Redefining Energy in Alberta: Can Old Oil Give Way to New Trends in the Canadian Solar Sector?
- Canada may not be the most obvious location for solar power projects; however, many parts of Canada have substantial solar energy resources. For example, Alberta is ideal for solar power generation due to its large open areas, low vegetation, high amounts of sunlight and vast agricultural industry.
- Each province in Canada has the power to control its natural resources, so the electricity market will vary from province to province. In addition, the USA also has some influence as they are a neighbouring supplier and consumer of energy.
- The Canadian government has created legislation committing the country to reach net-zero emissions by 2050. This will push the economy to either remove or offset all greenhouse gas emissions—a decision that will directly impact Alberta as it is Canada’s largest oil producer.
- It is projected that Alberta’s renewable energy sector growth should continue its upward trend, with the anticipation of a surge of projects that could have the province poised to be the Canadian leader in utility-scale solar capacity by 2025.
Alberta is Canada’s largest oil-producing province, generating an estimated 1.61 million barrels a day. Although the region does produce conventional oil, the majority comes from the Athabasca oil sands in northeastern Alberta—the world’s third-largest proven oil reserve. If Alberta were a country, it would be the fifth-largest oil-producing nation.
Canada is actively promoting action against climate change, and Alberta is expected to experience one of the fastest renewable energy capacity growth between 2018 and 2023. New solar and wind projects are being installed across the prairies to help replace the reliance on fossil fuel electricity.
Many Canadian renewable energy companies are developing their solar projects to suit the Alberta landscape. They are using the advancements in solar power storage and various other technologies to support their utility-scale solar plans. The number of solar companies in Canada is growing, but how suitable is Alberta for solar development and is there space for renewables in an oil-rich province?
Alberta’s Environmental Suitability to Solar Power
Many parts of Canada have substantial solar energy resources, such as Alberta due to its large open areas.
At first glimpse, Canada may not be the most obvious location for solar power projects. It is often seen as having a cold, wild landscape that is not particularly suitable for renewable energy, such as solar power generation. However, this is far from the truth. Many parts of Canada have substantial solar energy resources, such as Alberta, due to its large open areas. The southern province of Alberta, known for its oil production, has now been identified as having one of the highest solar generation potentials.
- Land Form
Alberta is located in the interior plains, one of Canada’s landform regions. This landform facilitates solar energy production as most of the interior plain is flat. This results in solar panels receiving sunlight for most of the day—unlike the cordillera, which has a harsher terrain with mountains and valleys, which would not be the most accessible location to install solar panels.
The vegetation in Alberta consists of rocky mountains, foothills, the boreal forest, parklands, grasslands, and the Canadian Shield. The grassland vegetation and the parkland vegetation can be great locations for solar farms. Most of the land will be free of shade which can block solar panels from receiving optimum sunlight needed to generate power. The parklands in Alberta are also mainly made of grass along with a few aspen trees. The grasslands primarily consist of short grass and mixed grass, which allow solar panels to work without being covered.
Unlike many Canadian provinces, Alberta is an excellent location for solar power generation as it receives a lot of sunlight. The whole of Alberta gets between the range of 2,500 to 2,000 hours of sunlight every year.
- Agriculture Industry
One of the primary industries in Alberta is agriculture. This industry, in particular, can be of support to solar energy as it holds a lot of land. Agriculture supports the environment in many ways, but over time the soil used can become inadequate. The plots of land no longer suitable for agricultural use make great locations for solar arrays as land. The energy produced can then supply the power needed to run the farm and provide a second income when surplus power is sold on.
The Different Canadian Provincial and Federal Energy Policies
Many investors are looking at new grid-parity projects where they can get a power purchase agreement (PPA), and one of the best places to do that is in Alberta.
Canadian energy policies can get complicated as there are various authorities vying for control. Each province is permitted to control its own natural resources under Section 109 of the Constitution Act 1867. This implies that the development of energy generation facilities occurs due to bargaining between the provincial and federal governments. In addition, the USA also exerts some influence as a neighbouring supplier and consumer of energy.
Although oil and gas are essential for energy generation in Canada, oil is declining, pushing the cost of energy up. This has stimulated a push for developing renewable energy plants, particularly solar power in Alberta. Many investors are looking at new grid-parity projects to get a power purchase agreement (PPA), and one of the best places to do that is in Alberta.
The solar industry in Alberta is deregulated, which means the utility does not control it—it is open to everyone to participate in when it comes to selling electricity or buying a hedge fund. Although the price of power in Alberta is not massively high, it is still considered a decent rate for investment. The carbon-traded tax is increasing yearly in line with the policy from the government, and it remains a free market where everyone can produce and sell electricity.
It is not uncommon to see individual solar farms of 300 MW being built in Alberta. Adjoining Saskatchewan is also known to have excellent irradiation, but there is a problem. Compared to Alberta, they have a small population, so their energy market is regulated. The energy sold in Saskatchewan has to be done so through the utility, and the amount permitted to be sold is dependent on how much the utility wants to buy.
The Future of Renewables in Alberta
The Business Renewable Centre of Canada has reported that 2021 has been record-breaking for corporate renewable energy deals—all of which have been located in Alberta.
