Alberta's electricity system is owned and operated by a mix of investor-owned and municipally owned companies, not by the Alberta government. To ensure Albertans of a long-term, reliable supply of competitively priced electricity, Alberta Energy develops, supports and monitors the framework for bringing new generation on-line, competitive electricity markets, and efficient delivery systems.
There are different types of electricity markets. Alberta currently has an “energy-only” market. We're one of a few jurisdictions globally – and one of only two in North America – using this model. In an energy-only market, generators are paid for the electricity they produce based solely on the wholesale price of electricity, which fluctuates. These companies decide on the type of generation they produce and on the location of facilities.
Over the next 14 years, Alberta will need up to an estimated $25 billion of new investment in electricity generation to support the transition toward cleaner sources of energy and meet the electricity needs of a growing province. In order to attract this investment, protect consumers from price volatility and maintain system reliability, Alberta is transitioning to a capacity market system. In a capacity market, private power generators are paid through a mix of competitively auctioned contracts which pay their fixed capital costs and revenue from the spot market.
A capacity market will allow Alberta’s current generators, along with investors from outside the province, to compete to provide generation at the lowest cost. This transition was recommended by current and potential energy investors, external experts, consumer groups, and the Alberta Electric System Operator (AESO), which oversees the province’s electricity system in the interest of the public.
A capacity market will also support a smooth transition to cleaner power. To reduce emissions and increase the use of renewables to generate electricity in Alberta, the government launched
the Renewable Electricity Program
. This program
will add 5,000 megawatts of renewable electricity capacity by 2030 using a competitive process, administered by the Alberta Electric System Operator (AESO), and puts Alberta on a path to achieve a target of 30 per cent renewable energy by that time. In addition, under the Climate Leadership Plan
, pollution from coal-fired electricity generation will be phased out by 2030.
The first competition of the Renewable Electricity Program opens with the AESO Request for Expressions of Interest stage on March 31, 2017. For more information about the competition, please visit the Alberta Electric System Operator .