Landowner Duane Olson and his dog Bella drive past solar panels at the opening of the Michichi Solar project near Drumheller, Alta., on July 11.Jeff McIntosh/The Canadian Press
Alex Simakov is the senior research fellow for energy and environment at Policy Exchange in London. He previously served as a policy adviser to the Ontario minister of energy, northern development and mines.
Alberta’s abrupt imposition of a seven-month moratorium on new renewable energy projects puts at risk not only $3.7-billion in investment and 4,500 jobs, but the province’s reputation as one of the most business-friendly jurisdictions in North America.
Alberta, which leads Canada in wind, solar and energy storage projects, must urgently provide clarity on its policy intentions and pursue every opportunity to lift the moratorium ahead of schedule.
Affordability and Utilities Minister Nathan Neudorf’s reasoning for the pause is grounded in genuine concerns and reflects challenges facing many jurisdictions at the forefront of the transition to a clean economy. Rural and farming communities can experience disruption, intermittent generation can strain transmission systems and undermine the economics of natural gas plants, and concerns regarding decommissioning and recycling must be resolved.
But while these are substantive issues, they are also entirely manageable and should be addressed concurrently with reforms to how the Alberta Utilities Commissions (AUC) approves new projects – not with a blanket pause.
Moreover, the often-cited notion of adverse competition pitting renewables against agriculture is mistaken. Rather, farmers are the foremost beneficiaries of the sector. By leasing their land to developers to host wind and solar assets alongside their crops and herds, more than 23,000 farmers across Canada earn a steady source of revenue to moderate the fluctuations of commodity prices, while their communities enjoy tax revenues and community benefit agreements (CBAs) to improve infrastructure and civic amenities. More can be done to encourage agrivoltaics – the simultaneous use of land for solar panels and agriculture – and other complementary practices without challenging the property rights of farmers to make use of their land as they see fit.
Critics do have a point when they say that, with variable renewables now accounting for almost a third of the province’s installed generation capacity, they can increasingly erode the financial viability of the natural gas plants that provide 60 per cent of generation. Available solutions include revisiting the idea of introducing a capacity market and considering bilateral contracting of gas plants, which would grant gas plants stable, long-term revenue that they lack under Alberta’s current “energy-only” market. However, such significant reforms would take several years to implement and do not benefit from a renewables hiatus.
Meanwhile, it is understandable that Alberta is concerned with end-of-life planning for renewable energy projects. Home to thousands of orphaned wells, the province knows full well the risks of abandoned energy assets. The government is right to seek enhancements to its existing directive for renewables reclamation, with a view toward initiating a circular economy to salvage the valuable critical minerals and rare earth metals, thereby reducing Canada’s dependence on Chinese suppliers. Fortunately, however, the new renewable projects in question will be operational for 20 or more years, providing ample time to collaborate with industry in developing the right policies, incentives and responsibilities to enable end-of-life solutions. A seven-month pause is not needed.
This is a critical moment in the global renewables industry. Faced with rising interest rates, stretched supply chains and fierce international competition for investment, developers are favouring jurisdictions with fair and predictable regulatory environments. As the Alberta government knows all too well from its advocacy for the oil and gas sector, arbitrary interventions in these markets can leave long-lasting damage to investor confidence.
The ministry must move quickly in working with the sector to develop appropriate solutions to these manageable problems and recognize the opportunity to work concurrently in reforming the market without putting a freeze on investment and job creation.