Experts say that growth in Alberta’s renewable energy sector should continue its upward trend, with one forecast anticipating a surge of projects that could have the province poised to be the Canadian leader in utility-scale solar capacity as early as 2025. Rystad Energy (independent energy research and business intelligence company) projects that Alberta will have the largest combined total of utility-scale solar and wind capacity in the country, overtaking Ontario.
Soon, Alberta could be leading the way to develop new solar technologies, advance the already developing solar battery storage advancements, and boost their green economy potentials. Investors recognize the tremendous potential Alberta has to offer. The Business Renewable Centre of Canada has reported that 2021 has been record-breaking for corporate renewable energy deals—all of which have been located in Alberta.
The Canadian government has created legislation committed to reaching net-zero emissions by 2050, pushing the economy to remove or offset all greenhouse gas emissions. The decision of how best to tackle the net-zero target will directly impact Alberta. In 2019, just over 100,000 direct jobs were added to Alberta’s mining, quarrying, and oil and gas extraction industry alone—half of the total number of jobs added in the industry throughout Canada that year. Phasing out this industry would cause a threat to many job losses.
There is tension between climate change activists, oil and gas workers, and governments within Canada. They are all trying to navigate the political and economic factors surrounding renewable energy and oil and gas. Those who fear their jobs will be lost due to the transition to renewable energy in Alberta are increasingly concerned. However, the reality is the transition needs to happen, and those in the oil and gas industry may need to shift their skill set to one that complements the renewables industry.
It is projected that by 2030, renewable energy will create almost 560,000 jobs for Canadians. The type of jobs available will be varied, including workers needed to install the solar farms, technicians to maintain wind farms, and engineers to manufacture the equipment. The transition to renewables in Alberta will take time until it runs smoothly, but the aim is not to leave workers and communities behind that rely on fossil fuel resources.
Despite the many challenges solar power generation projects face in Canada, the prospects for solar remain very positive. Regions, such as Alberta, are expected to implement some stringent building code requirements for rooftop solar on new homes, more businesses opting to install solar panels as a way to manage energy costs and reduce their carbon footprints, and an increase in procurements led by both corporate consumers and utilities of large-scale solar farms.
For Alberta, the economic benefits of the corporate renewable energy deals are substantial. Some of these corporate procurement agreements are backing solar and wind projects that are even larger than the deals themselves, which altogether are estimated to generate $2.5 billion in capital investment in the province and create more than 3,000 jobs. These energy development projects also come with millions of dollars in lease payments to rural landowners and property taxes which support municipal budgets.
Canada is looking to renewable energy to help fulfil its climate action commitments and reduce reliance on high-emitting energy sources such as oil. An increasing need to meet the electricity demand with renewable power is factored in when deciding where to build new electricity generating facilities. There is also an increase in green investors looking to back more sustainable business models. Opportunities to get involved in solar power are set to continue their upward trend in Alberta. The Canadian government and organizations recognize the strong business case for locking in low-cost, low-emitting renewable energy.
Frequently Asked Questions (FAQs)
How is oil converted into electricity?
There are three technologies used to turning oil into useable electricity:
- Conventional steam
Oil is burned to heat water to produce steam which is then generated into electricity.
- Combustion turbine
Oil is burned under intense pressure to produce hot exhaust gases, spinning a turbine to make electricity.
- Combined-cycle technology
Oil is combusted via a combustion turbine, using the heated exhaust gases to generate electricity. Once the exhaust gases are recovered, they heat water in a boiler, creating steam to drive an additional turbine.
All these forms of burning oil for electricity produce vast amounts of carbon dioxide, which is incredibly polluting for the planet. In addition, sludges and oil residues that are not expended during combustion become a solid waste problem and contain toxic, hazardous substances.
What is Canadian oil mostly used for?
The majority of Canadian oil is used for transportation fuels—which is essential to the movement of people, goods, and services. According to Statistics Canada, there were 34.3 million vehicles registered in Canada in 2017, mainly fueled by gasoline, diesel and natural gas. In addition, there are refineries across Canada that turn crude oil into usable products like transportation fuels, including diesel, gasoline, and aviation fuel.
How much solar power does Alberta need to generate to meet current demand?
To generate Alberta’s current energy demand of 80,257 gigawatt-hours, Alberta would have to install 66,881 megawatts of solar panels. An example of the amount of land required would be to estimate that 1 megawatt of solar power mounted at ~45 degrees, with adequate inter-row spacing to prevent shading, would require ~1.725 hectares of landmass.
Can solar energy replace oil?
Solar power could one day not only replace most fossil-fueled electricity generation but could also replace petroleum-based transportation. The sun is a much larger viable energy resource than oil. Although the start-up costs for solar power can be higher than oil for the consumer, going solar is a positive in the long term—as a money-saving option and reduces harmful emissions.
How much of Alberta’s electricity is renewable?
Around 91% of electricity in Alberta is still produced from fossil fuels—roughly 43% from coal and 49% from natural gas. The remaining 8% is generated from renewables, such as solar, wind, hydro and biomass. However, there should be a vast improvement with Alberta’s forecasted renewable energy growth, with an estimated 26% of Alberta’s electricity capacity coming from renewable sources by 2023.