Alberta is a western province of Canada and is the fourth-most populous province. Alberta Government recently struck a deal with three major power producers (TransAlta, Capital Power, and Atco) of the province and has decided to phase out the usage of coal-fired electricity completely by the year 2030.
The Alberta Government has agreed to pay a total of $97 million a year over the next 14 years to these three power producers. This money is being paid to compensate for the shutdown of their coal-fired power plants and to assist them in the transition towards clean energy. The government expects to recover this huge amount from the carbon levy it plans to impose on heavy industrial emitters. The Government is also introducing a carbon tax on gasoline at the pumps, home, and business heating bills. This tax will come into effect from 1st January 2017.
This plan is chalked out in Alberta for Alberta’s electricity market by the local government and has nothing to do with the federal government’s recently announced policy to phase out coal-fired electricity during the same time frame in the country. The plans are to replace the present coal-fired power generation capacity with natural gas-fired power and a balanced mix of renewables, including solar, wind, and hydro. Ending coal-fired electricity is one of the pillars of the climate change plan introduced in the year 2015 by Premier Rachel Notley’s government.
As per the terms of the agreement of the deal, the three power producers will keep their headquarters in Alberta. They will make the new investments in the clean energy sector in the province only and work to provide strong support to the communities affected by the shutdown of the present coal-fired power plants. There are 18 coal-fired electricity units in Alberta. Out of these six are already scheduled to shut down before 2030. The power producers have agreed to convert nine of the coal-fired stations into natural gas-fired power plants by making the necessary modifications in the plants. And thus, ensuring a smooth transition.
The Alberta Government had appointed Mr. Terry Boston, a U.S.-based retired power executive for formulating the entire power transition study. As per his report, the complete transition will require $20 to $30 billion worth of investment. The most important announcement came from Premier Notley earlier this month, that Alberta will cap electricity costs at 6.8 cents a kilowatt-hour in the short term so as not to burden homeowners by price spikes during the transition.