When the winning bids for Alberta’s renewable power auction were announced in December, jaws dropped.

The winning projects were approved at a record-breaking low price of 3.7 cents per kilowatt hour — the lowest price for electricity anywhere in Canada.

“This is a game changer. Even the most optimistic observers were shocked at how low the price turned out to be,” said Binnu Jeyakumar, electricity program director at the Pembina Institute.

My, how the times have changed.

Nearly a decade ago a leaked voice recording showed federal money earmarked for wind projects was quietly redirected to subsidize Alberta’s oil patch. About a year later the fledgling Canadian wind industry was left high and dry with a federal budget that saw renewable energy as merely a method of greening the oilsands.

That all changed with the introduction of the NDP government’s Climate Leadership Plan in November 2015. The plan called for all coal-fueled generating plants to be phased out by 2030. Coal generating plants now produce about half of the province’s electricity.

Renewable energy producers were so eager to get in on the action that when the government agency that manages Alberta’s electrical grid put up for auction 400 megawatts of renewable power last year, bids by 12 companies totalled 10 times that much.

In the end, 600 megawatts — four projects with a total price tag of $1 billion — were approved.

The recent winning bids revealed keen competition when it comes to price. The successful bidders will produce wind power at prices much lower than Ontario, and lower even than natural gas powered plants.

No wonder Premier Rachel Notley could hardly contain her glee as they announced the auction results to the news media in mid-December.

“The naysayers predicted that the price of this renewable energy would probably come in high, about eight cents per kilowatt hour,” Notley said. “In fact, our process was so competitive and so many companies wanted to invest we got a 20-year price of 3.7 cents per kilowatt hour.”

My, how the times have changed. https://t.co/8xDfO3OEFE

— DeSmog Canada (@DeSmogCanada) February 15, 2018

More wind projects in Alberta to come

In early February the government announced two more bidding competitions will get underway by the end of March with winners to be announced in December.

Round 2, for 300 megawatts, will require bidders to have a minimum of 15 to 25 per cent Indigenous equity ownership.

For round 3, 400 megawatts will be up for auction with the lowest cost the most important determinant.

Robert Hornung, president of the Canadian Wind Energy Association, was among the first to respond with kudos for Alberta’s renewable electricity program.

“Today’s announcement is a clear signal that Alberta is ‘open for business’ for renewables,” Hornung stated in the media release, praising the province’s “clarity and consistency.”

Alberta’s electricity market appeals to renewable energy developers for several reasons — even aside from its abundance of wind, sunshine and open spaces.

Notably, Alberta’s power generation and transmission is not owned and managed by a Crown corporation. Instead, mostly private, for-profit companies provide electricity to Albertans, allowing more room for new entrants to the market. Government-appointed agencies oversee their operations and ensure generating plants and transmission lines keep up with demand for electricity.

And unlike many other provinces, Alberta does not rely on hydro to generate electricity; it has usually been too expensive compared to the power-generation mainstays, coal and natural gas.

The combination of these factors means Alberta presents a big opportunity for wind and solar producers.

Wind projects a boon to local communities

Three companies will spend a total of $1 billion on the wind farms, which will have the capacity to produce electricity for 255,000 homes.

All the winning bids, announced in December, were for wind projects. Edmonton’s Capital Power, which was a big player during the coal era, was awarded a 201 megawatt project in southeast Alberta; EDP Renewables of Portugal won a 248 megawatt project also in southeast Alberta; and ENEL Green Power North America, a division of a Rome-based global power company was awarded projects of 115 and 31 megawatts near Pincher Creek in southwest Alberta.

The projects will be a boon to local communities because they will pay municipal taxes, fees to landowners, as well as provide jobs particularly during the construction phase.

“We are very pleased about this project,” said Joan Hughson, deputy reeve of Forty-Mile County which stretches southwest of Medicine Hat to the U.S border and includes about 3,500 residents. “This will be a very big boost for our tax revenue because there is little industry here; it’s mostly farming.”

According to Jerry Bellika, a spokesman for Capital Power of Edmonton, its project, which features 56 wind turbines, will generate about $2 million a year in taxes for the county. Thirty landowners will receive annual payments for the use of their land. In addition, neighbouring landowners will receive “goodwill payments.”  

