Free the market for renewable energy in Alberta

Globe and Mail

3 days ago

Alberta's clean energy sector is in retreat. In 2024, the number of renewables projects in the province's connection queue shrunk for the first time, meaning more projects were cancelled than proposed.
It's not hard to parse why. Since 2023, mounting regulatory burdens, an abrupt seven-month moratorium on new project approvals, rising regulatory fee and uncertainty brought on by the provincial government have hit the industry.
Alberta only needs to look so far as Texas, which shares key characteristics with the province, to understand the consequences of taking a hard stance against renewables. Texas and Alberta share an abundance of wind and solar resources, and a free market that encourages competition and innovation from independent power producers.
But the difference is that Texas has embraced the economic benefits of a thriving renewables sector. Deregulated markets attract the most economic forms of energy and in many cases, that's wind and solar.
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A regulatory structure that enabled the free market and that rewarded risk-taking is what propelled Alberta to become a leader in oil and gas in the 20th century. The same looked to be true of renewables. In 2023, Alberta accounted for 92 per cent of new renewable energy capacity.
Now, the premise and promise is being walked back and selectively applied by Premier Danielle Smith.
On the one hand, Ms. Smith inveighs against federal regulations that she says scares off risk-averse capital from investing in megaprojects. (And to an extent, she has a point.) But at the same time, she's effectively strangling renewable projects within Alberta's boundaries with a fresh roll of red tape.
Global energy investments are trending more towards renewables than fossil fuels. According to the International Energy Agency, two thirds of global energy investment went towards clean energy in 2024. Alberta could, and should, be a leader in this sector.
For a while, Alberta stood to benefit from this trend. Between 2019 and 2023, renewable energy projects in the province generated nearly $5-billion in investments and almost 5,500 jobs, according to the Pembina Institute, a think tank.
But then, Ms. Smith's government decided it would be better suited as a benchwarmer and pulled itself out of the renewables race.
Meanwhile, Texas hasn't stopped producing oil and gas. And it certainly didn't decide to become a renewable energy powerhouse to save the planet.
Other provinces are doing better than Alberta. Ontario, for example, awarded 10 contracts to battery energy storage projects as part of a procurement round it held in 2023. British Columbia, meanwhile, recently launched its second call for power after awarding 10 contracts to wind and solar projects through a similar procurement program in 2024.
Some confidence was recently regained in energy storage investment in Alberta after the government clarified how some of its new rules applied to projects, according to the Pembina Institute. However, it has hardly done enough to bring Alberta up to speed with the rate of renewables growth in other provinces or even return it to its own growth rate, pre-moratorium.
The lingering uncertainty from that surprise move is still a drag on the growth of renewable energy in the province.
Pembina also notes that policy changes on electricity transmission are a weight on renewable energy. In a letter to the Alberta Electric System Operator in July, 2024, Nathan Neudorf, Alberta's minister of affordability and utilities, instructed the operator to scrap a rule that kept transmission lines operating below full capacity.
Among its effects, that rule allowed wind and solar plants access to the grid when their output rose. Without some slack in the system, intermittent producers could be unable to get their power into the system.
Ms. Smith needs to slash the red tape binding renewable energy projects in the province, clearly communicate which areas of the province are well suited to new developments and encourage the use of technologies such as energy storage to reduce transmission system congestion.
The Alberta premier has had much to say lately about embracing the free market and getting government out of the way of big projects. It's time she took her own advice – and gets government out of the way of renewables growth in Alberta.