‘Tsunami’ Engulfs Alberta Renewables as Provincial Moratorium Unsettles Sector

Alberta’s seven-month ban on new renewables projects, lifted earlier this year, continues to unsettle the sector, evident in a slowdown of power purchase agreements (PPAs).

“What you’re seeing now is the lag time of the moratorium and the regulatory uncertainty,” Jorden Dye, director of the Business Renewables Centre-Canada (BRC), told The Energy Mix in an email.

“If you imagine the moratorium as the earthquake, what we’re seeing now is the resulting tsunami crashing down,” he explained. “The turmoil has engulfed the industry and it’s still unclear what kind of marketplace will re-emerge once the Alberta government completes its regulatory changes.”

The province once dominated renewable energy development in Canada. Its PPA market, which grew alongside the expansion of renewables, saw significant growth starting in 2021. At the time, low prices for renewable energy—driven by government procurements—attracted companies seeking emissions offsets, explains the Canadian Climate Institute.

Tech companies and developers building data centres for the artificial intelligence revolution partly fuelled the trend, with their role in Alberta’s energy ecosystem becoming increasingly important as the province strives to be a favourable location for their investments. Those developers are likely to continue engaging in PPAs for renewable energy.

“We would expect that announcements with data centres would hopefully be combined with announcements of wind and solar contracts to provide electricity to those data centres,” Evan Wilson, vice-president of policy with the Canadian Renewable Energy Association, told the Calgary Herald.

Other entities involved in PPAs included banks, public entities like schools, and heavy emitters like chemical plants and oil producers seeking to reduce their carbon footprints. At least 33 companies have signed PPAs with Alberta energy providers since 2019, The Logic found in a recent analysis. Those agreements add up to almost 3,000 megawatts, enough to power 1.8 million homes for a year. The “boom” in power buying transformed the province’s electricity grid, “prompting a massive buildout in wind and solar facilities totalling more than C$5.9 billion.”

But last summer, Alberta banned all new solar and wind projects for seven months until this February, raising concern among renewables advocates who warned the market uncertainty would scare off investors. At the time, the Pembina Institute reported that 118 projects worth $33 billion in investments were at risk.

BRC has seen a drop in project announcements in 2024 as a result of the moratorium, Dye said. Compared to the 33 PPAs signed between 2019 and 2023, there has so far been only one such deal in 2024, making the first half of this year the slowest for the Alberta PPA market since 2020.

He added that companies already engaged in PPAs responded in different ways, with some pulling back in the early stages of the moratorium to see the outcomes, and others continuing on to complete deals. But because seeing a PPA through to the end is a lengthy, often multi-year process, the full effects of the moratorium are only now becoming apparent, and they highlight “the uncertainty introduced by the government.”

“The lack of clarity around the details of the new restrictions continues to impact PPAs,” Dye said. “Buyers and developers need unambiguous rules in order to make commercial decisions.”

So “until the specifications around these new restrictions are released, there will be hesitation to lock into long-term agreements.”