(Bloomberg) -- Clean energy is coming to Canada’s oil patch.
The government of Alberta -- home to the world’s third-largest oil reserves -- on Wednesday auctioned off 595 megawatts of renewable energy capacity to be built in the province. That exceeded the government’s target of 400 megawatts.
The process marks a major step for Alberta -- Canada’s largest consumer of coal and its second-largest producer of the fuel -- in its efforts to transition to all renewable and gas-fired generation by 2030. Rather than a change in direction, Alberta’s government billed the move toward renewables, part of its Climate Leadership Plan, as a continuation of the province’s leading position in energy.
“It’s an industry that’s going to continue to be at the core of who we are and what we do for many, many years to come,” Premier Rachel Notley said at a news conference.
The winning bidders were Capital Power Corp., which is planning a wind farm with 201 megawatts of capacity, EDP Renewables, which is developing a 248-megawatt project, and Enel Green Power SpA, which will build two wind farms with total capacity of 146 megawatts, according to an emailed statement. Combined, the wind farms can power more than 250,000 homes, officials said.
The weighted average bid was 3.7 Canadian cents (3 U.S. cents) a kilowatt-hour, the lowest price for wind power ever in Canada. Developers agreed to sell power for 8.5 Canadian cents a kilowatt-hour in an Ontario procurement last year.
Climate Leadership Plan
The Climate Leadership Plan seeks to phase out all pollution from coal-fired electricity and get 30 percent of the province’s power, or about 5,000 megawatts of capacity, from renewable sources by 2030. The first round of the competition started with a request for expressions of interest in March and saw 29 projects advance to the bidding stage.
Alberta’s government, controlled by the left-leaning New Democratic Party, has sought to balance efforts to curb climate change while not harming the province’s major industry. Alberta’s oil sands contain the world’s third-largest stores of crude, with proven reserves of about 165.4 billion barrels, and produced about 2.5 million barrels of crude bitumen last year, roughly the same oil output as the entire country of Mexico.
Coal is also a major industry in Alberta. The province consumes about two-thirds of the fuel used in Canada for generating electricity, according to the nation’s natural resources department. Alberta has 6,457 megawatts of coal-fired generating capacity, more than four times the 1,530 megawatts in second-place Saskatchewan.
The province also accounted for 42 percent of Canada’s coal production last year, according to government estimates. Alberta was expected to produce 27.5 million tons of coal this year, according to the province’s energy regulator.
Notley credits the Climate Leadership Plan with helping the province secure federal government approval for Kinder Morgan Inc.’s expansion of the Trans Mountain oil pipeline as well as Enbridge Inc.’s expansion of its Line 3 conduit. Both projects have been seen as key supports for the oil sands, which are a top target of environmentalists seeking to limit global greenhouse gas emissions.
The Pembina Institute, a Calgary-based environmental organization that has been critical of the oil sands industry, praised the power auction on Wednesday, saying it showed that renewables are the affordable electricity-generation option for the province moving forward.
“It’s a good example of how a competitive process coupled with good policy design can result in cheap clean energy,” Binnu Jeyakumar, the institute’s program director for electricity, said in an emailed statement.
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