The $300 million project still needs approval from the Alberta Utilities Commission but construction is expected to begin later this year and be complete by the end of 2019.

Rome-based Enel Green Power has a North American division headquartered in Massachusetts,  and already has a wind farm near Pincher Creek in the southwest corner of Alberta and will be building two more in the area at the cost of $209 million.

When asked about plans to engage with the local community about the projects a representative was vague about exactly what the company planned to do.

“We are committed to hiring locally when the workforce is available…we also always look for ways to support critical community initiatives such as infrastructure, education, recreation , and more,”  she wrote in an email.

EDP Renewables did not reply to a request for information.

Binnu Jeyakumar of the Pembina Institute said how the companies engage with and contribute to the local communities will be among the key factors when it comes to determining  if these renewable energy projects are successful.

“Good community engagement will be critical to building good will,” she said.  “Because there are a lot more renewable projects to come.”

By 2030 it is anticipated that 30 per cent of the grid will be powered by renewables.

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Alberta’s plan for the replacement of coal energy with natural gas and renewables was announced in 2015, but still questions as to who will provide the new power remain unanswered.

Walter Hossli, who has been working with solar panel manufacturers, potential investors, and green energy groups to promote community energy projects, says they want the government to move much more quickly on that sector than it has.

“Everyone is sitting on their hands not knowing what the rules will be…maybe the government just doesn’t know what it’s doing on this file,” said Hossli. “There’s this go big or go home mentality because the system has been geared to larger scale electricity producers.”

The phase-out of coal-generated electricity by 2030 is a main pillar of the Alberta government’s Climate Leadership Action Plan. If the government operates according to plan, in 13 years natural gas will account for 70 per cent of the province’s electricity, while generation by renewables — mostly wind and solar — will have increased significantly to make up the remaining 30 per cent.

Currently, coal accounts for 50 per cent of electricity generation, the highest of any province.

Overabundance of Interest from Renewable Producers

A government request for proposals for renewable projects aroused a lot of interest; a total of 400 megawatts of electrical power were on the table for this round of contracts. Bids amounting to ten times that much were received.

Four hundred megawatts is only about 1.5 per cent of total electricity generation in Alberta, so many more renewable projects will have to be integrated into the system if the government’s goal is to be reached.

But there are still lots of questions about the NDP government’s policies designed to achieve that goal: Will the renewable sector be turned over to the corporations that dominated the coal era? Or will they lose out to international players?

Will there be room for smaller scale community renewable energy that gives people more control of their electricity usage and costs?

Those are some of the key issues arising as the government is set to announce in December the first batch of successful bidders for renewable energy projects.

“There’s this go big or go home mentality because the system has been geared to larger scale electricity producers.” https://t.co/2A5nGVJC7Q

— DeSmog Canada (@DeSmogCanada) December 4, 2017

Patchwork of Electrical Companies

To fully understand the switch that the government is attempting, it is important to remember that unlike other provinces, Alberta’s power generation and transmission is not owned and managed by a crown corporation.

Instead, mostly private, for-profit companies provide electricity to Albertans. Government appointed agencies oversee their operations and ensure generating plants and transmission lines keep up with demand for electricity.

The main agency is the Alberta Electric System Operator (AESO) which now manages the bidding process for renewable projects.

According to spokesperson Erin Powell, the system operator will rank the proposals and then turn the list over to Alberta’s minister of energy who will make the final decisions next month.

The agency wouldn’t disclose what companies entered the bidding competition. But there’s no question that big players from the coal era that now have to transition to natural gas and renewables — notably TransAlta and ATCO — are among the bidders.

Suncor, the biggest oilsands producer, is also investing in wind projects. Municipally-owned power companies such as Calgary’s Enmax are developing wind and solar projects along with their natural gas powered generating stations.

“Incumbents definitely have an advantage,” said Binnu Jeyakumar, electricity program director at the Pembina Institute.

“They are familiar with the system in place and know the province. But there are also lots of international companies that have a great deal of expertise with renewables.”

Wind projects will likely be awarded the lion’s share, said Jeyakumar.

