https://www.cbc.ca/news/business/wind-power-cost-1.4979213
[It is worth noting that these 2 provinces are Canada's largest coal
producers, and have significant coal-fired generation today. Despite
that, unsubsidized wind power is winning future electricity supply
contracts in both provinces - without any allowances for coal-fired
costs rising due to the scheduled federal GHG emissions feebate program
which starts in a couple of months. The financial windfall for the
latecomers to wind power can thank visionaries like Denmark, Germany and
Ontario for creating the initial market demand for the technology, so
that development aimed at reducing costs had a place to start.]
Wind power making gains as competitive source of electricity
Recent contracts awarded in Alberta and Saskatchewan will keep
electricity prices low
Susan Noakes · CBC News ·
Posted: Jan 16, 2019 4:00 AM ET | Last Updated: January 16
It's taken a decade of technological improvement and a new competitive
bidding process for electrical generation contracts, but wind may have
finally come into its own as one of the cheapest ways to create power.
Ten years ago, Ontario was developing new wind power projects at a cost
of 28 cents per kilowatt hour (kWh), the kind of above-market rate that
the U.K., Portugal and other countries were offering to try to
kick-start development of renewables.
Now some wind companies say they've brought generation costs down to
between 2 and 4 cents — something that appeals to provinces that are
looking to significantly increase their renewable energy.
The cost of electricity varies across Canada, by province and time of
day, from an average of 6.5 cents per kWh in Quebec to as much as 15
cents in Halifax.
Capital Power, an Edmonton-based company, recently won a contract for
the first phase of the Whitla wind project near Medicine Hat, Alta.,
with a bid of 3.9 cents per kWh and capacity of 201.6-megawatt (MW).
That price covers capital costs, transmission and connection to the
grid, as well as the cost of building the project.
Jerry Bellikka, director of government relations, said Capital Power has
been building wind projects for a decade, in the U.S., Alberta, B.C. and
other provinces. In that time the price of wind generation equipment has
been declining continually, while the efficiency of wind turbines increases.
Increased efficiency
"It used to be one tower was 1 MW; now each turbine generates 3.3 MW.
There's more electricity generated per tower than several years ago," he
said.
One wild card for Whitla may be steel prices — because of the U.S. and
Canada slapping tariffs on one other's steel and aluminum products.
Whitla's towers are set to come from Colorado, and many of the smaller
components from China.
"We haven't yet taken delivery of the steel. It remains to be seen if we
are affected by the tariffs." Belikka said.
Another company had owned the site and had several years of
meteorological data, including wind speeds at various heights on the
site, which is in a part of southern Alberta known for its strong winds.
But the choice of site was also dependent on the municipality, with
rural Forty Mile County eager for the development, Belikka said.
Alberta aims for 30% electricity from wind by 2030
Alberta wants 30 per cent of its electricity to come from renewable
sources by 2030 and is encouraging that with a guaranteed pricing
mechanism in what is otherwise a market-bidding process.
While the cost of generating energy for the Alberta Electric System
Operator (AESO) fluctuates hourly and can be a lot higher when there is
high demand, the winners of the renewable energy contracts are
guaranteed their fixed-bid price.
The average pool price of electricity last year in Alberta was 5 cents
per kWh; in boom times it rose to closer to 8 cents. But if the price
rises that high after the wind farm is operating, the renewable
generator won't get it, instead rebating anything over 3.9 cents back to
the government.
On the other hand, if the average or pool price is a low 2 cents kWh,
the province will top up their return to 3.9 cents.
This contract-for-differences (CfD) payment mechanism has been tested in
renewable contracts in the U.K. and other jurisdictions, including some
U.S. states, according to AESO.
Competitive bidding in Saskatchewan
In Saskatchewan, the plan is to double its capacity of renewable
electricity, to 50 per cent of generation capacity, by 2030, and it uses
an open bidding system between the private sector generator and publicly
owned SaskPower.
In bidding last year on a renewable contract, 15 firms submitted bids,
with an average price of 4.2 cents per kWh.
One low bidder was Potentia with a proposal for a 200 MW project, which
should provide electricity for 90,000 homes in the province, at less
than 3 cents kWh, according to Robert Hornung of the Canadian Wind
Energy Association.
"The cost of wind energy has fallen 70 per cent in the last nine years,"
he says. "In the last decade, more wind energy has been built than any
other form of electricity."
Ontario remains the leading user of wind with 4,902 MW of wind
generation as of December 2017, most of that capacity built under a
system that offered an above-market price for renewable power, put in
place by the previous Liberal government.
In June of last year, the new Conservative government of Doug Ford
halted more than 700 renewable-energy projects, one of them a wind farm
that is sitting half-built.
The feed-in tariff system that offered a higher rate to early builders
of renewable generation ended in 2016, but early contracts with
guaranteed prices could last up to 20 years.
Hornung says Ontario now has an excess of generating capacity, as it
went on building when the 2008-9 bust cut market consumption dramatically.
But he insists wind can compete in the open market, offering low prices
for generation when Ontario needs new capacity.
"I expect there will be competitive processes put in place. I'm quite
confident wind projects will continue to go ahead. We're well positioned
to do that."