The Alberta government is anticipating a new $200 million subsidy program will help rural groups or co-operatives develop renewable energy projects for their communities.
Projects up for consideration must be smaller in scale, in the five-to-25 megawatt range, and funds will come in the form of 20-year contracts, said Shannon Phillips, the minister in charge of the climate change office, during the announcement Nov. 22.
For instance, she said community groups, agricultural societies, rural and urban co-ops, schools, Indigenous communities and other groups can partner with companies on a project to distribute electricity.
In order to get funds, applications must demonstrate community benefits, such as revenue from electricity production, local jobs and training opportunities.
To be considered, partnering companies must also pass all regulatory hurdles, such as having a permit and meeting wildlife protection standards.
Phillips indicated applications with the lowest weighted average price will be successful in seeing their projects go forward.
“We have to make sure the benefits of the green energy economy are shared widely,” she told reporters. “This is something we can do with electricity. With changing technology and the advent of solar and wind, it means people can invest.”
The government’s funding model means potential projects must include a weighted average electricity price target. If electricity prices of the day fall below that target, a government subsidy will kick in. If prices are over that target, there won’t be a subsidy.
This model is already in place for larger scale projects.
Phillips said the idea of the subsidy is to encourage investors to kick-start renewable energy projects. She explained many projects are already waiting on the sidelines — they just need a bit of a boost to fully launch.
“There is a number of projects just waiting, but the price of electricity hasn’t been high enough,” she said. “Most of the medium-sized projects are waiting for some kind of firming and there are a number of different ways to accomplish that.”
The government has made it a priority to have 5,000 megawatts worth of generation from renewable sources by 2030. Phillips said there is already 7,000 megawatts worth of projects ready to go, an indication there will be strong interest.
When there is more interest, she said companies become more competitive in their bids, which could mean lower weighted average price proposals.
“You leverage the most competition within the market place and end up with the lowest prices,” she said.
The Alberta Federation of Rural Electrification Associations, as well as the Alberta Community and Co-operative Association and Rural Municipalities of Alberta (RMA) support the program.
Funds for the $200 million project will come from the provincial carbon tax. Phillips said if the carbon tax were repealed by a United Conservative Party government, these renewable energy contracts would have to be shredded, which could offer more challenges.
The province will promote the program before it launches in fall 2019.