Government of Alberta
The Government of Alberta will create a “capacity market” for electricity as part of its plan to ensure that consumers are protected from price volatility with a reliable supply of electricity at stable, affordable prices.
“Today (Nov. 23), we begin our work to create an electricity system that is more reliable, delivers stable, affordable prices to Albertans, and is attractive to investors. Experts tell us that our current ‘energy-only’ system won’t deliver the reliable electricity system that Albertans need to grow in the future.”
– Energy Minister Margaret McCuaig-Boyd.
In capacity markets, private power generators are paid through a mix of a competitively auctioned payment of their fixed costs and prices from the spot market. Capacity markets directly benefit consumers by:
. Dramatically reducing price spikes and market uncertainty
. Driving efficient use of the existing transmission system
. Accommodating energy-efficiency initiatives better than Alberta’s current system.
This transition was recommended to the government by current and potential energy investors, as well as by the Alberta Electric System Operator (AESO), which oversees the province’s electricity system in the interests of the public.
Alberta’s capacity market will be developed carefully and in consultation with stakeholders and will be in place by 2021. This will ensure that existing investments, including existing renewables, are treated fairly and that there is a level playing field for competition.
Capacity markets serve tens of millions of electricity consumers in more than 30 U.S. jurisdictions and in the United Kingdom and elsewhere.
“We welcome a shift to a capacity market in Alberta. It will enhance our ability to make investments in existing and new generation to the benefit of customers and other stakeholders in the services we provide.”
– Dawn Farrell, President and CEO, TransAlta.