Alberta has committed to phase out 6,300 MW of coal-fired capacity and provide financial support for 5,000 MW of new renewable power projects between now and 2030. The net result of this commitment is that the province will need at least 9,000 MW of new dispatchable power to replace the balance of the phased-out coal, firm new and existing renewable power, and satisfy its future load growth. By dispatchable power, we are referring mostly to power derived from gas-fired power plants, however, dispatchable power could also include renewable power projects, like hydro, that have a dispatchable capacity value.
One of the many questions being asked by Alberta power market stakeholders today is where this 9,000 MW of new dispatchable power will come from? Will it be generated from baseload or peaking plants, or an even mix of both? How much dispatchable power will be generated from gas, and will future gas projects be combined cycle or single cycle gas plants? What role will coal-to-gas conversion play in satiating Alberta’s need for dispatchable power? What about hydro, including pumped hydro storage? And, finally, will that holy grail of energy storage contribute to meeting the province’s need for dispatchable power?
While the answer to many of these questions depends on the design and implementation of Alberta’s new capacity market, a review of the AESO Project List (the “Project List”) provides us with some idea of where project development money is currently being invested in the province. Presumably, developers think these projects can satisfy Alberta’s need for dispatchable power:
Gas – Combined Cycle
The Project List identifies two large proposed combined cycle gas plants: (i) ATCO’s proposed 510 MW Heartland Generating Station; and (ii) Capital Power and Enmax’s proposed Genesee 4 and 5, with a combined output of 1,010 MW. Additionally, though not included in the Project List, TransAlta has proposed Sundance 7, an 856 MW combined cycle gas facility.
Gas – Peaking Plants
The Project List identifies three proposed peaking gas plants with a combined capacity of 535 MW. One of these plants is Enbridge’s 186 MW Whitetail Peaking Station. Additionally, a further five projects, identified on the Project List as gas projects, look to us like peaking plants with 277 MW of combined capacity.
Six projects are identified on the Project List as cogeneration projects. The aggregate capacity of these projects is 1,672 MW.
Mustus Energy has the only project identified as biomass on the Project List with a 41.5 MW capacity.
The Project List contains three early stage battery projects with a proposed aggregate capacity of 50 MW. The most interesting of the battery projects is Nextera’s proposed battery storage project for its existing 82 MW Ghost Pine Wind Farm.
There is only one hydro project currently on the Project List, being the 125 MW Canyon Creed Pumped Hydro Energy Storage Project proposed by Turning Point Generation. Although not on the list, we also know that TransAlta is pursuing a 600 to 900 MW large pumped hydro storage expansion project at its existing Brazeau Hydro facility – this will increase that plant’s capacity from its current 355 MW output. The proposed 330 MW Amisk Hydro Project on the Peace River near Dunvegan, Alberta is another hydro project being developed by AHP Development Corporation that is not represented on the Project List.
The Project List does not identify any coal-to-gas conversion projects. However, Terry Boston, the coal facilitator who advised the Province on the coal-phase-out settlement, previously estimated that half of the province’s 18 coal-fired units could be converted to natural gas power generation. Although not currently reflected on the Project List, Terry Boston’s estimate is consistent with the position of TransAlta, which told investors in December that it saw coal-to-gas conversion replacing approximately 3,000 MW of coal-fired power, or about half of the capacity of the coal being phased out in Alberta. Additionally, news releases made when the coal settlement was announced late last year speculated that coal plant owners and the Province would cooperate and collaborate to advance coal-to-gas conversions.
While the Project List provides a glimpse into the types of power development projects planned to meet the province’s dispatchable energy needs, its function as a crystal ball for Alberta’s energy future is limited. Many of the proposed dispatchable power projects on the Project List will never come to fruition and many more high-profile projects are not yet reported on the list.
Nevertheless, as it currently stands, the Project List presents a good mix of power production under development. Based on our review it appears that base, peaking and cogeneration will play a role in meeting Alberta’s need for dispatchable power, along with significant coal-to-gas conversion. Additionally, given TransAlta’s commitment to pursue expansion of the Brazeau Hydro facility, we expect hydro to play a larger role as the capacity market design takes shape.
Kent D. Howie and Joshua Weinberger