The Alberta government has made an estimated $160 million from the Renewable Energy Program amid surging power prices, according to a new report from the University of Calgary’s School of Public Policy.
The program, introduced in 2016 under the then-NDP government, saw developers bid for contracts for projects to generate renewable energy.
Those contracts work by having the government pay the developer the difference between the auction price and the market price of energy, in order to guarantee the developer a fixed price for power generation. But when market prices exceed the auction price, the developers pay the difference to the government.
That’s exactly what’s happening in Alberta, said Sara Hastings-Simon, an assistant professor at the U of C who researches sustainable energy development.
She said low-end estimates show the government has received roughly $100 million in net payments as of Oct. 13, and has saved an additional $60 million in carbon offsets and emission performance credits that developers surrendered in signing contracts with the province.
“One take-away is that well-designed climate policy does not have to be costly to the public, and it can actually come at a benefit,” said Hastings-Simon, a co-author of the new School of Public Policy report.
“If prices rise, that gives government additional funds they can use to do other things . . . When the electricity price rose above (the auction price), that windfall didn’t go the companies who didn’t need it to make their products profitable. It actually went back to the government and ultimately back to the public.”
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On Tuesday, a spokesperson for Alberta Energy Minister Pete Guthrie said they couldn’t confirm the report’s estimations since renewable energy contracts don’t have a fixed value.
They said the program’s revenue is a drop in the bucket, however.
“The revenue from the remaining REP contracts pale in comparison to the billions in investment that Alberta’s energy-only market has driven,” said government spokesperson Gabrielle Symbalisty.
“With our free market approach, there is more than $13.8 billion in generation projects currently underway, without taxpayer subsidy or royalty – including more than $4.4 billion in utility-scale renewable projects.”
The competitive bid for the Renewable Energy Program saw the winning renewable energy projects — all for wind power — come in at below $40 per megawatt-hour, on average.
That’s a far cry from record-breaking power prices currently hitting Alberta, which averaged $258 per MWh in August, a jump of more than 200 per cent from the same time the previous year.
Money from the program is currently flowing into Alberta Energy as general revenue, Hastings-Simon said.
The U of C researchers proposed that money instead be earmarked to help Albertans struggling to pay their bills, as a result of the same price surge that generated the government windfall.
“Part of the reason that the government is seeing this money flowing from these projects is that electricity prices have risen,” Hastings-Simon said.
“Basically, we think that some of these funds could be used to support a bill payment assistance program that provides targeted support to individuals who are facing energy poverty that are not able to pay their bills.”
Alberta is currently rolling out electricity rebates, totalling $300 for eligible customers, with an estimated 1.9 million homes and businesses slated to see the price reduction.
But Hastings-Simon argued that fixed rebate program doesn’t provide support to all Albertans, including those who may have a utility sub-meter because they live in an apartment building or a multi-family home.
Twitter: @jasonfherring
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