“Wind is by far the cheapest renewable in Canada, only natural gas is cheaper right now but we don’t know what will happen with the price of natural gas in the future. It could go up,” she added. “Proponents of solar projects may get a share but wind will dominate.”

And there’s plenty of wind in southern Alberta which is already home to a few wind farms.

One of the key factors Jeyakumar says Pembina will be watching is how winning bidders plan to engage communities that will be affected by wind farms.

“They will be in rural areas, and it’s important that not just the owners of the land where the wind farm is located, but other people close to the project share in the benefits,” said Jeyakumar.

Small-Scale, Community Energy Not a Priority for Government

There’s another piece that is part of the push for renewable energy in Alberta that’s fallen under the radar.

Plans for community energy and micro-energy which could see solar and wind power produced for the benefit of small groups of local investors — neighbourhoods, towns, farms, First Nations or large institutions such as a universities—  are not being developed by Alberta Energy, one of the most dominant government ministries, but by the environment ministry.

That seems to indicate that those sorts of projects are not high on the government’s agenda because all the expertise in the electrical energy field is concentrated in Alberta Energy.

So it’s not surprising that stakeholders in the community renewables sector are still waiting for the government to come up with policy and regulations so they can move ahead with projects.

“Ideally, we would like to see about 20 per cent of the renewable pie go to community energy,” Hossli said.

In Germany, where renewable energy accounts for 35 per cent of all energy produced, most of the solar and wind projects are owned by citizen cooperatives, Hossli noted.

The Alberta Green Economy Network is also pushing for more community energy and would like to see the government implement a feed-in tariff for the projects, which would guarantee a price for energy produced and sold to the grid to encourage up-front investment.

It could be difficult for community groups to raise the necessary funds for local renewable energy projects without this kind of program in place.

Last summer the government conducted a survey of 158 stakeholders asking for input on community energy generation; 54 responded.

According to the final report, “Many participants believe the market currently favours traditional players who generate electricity using coal and gas. They perceive an unlevel playing field that advantages large scale, incumbent producers of energy.”

The government followed up the survey with a one-day symposium for stakeholders and experts last July. But to date no further steps have been taken to advance community energy or micro-generation projects in Alberta.

Meanwhile, large scale renewable energy projects are moving ahead, with the first batch expected to be operational by 2019.

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As the leadership contest for Alberta’s newly formed United Conservative Party heats up, it’s no surprise pipeline politics are front and centre.

As four major oilsands pipeline projects from Alberta sit abandoned, stalled or awaiting review, one contender is proposing to beat the pipeline gridlock through an entirely new route.

It wouldn’t be through the west or east coast but through the Arctic — namely Churchill, Manitoba, the polar bear capital of the world, nestled in Hudson Bay.

“Churchill has Canada's only deep-water port facility, and it could be capable of sending 250,000 barrels/day of Alberta oil to global markets so we can secure the premium price,” states a media release from Jeff Callaway, former Wildrose president and now leadership contender for the United Conservative Party.

The president of the Churchill Chamber of Commerce blasted the proposal as ecologically dangerous.

“Everyone always wants jobs and security that way but oil is pretty scary business, especially on the edge of the Arctic,” Dave Daley, an avid dogsledder and owner of Wapusk Adventures, told CBC.

"As soon as that article hit town here there was a big uproar about 'Say no to oil.' "

Latest Oil Pipeline Proposal Comes as Support Grows for Getting Off Oil

This latest pipeline proposal comes at time when the world is grappling with the urgent need to ramp down fossil fuel use and greenhouse gas emissions to avoid the most dangerous impacts of climate change.

Pipelines have become a symbol of the larger debate about climate change, with new pipeline proposals threatening to enable increased oil production at a time when scientists and world leaders agree rapid de-carbonization is needed.

New polling released by Abacus Data this month indicates a majority of Canadians (59 per cent) are growing “more worried about climate change and it is changing my view of how long we should use oil.” That includes 48 per cent of Albertans and 35 per cent of Conservative voters.

“Energy, pipeline and climate issues have been among the most highly charged political debates in Canada for several years,” said Abacus chairman Bruce Anderson.

