As Grant Arnold strolled down the long rows of black and silver panels at his company’s solar farm near Burdett, a hamlet along Highway 3 in the southeastern corner of Alberta, the October conditions could not have been more ideal for generating clean power. The sun beat down on the 72,500 south-facing solar panels, as a pair of miniature donkeys named Starsky and Hutch kept the facility’s groundskeepers – a herd of sheep – in line.
The Burdett Solar Farm is a new 20 megawatt facility developed by BluEarth Renewables Inc., where Mr. Arnold is chief executive officer. Burdett and its sister facility, Yellow Lake, 20 km south, cover 85 hectares of farmland. BluEarth built them amid a massive influx of capital that has flowed into renewable energy along Highway 3.
These investments have made the province that’s long been known as the country’s fossil-fuel centre its green energy hot spot as well. Welcome to Alberta’s Energy Transition Corridor.
The highway cuts across a vast region that is reaping the benefits of famously bright and breezy conditions, a welcoming market for investors and big strides in green technology. Combine the space and the weather with provincial rules that allow power generators to sell directly to users, not just a government utility, and the corridor is uniquely well positioned. “It’s not happening anywhere else,” Mr. Arnold says.
Alberta’s wind and solar farms
MURAT YÜKSELIR / THE GLOBE AND MAIL, SOURCE:
GOVERNMENT OF ALBERTA; ORENNIA; CANADIAN
WIND TURBINE DATABASE; TRANSALTA
Alberta’s wind and solar farms
MURAT YÜKSELIR / THE GLOBE AND MAIL, SOURCE:
GOVERNMENT OF ALBERTA; ORENNIA; CANADIAN
WIND TURBINE DATABASE; TRANSALTA
Alberta’s wind and
MURAT YÜKSELIR / THE GLOBE AND MAIL, SOURCE: GOVERNMENT OF ALBERTA; ORENNIA;
CANADIAN WIND TURBINE DATABASE; TRANSALTA
Also called the Crowsnest Highway, the road starts at Medicine Hat in the southeast, then extends 324 km through Taber, Lethbridge, Fort Macleod and on past Pincher Creek in the Rocky Mountain foothills. From there it cuts through the Crowsnest Pass and continues west into British Columbia.
Along the route, signs of Alberta’s tried-and-true industrial lifeblood are everywhere – farming and ranching, food processing, cargo terminals, and oil and gas production. Day and night, heavy trucks trundle back and forth. Canadian Pacific Railway Ltd.’s tracks parallel the highway across the region’s rolling hills and badlands.
But transformation is also evident. The sunny and gusty southwestern corner of the province has been a hub for clean energy since the 1990s, and development is accelerating, with 17 projects generating 1,032 MW. Wind turbines by the hundreds poke up alongside the highway.
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Lately, solar projects have popped up at a brisk pace, too. Many, like Burdett, are east of Lethbridge, developed by a variety of large and small companies. Provincewide, solar generation, at 1,088 MW, is now at the level the Alberta Electricity System Operator (AESO) had forecast last year would not be reached until 2033.
Just five years ago, wind power accounted for 9 per cent of Alberta generation capacity, and solar didn’t even register, according to AESO. Today, the two sources make up 22 per cent. Solar alone is now 6 per cent of the total, and about to take its next leap when Canada’s largest solar project, Greengate Power Corp.’s $700-million Travers development, starts up.
There’s also a nascent renewable natural gas (RNG) industry along Highway 3, in which the fuel is generated from agricultural and municipal waste, and plans for increased storage and other technology to level off the variable power supplies from wind and solar.
The former NDP government kick-started development in 2016 with auctions in which wind developers bid on projects – those offering the least expensive power to the grid won. The arrangements have netted the Alberta government $160-million, according to new research by the University of Calgary School of Public Policy, and primed the pump for today’s investment rush.
“The number one driver of renewables in Alberta is private investment,” says Nagwan Al-Guneid, director of Business Renewables Centre-Canada (BRC), a non-profit that provides education and networking services for developers, investors and electricity buyers. “These are private corporations, public institutions, looking to procure renewables through power purchase agreements in Alberta. They have serious ESG [environmental, social and governance] commitments.”
When BRC was established as an initiative of the Pembina Institute three years ago, it set a daunting target of reaching 2 gigawatts of renewable energy contracted by 2025. Alberta has already surpassed that, after $3.75-billion in spending on new generation. All that activity, the organization says, has created 4,500 jobs. Five deals have been signed this year, adding 333 MW of solar and wind power. More is on tap.
Green power is proliferating in other parts of the province as well. But Highway 3, already long established, can move workers and materials to and from projects quickly as they are constructed.
