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Canadian Energy Perspectives

Renewable Generation Incentives in Alberta Contracts for Differences: the Way Forward?

Posted in Climate Change, Climate Policy, Electricity, Energy – Renewable, Alternative and Clean
Alberta
Kimberly J. HowardKimberly MacnabSeán O'NeillMichael Weizman

Last November, the Alberta government released its Climate Leadership Plan, setting out the phase-out of coal-fired electricity generation by 2030, to be replaced with two thirds renewable energy generation and one third natural gas generation.  Then, the Alberta Electric Systems Operator (AESO) was subsequently directed to develop an incentives program for renewable generation.

Today at the CanWEA Conference held in Calgary, Minister Shannon Phillips delivered a speech announcing details about Alberta’s Renewable Electricity Program. The Alberta Government has issued a press release following the announcement this morning.  Some of the highlights include:

  • Incentives for renewable generation will take the form of an indexed renewable energy certificate (REC) structured akin to a contract for difference (CFD);
  • The AESO will commence consultation on the commercial terms of the REC/CFD as early as next week;
  • The AESO will be implementing a competitive process and the first call will commence in Q1 of 2017 for up to 400MW of renewable generation. The projects are expected to be in service by 2019; and
  • The Renewable Electricity Act will be tabled today in Alberta’s Legislative Assembly. This Act is expected to contain details regarding the competitive procurement process and will enshrine into law Alberta’s target that 30% of electricity used in Alberta will come from renewable sources by 2030.

Our team has prepared a legal update which provides an overview of CFDs and a description of some of their more important commercial provisions to illuminate some of the key issues that government and potential stakeholders should consider in connection with the implementation of the REP in Alberta.