The future of the Alberta Electrical Grid

The Alberta electrical grid will undergo significant changes in the next few years.  Here is some information to help Albertans understand those changes.

First, many will ask what is an electrical grid?

People looking at a plug on the wall may wonder, where does the electricity to supply that plug come from?  Just as there are pipes behind a water faucet to supply water, there are wires to supply electricity.  Just as those water faucets are attached to pipes, water mains and central pump stations, so is the plug attached to infrastructure consisting of wires, transmission lines and central electricity plants that generate electricity.   This infrastructure is called the electrical grid.  Simply put, it keeps your lights on whenever you need them, whether you are an individual in a residential abode, or a business in a commercial office or industrial operation.   The total average demand for all of Alberta is about 10,000 megawatts (MW), a significant portion of which comes from industry.

 What are the upcoming changes? 

The current grid gets its electricity supply from coal (48%), gas (42%), wind farms (6%) and the rest from hydro, biomass and one small solar facility (4%).  By 2030, this will change to 0% from coal, 70% from gas, 26% from wind and 4% from hydro/biomass/solar.  This change will require investment to build 13,000 MW of new gas and wind facilities (75% of current capacity) that do not exist today.    In 2017, industry bid to construct about 600 MW of wind power, with a further auction in 2018 for 700 MW more.  Three hundred MW of this 2018 auction must contain a minimum of 25% indigenous equity ownership.

Wind turbines and solar panels both require large amounts of land.  The 5,000 MW of new wind capacity is triple the existing wind capacity, and would require about 2,000 wind turbines of 2.5 MW each. Depending on configuration, it is possible to put about 7 wind turbines per square mile.  This means that there will be an additional 300 square miles (2000 divided by 7) of Alberta occupied by wind turbines by 2030.  Solar panels are more energy intensive in that they produce more electricity per unit area than wind.  The new 700 megawatts of solar would occupy about 6 square miles.  The downside to solar is that since the solar panels cover all the land, there is no alternative use for such land.  Wind turbines only cover part of the land, leaving the space between turbines for use as grazing or raising crops.

The two main concerns for electricity users in Alberta are (1) is the system reliable to avoid blackouts, and (2) is the cost reasonable to avoid sticker shock when Albertans open their electricity bill.

Regarding reliability, the Alberta government is planning a new capacity market that will compensate investors for building the capacity to generate electricity, in addition to the current energy market that pays for the actual electricity generated.  The future grid might even have giant storage batteries to provide backup electricity when the wind does not blow.

Regarding cost, just as gasoline is priced in dollars per litre, electricity is priced in cents per kilowatt-hour.  If you used a 100-watt light bulb for 10 hours, you would use 1,000-watt hours of electricity, equal to 1 kilowatt hour.  A rule of thumb is that an average suburban house uses about 30 kilowatt-hours of electricity a day.  The price of 3 to 4 cents per kilowatt-hour for electricity in Alberta in the last three years has been quite low, reflecting low natural gas prices and lower electricity demand due to reduced industrial activity.  The changes described above may well increase that price.  In anticipation of such possible price increase, the government of Alberta has set a cap of 6.8 cents per kilowatt-hour in effect until June of 2021 for retail consumers.

My last electricity bill showed a price of 6.8 cents per kilowatt-hour for the month of April, up from 4.5 cents for the month of March.  But my lights stayed on.  Now the readers know why.

Brian Livingston is an Executive Fellow with The School of Public Policy at the University of Calgary.  He recently wrote a paper on the future of the Alberta Electrical Grid.