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Alberta proposes subsidies to double renewable-energy output

Alberta Environment Minister Shannon Phillips announces details of a bill introduced in the legislature in Edmonton, Tuesday, Nov.1, 2016 to cap greenhouse gas emissions on oilsands.

Dean Bennett/THE CANADIAN PRESS

Alberta has outlined its renewable-energy subsidy plan designed to roughly double the amount of electricity the province generates from alternative sources of power as it shutters coal plants, although the left-leaning government does not know precisely how much the new program will cost.

The NDP government wants 30 per cent of the province's electricity to stem from renewable sources by 2030. To get there, Alberta's new renewable-energy program would subsidize companies that collectively add 5,000 megawatts of electricity to the province's system over the next 13 years. The proposed legislation, tabled in the legislature Thursday, comes as the province phases out coal-fired power plants and critics continue to paint Alberta as a major polluter largely thanks to the oil sands industry.

The NDP government wants to polish the province's image, and increasing Alberta's renewable-energy production is part of that strategy.

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Alberta's major carbon emitters pay into a fund that would, in turn, subsidize this renewable-energy effort.

The first round of projects to be awarded contracts are supposed to be operating by 2019 and, over the lifetime of the program, the NDP expects companies to spend $10.5-billion in Alberta, adding 7,200 jobs.

"We are going to take the price on pollution that is being charged, in particular, to coal-fired electricity and recycle that back into new renewable-energy opportunities," Shannon Phillips, Minister of Environment and Parks, told reporters Thursday.

Consumers, she said, would not bear the burden of the subsidy.

The NDP's climate plan calls for coal power to be completely phased out by 2030, and the government wants to replace the lost capacity with renewable energy or natural gas-fired plants.

Shuttering all of the province's coal plants, which provide about 60 per cent of Alberta's power, could cost the province up to $2-billion, according to some electrical companies. Premier Rachel Notley's government argues that is an inflated estimate.

Alberta's Official Opposition argued that the NDP's expectation that companies would spend billions in the province because of the program is questionable.

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The Wildrose Party "believes in a realistic renewable-energy program driven by private-sector investment, not government subsidies," Don MacIntyre, a Wildrose member of the legislature, said in a statement.

"However, the government needs to make it clear where they expect nearly $11-billion of investment to come from when they are busy ripping up contracts with Alberta-owned power companies and creating investor uncertainty across our energy sector."

The first round of bidding under the renewable-energy subsidy program would start in early 2017, with winners to be selected about a year from now.

Companies must submit what they want as a guaranteed price per megawatt over the lifetime of a 20-year contract. If the market price falls short of the contract price, the government would make up the difference to the company. If the market rate exceeds the guaranteed price, the power producer would essentially refund any money it previously collected as part of the top-up deal. If power prices continued to outpace the contract rate, energy producers would not be eligible to rake in what would otherwise be a richer profit. Instead, the upside difference would go to the province.

In short, the company's contract price would serve as both a floor and a ceiling for two decades. The government's financial obligation and potential benefit, however, would not be capped.

Only new or expansion projects in Alberta would be eligible for the program and the first tranche of bidding is limited to 400 megawatts. Bids must add at least five megawatts of capacity. The winners of the first round would be determined solely on price.

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About the Author

Carrie Tait joined the Globe in January, 2011, mainly reporting on energy from the Calgary bureau. Previously, she spent six years working for the National Post in both Calgary and Toronto. She has a master’s degree in journalism from the University of Western Ontario and a bachelor’s degree in political studies from the University of Saskatchewan. More

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