Most importantly, there’s “the resource” – sunshine and wind. Southern Alberta has both in spades. Lethbridge, for instance, averages 330 sunny days per year, or over 90 per cent of daytime hours. The region, known for its balmy Chinook winds that race across the Rockies, is also one of the breeziest in Canada, second only to St. John’s, according to Environment Canada. Lethbridge gets more windy days than any other city in the country.
The development has jolted local economies, which suffered with the downturn in oil and gas that began in 2014. Medicine Hat, known historically as The Gas City, has embraced renewables. Across southeastern Alberta, hotels are booked, restaurants are busy and the real estate market is strong, says Jon Sookocheff, economic development consultant with the city government.
Besides construction jobs, the industry is providing related opportunities, such as maintenance, warehousing and distribution. Colleges in the region are training the next generation of renewable energy technicians. “I think it’s one of the bigger development stories in Alberta and in Canada, and it’s maybe a bit of a secret right now. But it certainly takes a lot of work to put these production facilities into play,” Mr. Sookocheff says.
“All of a sudden there’s a renewables boom” for communities along Highway 3, says Blake Shaffer, an assistant professor of economics at the University of Calgary, and a former electricity trader. “And they opened the doors to it.”
BluEarth Renewables completed its Burdett Solar Farm last year. Its rows of solar panels sit on scrubby, privately owned land adjacent to a substation for the power grid. The Burdett and nearby Yellow Lake facilities are benefitting from Alberta’s power purchase agreement system, in which electricity buyers sign up for long-term supplies with providers of their choice.
Royal Bank of Canada and Bullfrog Power have bought all of the output from the facilities, which together have a capacity of 40 MW. BluEarth is repeating that type of arrangement with a new wind farm near Drumheller, to the north, where Shell PLC has agreed to buy all of that power.
“The grid, technically and commercially, facilitates that transaction,” Mr. Arnold, the BluEarth CEO, says during a tour of Burdett. “It’s unique in that it’s the only market in Canada that facilitates that growth if the buyer and seller want to do that, and there are a lot of buyers now. And the only place they can buy that is in Alberta.”
In most other provinces, power producers have to sell electricity to a single utility, which may not always enthusiastically welcome the independents into the market.
Buyers in Alberta run the gamut from major retailers, to manufacturers, to software developers and cloud computing companies – any that need to reduce the greenhouse emissions tied to energy purchases, known as Scope 2 emissions, as they work toward net-zero goals and other ESG commitments. TC Energy Corp., Telus Corp., Cenovus Energy Inc., AB InBev, Shopify Inc. and the City of Edmonton are among big entities that have signed long-term wind and solar energy contracts.
Calgary-based Greengate, in partnership with Copenhagen Infrastructure Partners, is nearing completion of the sprawling 465 MW Travers solar farm in Vulcan County, 60 km north of Highway 3. The project comprises 1.3-million panels and covers 1,300 hectares, more than twice the area of downtown Calgary. E-commerce giant Amazon has signed a contract to buy most the electricity it generates.
Other renewables developers have taken a merchant role, selling directly into the grid. Lately, that’s been a boon as they’ve taken advantage of high prices in Alberta, where a phase-out of coal-fired generation is well ahead of schedule.
DIF Capital Partners of the Netherlands bought BluEarth from Ontario Teachers’ Pension Plan Pension Plan three years ago. BluEarth is an active investor in Canadian and U.S. renewable energy, with more than 700 MW in operation. Mr. Arnold says the Alberta region offers among the best attributes for renewables development.
“The Highway 3 corridor, which I’ve always loved, is in southern Alberta, and where we’re seeing the most growth is southeastern Alberta,” Mr. Arnold says.
Enbridge Inc.’s Solar One facility, north of Highway 3 near Burdett represents a nexus between the new and old economies. The 10.5 MW facility is one of three that provide electricity to help power the company’s massive oil pipeline network to the U.S. from Canada. Plans call for an eventual 13 solar farms to perform that function, representing an investment of $500-million to $1-billion.
Like other solar farms, a herd of sheep grazes around Solar One to keep the vegetation down under the 36,000 photovoltaic panels. Corinne Beaton, the technician in charge of the facility, ensures visitors are well versed in safety protocols. Twisting an ankle in a gopher hole is one risk. In her spare time, she tends to beehives along the fence of the site.
Two other solar projects, in New Jersey and Pennsylvania, provide power directly to the Enbridge pipeline pump stations. Solar One feeds the Alberta grid, so its link to the oil pipeline is indirect.
Does it make sense for a company in the business of exporting fossil fuels to do so with the aid of green power? Enbridge says the two are complementary. The company wants to reduce the greenhouse-gas intensity of its operations by 35 per cent by 2030, and get to net-zero emissions by 2050. Scope 2 emissions – which stem from the energy generated to power the operations – play directly into that aim.