“What we are seeing in our numbers now is an evolution of opinion: concerns about climate change have deepened, and belief that the world is going to transition away from oil has grown.”

Canadians are also becoming more convinced that oil demand will decrease in the next few decades. Ten years from now, equal numbers believe demand for oil will be rising (31 per cent) as believe it will be falling (32 per cent).

“This represents a striking 15-point increase in the number who believe demand will be falling, compared to our result in April of this year,” Abacus states.

A majority (55 per cent) would prefer to see demand in decline in 10 years and fully two-thirds would like to see demand declining in 30 years.

Even in Alberta, more people would like to see demand for oil declining (38 per cent) in 10 years as would like to see it increasing (28 per cent). Looking out 30 years, 48 per cent would prefer to see oil demand in decline, compared to 20 per cent who would like to see it increasing.

So if public sentiment is shifting to a place where it doesn’t support an increase in oil demand even in the next 10 years, how does that impact the debate about constructing new pipelines?

“Over the last three years, feelings about the construction of new pipelines to deliver Canadian energy to new markets have shifted. Negative feelings have not grown (21 per cent), but positive feelings (44 per cent) have dropped, while more people take a neutral stance (36 per cent),” Abacus states, noting stark differences of opinion based on generation and partisanship.

Yet when asked to choose between two alternatives: building new pipelines while pursuing efforts to reduce emissions, or building no new pipelines to avoid contributing to climate change, the large majority continues to support a strategy that both builds new pipelines (thus increasing emissions) while simultaneously ramping up policies that will see the country shift to more renewable forms of energy (to reduce emissions).

This question gets at the crux of the breakdown of public narrative on the construction of new export pipelines. Either the public fundamentally misunderstands that the export pipeline proposals under consideration would enable increased production, and therefore increase emissions, or essentially Canadians want to have their cake and eat it too.

Alberta Leadership Candidate Proposes Oil #Pipeline to #Arctic As World Aims to Get Off Oil https://t.co/pPHVUZongI #ableg #cdnpoli #climate

— DeSmog Canada (@DeSmogCanada) September 23, 2017

Alberta Government Proposed as Main Investor in Churchill Pipeline

Back to Callaway’s Churchill pipeline idea. Key to the proposal is a front-and-centre role for a new conservative Alberta government, which Callaway envisions subsidizing the proposal as the pipeline’s main investor.  

According to Callaway, after ousting the NDP government, Alberta should buy the out-of commission rail line that connects Churchill with points south, and the port facilities.

The port would then be revamped to handle both oil and grain exports. In addition, a new oil pipeline and access road would be built alongside the railway line.

The plan echoes one carried out by Premier Peter Lougheed in the 1980s when the government put up $200 million to expand the grain export terminals in Prince Rupert so farmers would have better access to world markets.

But it’s a far cry from recent conservative policy in Alberta, which decries any government bankrolling of energy projects. Canada has also joined other G20 countries in pledging to stop subsidizing fossil fuel extraction.

Omnitrax, a Denver-based company that owns the railway and the port facilities, has said it is not prepared to pay the $20 to $60 million dollars it would cost for repairs. It wants the federal government to step in instead.

Callaway did not respond to interview requests for this article.

Pipeline Projects Face Uphill Approval Battle

If the proposal ever came up for serious consideration, it would be years away.

At this stage, Callaway is not a front runner in the leadership race for the United Conservative Party, the party that emerged after the Wildrose and Progressive Conservatives agreed to unite. Jason Kenney, a former Harper cabinet minister, and Brian Jean, former leader of the Wildrose, have much better chances of winning.

Alberta’s provincial election is two years in the future and approval for a project of this magnitude, never mind completion, could easily take ten years (past the point when the majority of Canadians say they want to see oil demand decreasing).

But Callaway’s “big idea” is another sign of the growing frustration, particularly among conservatives, with a lack of progress on the pipeline file.

When NDP Premier Rachel Notley announced Alberta’s Climate Change Action Plan in November 2015 she touted it as a path to social licence for Alberta’s energy projects, particularly interprovincial pipelines. The plan included a carbon tax, a phase out of coal- generated electricity and a cap on oilsands carbon emissions and more renewable energy.

