A wind farm in Alberta.
Earlier this week, the Alberta Utilities Commission asked Texas-based Proteus Power Developments LLC for extra documents to support the company’s months-long application to build three solar farms. Less than 24 hours later, Proteus found out Alberta was pausing the application until March, along with all others for large new wind and solar power projects in the province.
“It’s terrible, terrible news,” Proteus founder and chief executive Mike Lambros told The Globe and Mail.
Although the provincial government says it consulted widely before making the move, Proteus was not the only industry player taken by surprise. “It just came out of left field. The whole industry is in shock,” Mr. Lambros added.
Alberta announced Thursday morning that it was putting on hold all applications for wind and solar projects that would produce more than one megawatt of power, so it can review where they can be built and how they will affect the province’s power grid. The province also plans to consider rules to guide what happens to these installations when they reach the ends of their lives.
The province’s United Conservative Party government argues that a recent surge in wind and solar projects means policies need updating, but the industry says the move will spook investors, put jobs at risk, create chaos in Alberta’s regulatory environment and undercut economic growth at a time when global investment in clean energy is increasing worldwide.
Globally, that investment is on course to rise to US$1.7-trillion in 2023, according to the International Energy Agency. Spending on clean energy technologies is significantly outpacing that on fossil fuels, as markets pursue more sustainable options.
Proteus has already spent millions of dollars on its proposal, and had lined up financing.
“We have to pause all spending on our projects and halt everything, because we don’t even know if we’re going to qualify under new legislation that may or may not come up,” Mr. Lambros said.
He said he had no inkling that the province was considering such a drastic move. His renewable power projects are among about 15 in the province now facing an uncertain future.
Alberta leads Canada in renewable energy growth. The multibillion-dollar boom in the province over the past few years has been driven by an abundance of sun, a rapid and dramatic drop in the cost of solar technology and Alberta’s unique power market structure, which makes it easy for companies to sign renewable power purchase agreements, where they buy power directly from green energy producers. This can help with corporate emissions-reduction goals.
Mr. Lambros said he thinks Alberta’s decision to put the sector’s unprecedented growth on ice will likely shake investor confidence in the province and in the Canadian market as a whole.
“I’m not sure if they took that into consideration before doing this,” he said.
Alberta’s power grid capacity is around 18,000 megawatts. About one-third of that is provided by renewables.
The pause on project approvals before the Alberta Utilities Commission, which regulates the industry in the province, will continue until Feb. 29. The policy review will begin immediately, and will be led by the AUC. Microgeneration projects – meaning those under one megawatt – and generation projects in isolated communities unconnected to the grid will be exempt.
Alberta Affordability and Utilities Minister Nathan Neudorf said in an interview that the province’s regulatory policies worked when the electricity grid was set up 25 years ago.
“But the world has changed, so we need to address this quickly and answer some of these challenges,” he said.
The policy changes could include the introduction of mandatory security bonds for developers, to ensure projects can be cleaned up when they need to be decommissioned. The government also hopes to define exactly where renewable energy projects can be built. For instance, it could decide to exclude prime agricultural land, or allow projects on Crown land in utility corridors next to highways.
The government spoke with about 200 people before deciding to pause applications, Mr. Neudorf said, including landowners, stakeholder groups, consumer advocates and power providers that rely heavily on natural gas.
But the Canadian Renewable Energy Association – the main group that advocates for wind, solar and energy storage solutions around the country – only found out after the government made its decision public.
The group’s vice-president of policy, Evan Wilson, called the pause surprising and disappointing. He added that the association has already been working with communities and landowners to find solutions to the issues raised by the government.
“These are conversations that we think need to happen, but to do so with this kind of approach really sends a negative signal to the market,” he said.
Critics of the move, including the province’s NDP Opposition, say it is also out of step with a rapidly growing demand for clean electricity, and will impede efforts to prevent the worst of climate change.
“Pausing approvals is a disruptive market intervention that will create uncertainty for businesses and discourage investment when clean electricity is quickly becoming a competitive necessity,” the Canadian Climate Institute said in a statement.
There are 3,400 megawatts of wind and solar projects currently under construction in Alberta, worth more than $2.7-billion. These projects, which will not be affected by the pause, have brought jobs and a flood of new revenue for rural municipalities in the form of taxes. But they have also caused consternation.
Rural municipalities worry that prime agricultural land is being used for solar panels rather than crops, and residents don’t always enjoy the sight of wind turbines on the horizon.
Energy projects have stung rural communities before. Orphaned oil and gas wells litter Alberta. Some were left behind by bankrupt operators, and others were run partly dry then sold to small companies that can’t – or won’t – pay to plug and mitigate them. Municipal councils and landowners don’t want to be stuck with a similar problem when it comes to solar and wind assets.
The vast majority of contracts between renewable energy developers and landowners include terms to cover cleanup, but rural municipalities insist that’s not enough of a guarantee.
At the Rural Municipalities of Alberta fall convention last year, a resolution passed that urged the province to learn from its mistakes with fossil fuels and deal with the end-of-life issue for renewables before it’s too late. It asked the government to mandate the collection of enough money for cleanup by requiring reclamation surety bonds as a condition of project approval.
“We’re only expecting this industry to grow. The sooner we can actually get those expectations clearly defined and outlined for what happens at the end of life and reclamation, who pays how much, the better,” Mr. Neudorf said.