The company buys power from utilities in several Canadian provinces and U.S. states along its pipeline routes, all of which are trying to reduce emissions and are progressing at different rates, says Colin Gruending, president of liquids pipelines at Enbridge. “This is a way for us to accelerate that path with our own supplemental renewable fuel mix,” he says.
The other benefit is a commercial one: Producing its own electricity removes some price risks that go into operating Enbridge’s massive pipeline network.
Environmental purists balk at renewables supporting fossil fuels, but the company is taking a rational stance, Mr. Gruending says. “As much as we’d like to be full-on renewables, they’re an intermittent source of reliability.”
For now, a mix of generation types is expected to contribute to the Alberta grid, from renewables to natural-gas-fired power plants, as the province transitions away from coal. Over the past five years, gas’s share of generation has climbed to 63 per cent from 44 per cent, as coal-fired plants have been retooled. Under the most optimistic scenario, the grid will not be free of emissions by 2035, which will require the purchase of carbon offsets, AESO said in a net-zero study earlier this year.
“Energy in all its forms and transportation sources is complex, and sometimes we overlook the practical challenges of getting there,” Mr. Gruending says. “So we believe in a gradual but intentional energy transition. All energies required.”
The Athabasca Chipewyan First Nation is no stranger to the energy business. It owns Acden, a company that provides numerous services to the oil sands industry. In September, ACFN joined several other Indigenous groups in a $1.12-billion deal to buy a minority stake in seven Enbridge oil pipelines in northern Alberta.
Now, the ACFN has diversified its holdings with a 50-per-cent stake in the new Monarch, Vulcan and Coaldale Solar farms in the south, which together have capacity of 67.6 MW. The identical projects cost $140-million. The nation’s partner is Concord Pacific, the Vancouver-based real estate and green energy developer. Unlike many renewable projects in Alberta, which have long-term power-purchase agreements in place, these sell their electricity to the grid as merchant operations.
Jason Schulz, ACFN’s executive director of strategic advisory services, says all the energy investments are aimed at benefitting the northern Alberta community and, through their revenue, allow the first nation to champion calls to action set out by the Truth and Reconciliation Commission of Canada. “Economic reconciliation, partnering with private industry, goes a long way to setting out what can be accomplished, and sets the bar high for anybody else going down this route,” he says.
On a recent visit to the Coaldale facility, located beside a plant nursery just a few kilometres north of Highway 3, project manager Mike Becker explained that the 78,720 panels have nifty bifacial technology that allows them to soak up some of the sun’s rays that deflect off snow on their reverse side. Many solar projects in the region adopted that technology.
Coaldale and its identical sister projects have more capacity than they currently deliver to the grid. “This was designed with storage in mind,” Mr. Becker says. “We overbuilt so we can connect to the grid at 22.5 MW, but we’ve installed 35 MW. During the peak of the day there’s a lot of energy there that’s available to store, then put on the grid in the evening.”
The partners are now finalizing plans for batteries to add to the three solar farms, a $60-million proposition, Mr. Shulz says. AFCN is not taking a stance on green versus renewable energy, and instead is diversifying its holdings. “In terms of an energy portfolio, it’s not necessarily one or the other. We’re not that extreme in our beliefs, but we do believe that green energy can complement more traditional forms of energy along the way,” Mr. Shulz says. “If you put all your eggs in one basket, you’re destined to fail – or at least have hiccups along the way.”
There are risks that could hamper further growth in renewables generation. Developers are concerned a rush of new projects could cause regulatory logjams and spark pushback from landowners who worry when valuable agricultural land is covered up by rows and rows of cells. However, so far, projects have tended to be located on less fertile acreage, and municipalities have benefited from the taxes companies pay. A sustained stream of new developments could also test the limits of today’s transmission system.
There’s uncertainty in the flow of capital as well. U.S. President Joe Biden’s recently passed Inflation Reduction Act, which includes US$369-billion in spending on climate initiatives, including renewable energy incentives, could lure some investment money away from southern Alberta.
Meanwhile, the industry is vulnerable to all the problems construction projects have encountered over the past two years, including surging prices for materials and labour, as well as snags in global supply chains. Concord Pacific and ACFN have suffered “minor” cost overruns, says Terry Hui, Concord Pacific’s chief executive. The developers were able to absorb the impact, Mr. Hui says, but it highlights risks for the industry.
Also, investors are wary of any changes in provincial policies that could add to risk for big renewable projects, he says. Indeed, the ruling United Conservative Party under new Premier Danielle Smith passed a resolution at its recent annual meeting to direct the AESO not to implement the federal government’s plan to get the national grid to net zero by 2035.
Lethbridge Biogas LP has just started up a $7-million piece of equipment that makes it a supplier of natural gas to the Alberta pipeline network and, indirectly, to green-conscious customers of B.C.’s main gas utility.