If Alberta doesn’t get a pipeline built, David Taras, a veteran observer of Alberta and Canadian politics and professor of communication studies at Mount Royal University, said the frustration in Alberta could boil over.

The “politics of isolation and anger” may surface in Alberta and that would play right into the hands of the United Conservative Party.

Numerous projects have faced regulatory and social licence hurdles when it comes to moving oilsands crude from landlocked Alberta to coastal export facilities.

After one of the most protracted, controversial and public pipeline reviews in Canadian history, the Enbridge Northern Gateway pipeline project is now dead.

The future of Kinder Morgan’s Trans Mountain pipeline project remains uncertain.

The project, which involves twinning the current Trans Mountain pipeline will lead to a seven-fold increase of oil tanker traffic off the coast of British Columbia. Concerns over oil spills, a lack of consent from First Nations, as well as growing support for strong climate policies have converged to make the pipeline politically toxic in B.C.

The new B.C. NDP government was recently granted intervenor status in a legal challenge of federal permits for the pipeline and has promised to do everything possible to legally impede the pipeline’s construction.

Pressure on the federal government to modernize the National Energy Board’s process for reviewing pipeline projects escalated during the Trans Mountain assessment process, which was widely criticized by numerous participants and coined an act of public deception.

The NEB’s review of the Trans Mountain pipeline did not consider the upstream climate impacts of the pipeline and included no oral cross-examination of evidence.

Public scrutiny of Canada’s review process for pipelines has come to bear on the ongoing review of TransCanada’s Energy East pipeline. In August, the National Energy Board announced it would consider upstream emissions in addition to downstream emissions of projects undergoing review, prompting TransCanada executive to request a suspension of the Energy East review.

The company signalled it will reconsider whether the pipeline is worth pursuing given the changes to the regulatory process.

In a perhaps unexpected turn for TransCanada, the Keystone XL pipeline project, unequivocally rejected by former President Barack Obama, was resuscitated by President Trump in March. Despite the new political support for the project, the company has publicly questioned the need for the project, leading some to wonder if Keystone XL, first proposed over a decade ago, will in fact be built.

How all of this pipeline turmoil will play out in the next Alberta election is anybody’s guess, given the rapidly shifting public opinion around the need to get off oil.

But it’s worth noting the Abacus survey was fielded in early August, before two devastating hurricanes hit the U.S., before another scorching month in B.C. stoked further forest fires and before drought conditions struck several provinces.

As the world feels the urge to shift off of fossil fuels, a transition some are calling the third industrial revolution, it’s clear the pipeline debate is caught in the crosshairs.

Image: Trans-Alaskan pipeline. Photo: etherlore via Flickr

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The duty to consult Indigenous communities — what it means and how it should be properly executed — is now a key issue for pipeline and petroleum companies hoping to proceed with proposed mega projects.

This was more than evident earlier this week in downtown Calgary when about 250 people gathered for lunch in The Palliser Hotel eager to hear a panel of experts discuss two recent Supreme Court of Canada decisions and their impact on resource project applications.

The two unanimous judgements rendered at the end of July both involved the responsibility of the National Energy Board (NEB) to conduct thorough consultations on behalf of The Crown with Indigenous communities impacted by resource development.

Clyde River, Chippewa of the Thames Cases Show Importance of Consultation

One decision, Clyde River, involved an authorization granted to Petroleum Geo-Services Inc. (a Norwegian-based company) to conduct marine seismic testing in Baffin Bay and Davis Strait. The Clyde River Inuit community asserted that the noisy underwater explosions would impact its treaty rights to harvest marine mammals such as seals, narwhals, whales and fish.

The NEB gave the go-ahead anyway. But the Supreme Court found that the NEB had only considered environmental effects and had given no consideration to the source (Treaty) of the Inuit community’s rights to harvest marine mammals, nor to the impact of the proposed activities on those rights.

“There were no oral hearings, and there was no participant funding. While these procedural safeguards are not always necessary, their absence in this case significantly impaired the quality of consultation,” the court found.

