A “capacity market” for electricity has been created by the Alberta government as part of its plan to ensure that consumers are protected from price volatility with a reliable supply of electricity at stable, affordable prices.
“We begin our work to create an electricity system that is more reliable, delivers stable, affordable prices to Albertans, and is attractive to investors,” says Energy Minister Margaret McCuaig-Boyd, MLA for Dunvegan – Central Peace – Notley.
“Experts tell us that our current ‘energy-only’ system won’t deliver the reliable electricity system that Albertans need to grow in the future.”
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.
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, says a news release from the provincial government.
“Think of capacity markets as ‘Market Plus’,” McCuaig-Boyd says.
“They support better planning and reliability, while using markets and competition to meet the energy demands in the most cost-effective way possible.
“And, because they’re used all over the world, capacity markets are familiar to investors, who like the stability and predictability they bring.
“Moving in this direction will help Alberta attract investment in the new, lowest-cost capacity we need to smooth our move away from coal-fired generations and create jobs as we do.”
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.