Pembina Institute welcomed the news earlier this week that the Kenney government will cancel the shift from an energy only market to the capacity market.
Binnu Jeyakumar, Director of Clean Energy at Pembina Institute said “since day one, the Pembina Institute, like most electricity industry players, has been critical of the capacity market for several reasons, and we’re pleased to see the cancellation.”
Jeyakumar said that while the shift to a capacity market was originally intended to attract investors to Alberta, it does carry several risks. “Notably, the capacity market would have shifted risk away from investors and onto consumers, likely resulting in more costs to ratepayers.”
As well, Pembina argues that the move to a capacity market would create an uneven playing field and provide an advantage for coal- and gas-fired power generators over renewable power sources, including solar and wind.
Agreeing that an update to the current electricity market is required, Jeyakumar adds he hopes that the government will move in that direction.
“Experience from other jurisdictions, such as Texas, shows how energy markets can be adjusted to ensure reliability while protecting consumers — and integrating the lowest cost option, which are renewable energy resources.”
According to Jeyakumar, a fair system that is cost effective and efficient will include all technologies being treated equitably and fully compensated for services provided.
“We need to look at the entire electricity system, beyond just the wholesale market,” said Jeyakuma. “For example, the most cost-efficient solutions would ensure energy efficiency is prioritized, and smart technologies are used to manage usage at peak demand times.”
Jeyakumar says a number of electricity systems are well along this path and we can learn from them.
“Globally, the electricity sector is undergoing a shift at a level that we haven’t seen in over a century. Renewables are cheaper than conventional generation, and we have new technologies that are changing how we generate, deliver and consume energy.”
“Our electricity market needs to be ready to adapt to changing innovation in a 21st century de-carbonized future grid that is lower emitting, lowest cost and more reliable.”
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