The second Supreme Court decision dealt with the Chippewa of The Thames First Nation in southwestern Ontario and Enbridge’s Line 9 oil pipeline reversal. In this case, the Supreme Court found that the NEB had conducted thorough consultations with the community. It also affirmed the NEB’s capacity and expertise to assess thorough consultation and accommodation to Indigenous communities.

The Supreme Court decisions not only reaffirmed the NEB’s duty to consult, they elaborated on what thorough consultation looks like, said Dwight Newman, Canada Research Chair for Indigenous Rights in Constitutional and International law at the University of Saskatchewan.

“No one benefits — not project proponents, not Indigenous peoples, and not non-Indigenous members of affected communities — when projects are prematurely approved only to be subject to litigation,” he said during the panel organized by the University of Calgary’s School of Public Policy.

Resource Companies Grapple With Supreme Court Decisions on Duty to Consult #Indigenous Communities https://t.co/anD2jUvFTK #cdnpoli

— DeSmog Canada (@DeSmogCanada) August 24, 2017

‘Litigation Not the Answer’

Another member of the panel, Norine Saddleback, who hails from Maskwacis in central Alberta and is a member of the National Indigenous Monitoring Committee for the Kinder Morgan pipeline, said she much prefers thorough consultation that results in impact agreements to paying scores of lawyers to go to court.

“We are trying to build bridges with people who have been in our back yard for a long time,” she said. Several First Nations in the area where she lives have developed oil resources on their territory in partnership with petroleum companies.

“As Indigenous people our job is to provide balance. To protect the environment and our Indigenous use of the environment,” Saddleback said. “That can be done if Indigenous people are taken seriously by proponents.”

Gerry Chipeur, a Calgary lawyer who has represented the interests of both project proponents and Indigenous communities, said relying on the courts to settle development disputes is risky business.

“Litigation is not the answer,” he said.  

Panel participants agreed that the two recent Supreme Court decisions were an important indicator of  the future role of the NEB which is currently undergoing a modernization review initiated by the federal government.

The review’s mandate includes Indigenous engagement and public participation.

Regulators May Be Vehicles for Consultation

Gaetan Caron, former chair of the National Energy Board, said the Supreme Court decisions affirm that the regulatory body is a vehicle through which The Crown can carry out its responsibilities to Indigenous people.

“The Crown has to consult and accommodate so why not use the regulatory body to carry out those responsibilities?” he said.

Both the court cases discussed during the Calgary panel involved instances where the NEB was authorized to make the final decision on a project.

Feds Took a Different Tack With Kinder Morgan Trans Mountain Consultation

These cases differ from the legal challenge of the Kinder Morgan Trans Mountain pipeline approval, where the NEB merely made a recommendation to federal cabinet and cabinet made the final decision.

Nigel Bankes, an expert in Indigenous and resource law at the University of Calgary was not on the panel, but in a recent law faculty blog he discussed the implications of the two Supreme Court decisions on legal proceedings challenging the federal government’s approval of the Trans Mountain pipeline.

Bankes contends that in the Trans Mountain case, the federal government did not rely on just the NEB process to discharge its responsibility to consult and accommodate. Having learned from mistakes during the Northern Gateway project proposal, the federal government took supplementary steps to improve its consultation and accommodation practices.

“The federal Crown undertook further consultation through the Major Projects Management Office and, as well, appointed the Trans Mountain Pipeline Expansion Project Ministerial Panel to engage potentially affected communities close to the proposed pipeline and shipping corridors.

In addition, the federal Crown itself conducted more intense consultation and accommodation activities in conjunction with the provincial Crown,” Bankes wrote.

Bankes also contends that the Chippewa of the Thames First Nation decision is confirmation that consultation and accommodation with respect to Trans Mountain will focus on the particular application and not on past decisions with respect to that same pipeline.

While the “new project” that was before the NEB in Chippewa of the Thames was small, the same cannot be said of Trans Mountain since it involves a very significant expansion in both pipeline capacity and tanker shipments, Bankes wrote.

The B.C. government recently announced it has hired renowned lawyer Thomas Berger and will seek intervener status in the court challenges, expected to be heard this fall.

Image: Idle No More, 2012. Photo: Zack Embree

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