Varcoe: TransAlta shelves wind project, pauses three other developments, amid upheaval in Alberta power market,

The Calgary-based power generator also has paused three other proposed developments in Alberta pending the province completing its ongoing energy market restructuring

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When it rains, it pours on the Alberta electricity market.

Two days after Capital Power cancelled a significant carbon capture project planned for the province, TransAlta has cancelled a proposed wind farm in southern Alberta and put three other developments — with estimated capital spending topping $500 million — on hold.

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TransAlta, Alberta’s largest power generator, cited provincial rule changes to renewable developments and uncertainty around broader electricity market reforms.

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During a first-quarter earnings call, TransAlta Corp. confirmed Friday the company was permanently shelving its Riplinger Wind Power Project, a 300-megawatt development in Cardston County.

Company CEO John Kousinioris said renewable project rule changes announced by the provincial government in late February, creating 35-kilometre buffer zones around “pristine viewscapes” in Alberta, meant the wind farm couldn’t go ahead.

TransAlta CEO John Kousinioris
TransAlta CEO John Kousinioris Courtesy TransAlta/via Postmedia

The Calgary-based power generator also paused three other greenfield developments in Alberta, pending the province finishing its energy market restructuring.

Those projects include the 100 MW Tempest wind project, the 180 MW WaterCharger battery storage project and the 44 MW Pinnacle gas development. The potential investment date has been pushed out until at least 2026.

“We’re not going to invest in these kinds of projects unless we have a good level of comfort that our return expectations are going to be met, and it’s a little opaque right now,” Kousinioris said.

Tempest is in Warner County and was approved by the Alberta Utilities Commission last year. It was estimated to cost about $270 million to build.

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WaterCharger, in Rocky View County west of Cochrane, was slated to be built on property owned by the company that is part of the Ghost hydroelectric facility. Its capital expenditures were projected around $170 million.

Finally, Pinnacle was slated to be built on lands included in the Keephills Power Plant site in Parkland County. The project was estimated to cost about $70 million to build.

“They are not cancelled,” Kousinioris said. “The team is working to preserve them and make sure that as soon as we get the kind of clarity that we need . . . they are things that could be resurrected.”

In February, after a seven-month pause on approving new projects, the province announced new rules for new renewable developments, including putting in buffer zones around pristine viewscapes, such as along the Rocky Mountains and the foothills.

It also adopted an “agricultural-first” approach when deciding where new renewable energy projects can be built.

Industry proponents have warned it would derail some initiatives.

“The announcement today is disappointing yet predictable,” said Vittoria Bellissimo, CEO of the Canadian Renewable Energy Association.

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“Alberta does not offer certainty right now. Alberta offers risk.”

In March, the province unveiled several short-term changes to the power market to reduce price volatility, including new rules to limit the allowed practice of economic withholding. The interim changes take effect in July and will remain in place until 2027.

The UCP government and Alberta Electric System Operator (AESO) are also advancing longer-term proposals to restructure the deregulated electricity market. The province could create new rules that include day-ahead pricing for the wholesale power market.

News of the project cancellations came the same week Edmonton-based Capital Power announced it will not pursue its $2.4-billion carbon capture, utilization and storage (CCUS) project at its Genesee Generating Station, west of Edmonton.

Capital Power said the technology is viable for gas-powered generating units, but the development isn’t economically feasible.

It didn’t take long for the finger-pointing to begin.

The Alberta government blamed the Trudeau government for dragging its feet on much-needed incentives for CCUS, including Ottawa’s promise to provide an investment tax credit for projects, along with carbon contracts for difference to lock in long-term carbon prices.

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Federal Natural Resources Minister Jonathan Wilkinson pointed out Friday that Ottawa is going to provide a 50 per cent investment tax credit to CCUS, more than a 12 per cent grant that Alberta has put on the table.

Alberta has its own carbon pricing system for large industrial emitters and could do more to enhance investment certainty by tightening up rules around emissions stringency or indicating a long-term trajectory for pricing going out to 2030, he said in an interview.

“The federal government still believes that CCUS has a significant role to play in a range of different industries,” Wilkinson added.

Both Capital Power and TransAlta also indicated they’re looking at making investments outside of Alberta, particularly in the United States.

Capital Power CEO Avik Dey said the company didn’t see the need for new firm dispatchable power capacity in Alberta for the next decade, given the supply situation that’s expected.

At TransAlta, Kousinioris said Alberta has positive factors in its favour: high growth, high income levels, population migration and industrial expansion.

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“We just need to get a bit of clarity, which I expect we will get in the coming year, two years,” he added.

Wilkinson said it’s a cause for concern if capital is shifting out of Alberta.

“It’s unfortunate that you’re seeing some of these advanced projects go by the wayside because of some of the decisions that the government of Alberta made with respect to renewables,” he added.

Utilities Minister Nathan Neudorf wasn’t available for comment Friday, but the province has repeatedly said Ottawa’s push for all provinces to have a net-zero grid by 2035 is unrealistic and punitive to consumers.

Sara Hastings-Simon of the University of Calgary School of Public Policy said that until the broader power market reforms and regulations about renewable projects are completed, it will be difficult for proponents to make major investment decisions.

“It does just underscore the need to finalize market rules,” she said.

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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