generation capacity in Alberta is created this way. The oil industry tends to operate 24/7 so the level of output is very consistent and not in response to system loads.
Intermittent renewable power represents the most problematic of the generation types to incorporate into an electrical grid. It competes with baseline generation on the electrical grid when it is running and dispatchable generation sources have to fill in the gaps between generation and demand on the other. It cannot replace other generation methods because it will go to almost zero at any time.
Currently in Alberta, the combination of cogeneration capacity and renewable capacity is about the average load on the grid. This means that in a “perfect” day where the sun is shining, the wind is blowing, and all the oil companies are happily pumping power into the grid we may produce more power than we need. When this happens you either have to shutdown something or ship the power outside the province, likely at a loss. The press shows another 3.4 Gigawatts of stopped approvals for renewable capacity which, if implemented, changes this from a theoretical problem to a real one. This has been facilitated by subsidies by both the federal Liberal government and the previous NDP provincial government. The feds chipped in for the capital cost of building them and the NDP guaranteed a rate per kilowatt hour of energy produced.
Alberta is currently under an auction system that matches the loads on the grid to the contributions of various generation sources on an hour by hour basis. Prices in the last few years have varied wildly on an hourly basis based on the competition of baseline, dispatchable, and intermittent sources. In a given 24 hour period electricity prices can go from $50 to $600 per megawatt. While this sort of auction is common in North America, the instability exhibited is also alarmingly common. The issue is that what the consumer wants to purchase is not just power for the next hour but power for the foreseeable future. If we get a good deal on power today but our lights are out tomorrow, no one sees that as a good deal. While this has worked adequately so far the continuing introduction of intermittent generation sources into the grid promises to aggravate the problems further unless we deal with the issues.
Both the NDP and the UCP have promised to change this system at one time or another but neither party has. The UCP may be reticent to play with a free market system which seems to work, however imperfectly. The NDP may have found that a more balanced system would have devalued renewable generation systems, which would lose them voters in an election. Regardless, to date, it has been politically avoided. In the next 6 months the UCP will have to have a plan though. If you cancel projects that are already approved, as Ontario did, you end up in court paying compensation for facilities that are cancelled, so Alberta is at a critical turning point.
Smith could simply cancel further development which would result on a deluge of criticism from the green factions. They could also drop all price guarantees or subsidies which were started by the NDP and leave future renewable projects to compete on an even basis in the auction system. This would likely slash the number of applications for wind and solar power without implementing a a moratorium. In the past, Alberta has considered the concept of capacity pricing which pays producers for the capability to produce at a future date as well as energy costs. The negative of capacity pricing is that it adds an extra cost on what may be a market that may be already working well. The advantage is that it can be used to balance the markets for dispatchable, baseline, and renewable power. The UCP, when they were elected, took capacity pricing away from the tool set for the AESO after it had been introduced but the NDP. At that time, the system had been working adequately however. With the projected increases in renewable generation however it may be time to look at the concept again. Eco activists will predictably pan the idea as the extra payments will go primarily to fossil fuel generation.
During the opening months of the Ukraine war, natural gas prices went wild as the US gulf coast exported LNG to the EU. Spot prices routinely double or triple on the spot market. The implementation of another batch of renewable power on a market which is not ready for it could bring a litany of problems before the next election.