Did You Know with Jeff Bell is an ongoing series that delves into data of the Edmonton Region to explore insights related to our Region’s competitiveness.
The energy market in Alberta is the only deregulated market in Canada and one of the few in North America, providing investors with a unique opportunity — choice in how they procure their electricity.
When investors and site selectors are evaluating potential jurisdictions for investment there are a number of common factors that come into play. Obviously, cost and availability of land, talent, and resources are common denominators that are being looked at — and energy is more often than not, in the mix. This seems straightforward. The jurisdiction with the most competitive pricing in these areas should be the winner— but maybe not.
Interestingly, comparing prices alone isn’t always the best option. Where this can get complicated is when investors aren’t able to compare apples to apples. Instead, they find themselves having to compare apples to oranges, or even at times, apples to… apple pie? Comparing electricity markets is not always as straightforward as a simple cost analysis.
Let me explain a little bit more.
Investors often want to understand the comparative cost of electricity in a jurisdiction. However, if you were to only look at cost you would only see a fraction of the story when it comes to electricity in the Edmonton Region. But what else is there to the energy market other than a simple cost analysis on electricity? Cost analysis doesn’t tell the whole story of where the Edmonton Region’s competitive edge lies in this area.
The Edmonton Region is part of Alberta’s deregulated electricity market, the only one in Canada (Figure 1) and one of the few in North America.
The system creates some unique advantages for investors — both those that are interested in selling power, as well as commercial and industrial end-users of electricity. A deregulated market translates into a lot of flexibility for companies. In terms of procuring power, the system allows a number of options for companies. A company can:
In regulated markets there is less flexibility in how companies are able to procure the power required for its operations. In Alberta, this means that the private sector, not the government, decides what kind of power generating infrastructure is built and where.
Figure 1
This begs the question, how has this system impacted the type of power generation that has been built in the province over time?
Figure 2 shows the total electricity capacity by source in the province over approximately the last ten years. This figure can provide a good indication of where investments have been taking place in power generation over time.
Another question for deregulated energy markets is how do they support the growing demand for clean energy? Over the last decade, Alberta has seen a complete phase out of coal and a corresponding increase in natural gas — including highly efficient natural gas cogeneration. As of June 2024, cleaner sources of electricity (such as renewables and natural gas cogeneration) now makes up approximately 60% of Alberta’s energy system capacity and half of the system generation (Figure 3).
Figure 2
Figure 3
In fact, according to the Canadian Renewable Energy Association, Alberta has led Canada in attracting new investment in renewable energy, attracting a staggering 94% of Canadian investment in 2023 (Figure 4).
Figure 4
Despite Alberta’s impressive track record of driving investment into green energy, it’s important to mention that the provincial government paused investments into new renewable projects for approximately six months in 2023 and leading into 2024. While this ban has now been lifted, the overall impact of this temporary provincial moratorium is yet to be determined. Recommendations made from the moratorium will result in new policies and regulations.
The story of renewable energy in Alberta looks promising, but what about energy specifically in the Edmonton Region? I dug into the numbers and found a similar landscape.
The historical and future planned projects in the Edmonton Region show that, like the rest of the province, investments in natural gas powered electricity and renewables are steadily increasing.
Given the nature of a connected electricity grid, users of electricity in the Edmonton Region might, at times, be getting their power from elsewhere in Alberta or even neighbouring jurisdictions like B.C. or Montana. Likewise, users in neighbouring jurisdictions might get their power from the Edmonton Region.
Figure 5 (below) shows the existing capacity physically located in the Edmonton Region by generation type, while Figure 6 shows projects in the queue — either proposed or under construction.
Figure 5
Figure 6
Recent and notable examples of renewable energy projects in the Region include:
Opportunities for renewable energy have attracted investment to the province from diverse countries. A few examples include:
Some may be surprised by the amount of investment into solar projects in the Edmonton Region but you really shouldn’t be. Figure 7 compares the potential of solar energy for the Edmonton Region compared to other Canadian jurisdictions.
The Region is fourth in the country, closely following some of our peer prairie Regions for potential solar energy. Given the available solar power, there’s a lot of opportunity for additional investment into these projects. Impressively, the Edmonton Region’s solar resource is higher than all of Germany – a country which, with about half the land mass of Alberta, generated 62,000 GWh of electricity from solar in 2022 (more than Alberta’s total 2023 system load: 60,893 GWh).
Figure 7
While Alberta’s wind energy has traditionally been associated with the southern part of the province, there’s potential in the Edmonton Region as well. The wind resource here is comparable to that in the County of Minburn, located about an hour east of Edmonton, where Italian energy leader Enel recently invested $650 million to develop the Grizzly Bear Creek wind farm. This demonstrates that with the right investor, our Region could also become a key player in wind energy development.
In a world where there is increasing demand for clean energy and where other jurisdictions (most recently Quebec) are struggling to construct sufficient power infrastructure in a timely manner — the Edmonton Region offers a dependable option. The process of evaluating the suitability of a jurisdiction for investment goes beyond a simple comparison of costs and resources.
While cost is a significant factor, the flexibility and opportunity for green energy production offered by Alberta’s electricity market provides a broader perspective for investors to consider.
In essence, when comparing apples to oranges in the investment landscape, the Edmonton Region offers a compelling narrative that goes beyond straightforward cost analysis, offering a dynamic and forward-thinking energy market that holds significant promise for future investments.
Additionally, the Region’s ability to attract substantial investments in renewable energy projects, highlights its robust and adaptable energy sector. Whether investing in energy generation, or seeking reliable power for a manufacturing facility, hydrogen production operation, food processing plant, data centre, or any number of potential projects, the Edmonton Region offers a compelling proposition for investors.