The plant, on the northwestern edge of the city, takes in manure, animal by-products and other agricultural waste, stews it all with bacteria in its cylindrical anaerobic digesters, then pipes the methane gas it produces into a new upgrader unit. That machinery removes imperfections so the methane can be injected into the gas grid operated by Atco Ltd. The remaining residue, known as digestate, makes for a potent fertilizer for farmers. It’s an elegant, if malodorous, process.
Previously, Lethbridge Biogas used the methane to generate power, and that made for volatile returns as power prices fluctuated. The upgrader has allowed it to stabilize revenues, and even attracted a new owner to invest in the facility, says plant manager Ed Mulder, whose background is in farming.
FortisBC signed a 20-year contract with Lethbridge Biogas for 350,000 gigajoules a year, enough for 3,800 homes, at a premium price. Under B.C.’s climate plan, gas distributors must blend a minimum of 15-per-cent renewable fuel, such as RNG or hydrogen, into their supply by 2030. The utility sources RNG from 12 suppliers, and plans to add another 18 over the next three years.
The benefits: RNG is indistinguishable from the fossil-fuel variety, so it requires no new infrastructure, and it eliminates greenhouse gas emissions that would otherwise be released if waste materials were landfilled. Inexpensive – or free – feedstock is virtually limitless, and the resulting fertilizer closes the loop in Alberta’s agricultural economy.
There’s been a mini-rush of investment in RNG along Highway 3 this year. Lethbridge Biogas was acquired by Guelph, Ont.-based Skyline Clean Energy Fund in August. GrowTEC, located at the Perry family potato farm just 25 km east, sold two-thirds of its biogas business to EverGen Infrastructure Corp. EverGen of Vancouver is providing the capital to install an upgrader at that facility, which also has a long-term supply contract with Fortis BC. EverGen has made a business of acquiring RNG plants across the country.
Mr. Mulder says biogas was sniffed at in Alberta before the oil patch went into a slump in 2014. Today, oil and gas producers want to make a dent in their emissions. “Now, when you go to a biogas conference, you’ll see oil companies, gas companies, which you never saw before,” he says.
From a distance, the wind turbines near Fort Macleod look pretty much the same – white towers with spinning blades poking up among the coulees and rolling farmland. Driving closer though, TransAlta Corp. wind operations supervisor Wayne Oliver points out the fine details that show new models are much more efficient. His company is Alberta’s largest wind-power operator.
The McBride Lake Wind Farm, a 50-50 joint venture with Calgary’s Enmax Corp., comprises 145 turbines in tight rows across the pastoral landscape. Built in 2003 with 50-metre towers, the 75 MW project was an early entrant into Alberta’s wind-power industry.
Across the road is the newest part of TransAlta’s fleet: the $275-million Windrise project, completed in 2021. Built on Hutterite colony land, it spins out 207 MW with just 43 turbines, each one 90 metres high. It’s jarring, at first, to stand beside one when the massive blades rotate by.
Wind energy made some startling improvements over that period. “Instead of eight turbines, you just have to build one now,” Mr. Oliver says, as his truck rattles along narrow gravel roads among the towers. A former teacher, he has been immersed in the nuts and bolts of TransAlta’s wind operations for 17 years. Inside the tight confines of the tall steel tubes, he explains the technological innovations that have made for increased power generation and easier maintenance.
Improvements in technology and costs have turned renewables from demonstration projects subsidized with taxpayer dollars into enterprises that deliver cash flow, making them attractive for developers and private equity and pension funds that provide a lot of the capital for construction. Costs per megawatt have plummeted – 70 per cent for wind and 89 per cent for solar – over the past dozen years, making them the most inexpensive electricity generation, according to BRC.
As generation costs have dropped, demand has surged, and it’s now fuelling construction, says Aron Willis, TransAlta’s executive vice-president of growth. Of TransAlta’s wind fleet, 38 per cent of the power is supplied under long-term contracts. The company is constructing a new wind farm near Drumheller called Garden Plain. Pembina Pipeline Corp. has agreed to buy most of the power over 18 years.
“These are big corporate entities with their own sets of ESG targets and ambitions, and they see renewable power as one limb of their strategy,” he says.
There are limits to the amount of wind and solar power the Alberta grid can support. A big hurdle to becoming baseload generation is their variability; it’s not windy and sunny every day. Participants say energy storage will allow the industry to take its next step. TransAlta is an early adopter, installing battery storage at its Summerview Wind Farm, near Pincher Creek. Its 10 MW Windcharger project comprises Tesla lithium-ion batteries that came into service in 2020, helping to make up for changes in wind speeds. Other storage projects are in the works across the region.
Batteries are one option, and the industry is considering other utility-scale technologies, including pumped hydro and compressed air, which can store power for longer periods. Another idea is using wind energy to produce hydrogen, which can be stored. These will help provide more stable supplies for the grid, by sending electricity when renewable generation ebbs.