Sun is Rising on Alberta’s Solar Industry

To date, Alberta’s merchant wholesale electricity market has not been kind to solar developers.  This is because solar has not been able to compete on a price basis in an Alberta merchant market where “least cost” has until recently been the primary objective. Our conclusion is supported by the fact that, despite having one of the best solar resources in Canada, Alberta currently has only about 15 MW of installed solar capacity – compare that to more than 2000 MW in Ontario.  Solar is just one tenth of one percent of the total installed electricity generating capacity in Alberta.  We have no utility scale solar projects – all the solar is small residential and commercial projects implemented under Alberta’s microgeneration rules.  The Alberta solar industry has arguably been operating in the shadows, but AlbertaPowerMarket.com thinks the sun is beginning to rise over its players. Why?

First, the Alberta government has recently rolled out several programs to encourage solar development in Alberta, including:

  1. The Alberta Indigenous Solar Program (AISP) that provides grants to Alberta Indigenous communities and organizations to install solar photovoltaic (PV) systems on facilities owned by these communities and organizations. AISP funds up to 60% of eligible costs to a maximum of $200,000 per project.
  2. The Alberta Municipal Solar Program (AMSP) that provides financial rebates to Alberta municipalities and community organizations who install solar PV on municipal facilities or lands and complete public engagement for the project. AMSP funds up to 25% of eligible costs based on a per watt of installed capacity formula of between 55 cents and 90 cents per watt, depending on the size of the project.
  3. The on-Farm Solar PV Program (FSP) funds solar PV on Alberta farms. The funding varies depending on whether or not the system is self-installed. However, if the system is contractor installed then FSP will fund 45 cents per watt to a maximum of 20% of project costs. The FSP is currently being reviewed to ensure it aligns with other Alberta solar programs – we therefore expect the rate of 45 cents per watt and the maximum percentage amount to be increased.
  4. The Alberta government procurement for a new utility scale solar farm(s) to provide half of the power that the Alberta government consumes for its own operations. This procurement is for 135,000 MWh of solar power per year and is ongoing, with no decision yet on the winning project(s).

Last week, the Province took another step on the solar front and announced a new program for residential, business and non-profit customers who install solar PV. The Residential and Commercial Solar Program (RCSP) will launch this summer and fund up to 30% of the cost for residential customers and up to 25% of the cost for business and non-profit customers. The RCSP is expected to fund 75 cents for each watt of solar PV installed.  The Province has set aside $36 million to fund the program, and is currently seeking a third party to administer RCSP on behalf of the Province. More details will be released by the Province in the coming months before the summer launch.

So, you are getting the idea, Alberta now has a solar rebate program for everybody, whether you are an Indigenous community, municipality, farm, residential, business or non-profit customer – piecemeal yes, but the programs are in pace.

The second reason for our conclusion on a rising sun for solar is the changes made recently to the Alberta microgeneration rules.  AlbertaPowerMarket.com described the changes in detail in its piece “Increasing Micro-Generation in Alberta: A Step in the Right Direction”, but suffice is to say here that Alberta’s microgeneration rules now provide incentives for eligible projects of up to 5 MW that service neighbouring buildings of the project owner. The changes expanded the scope of eligible microgeneration projects.  It was done mainly to encourage more solar PV installations by municipalities, farms and other multi-building operators.

Finally, we must not forget about Alberta’s Renewable Electricity Program (REP) and the upcoming 400 MW procurement this year. The solar industry was disappointed when the Province rejected its request that some of the procurement be carved out for solar. Instead, the Province maintained its position that at least this year’s procurement would be technology neutral. That said, as everyone knows, the cost of solar is coming down vis-à-vis wind.  Further, the structure of Alberta’s time of day hourly priced Alberta electricity market provides solar with some price advantages over wind in our market. Plus, the 2 renewable sources are complementary with some developers looking to pair wind and solar together at the same site. In short, though we do not expect a solar project to be successful in this year’s 400 MW REP, we do expect utility scale solar projects to compete with wind in future procurements.  A solar carve out in the next procurement is also a possibility.  Clearly Alberta solar developers agree with us, given that there are currently 37 utility scale solar projects with an aggregate capacity of over 1450 MW under development in Alberta and that appear on the Project List maintained by the Alberta Electric System Operator.

As you can see, there is a lot going on in Alberta on the solar development front. For many of us, given our solar resource, it was only a matter of time. That time appears to have come, even if we are still in the early morning with the sun just beginning to rise for Alberta’s solar industry.

Kent D. Howie and Jason Wang

 

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