Alberta?s Renewable Electricity Program: Design, results, and lessons learned*

We present a case study and analysis of Alberta's Renewable Electricity Program, one of a suite of policies implemented between 2015 and 2019 to increase the share of renewable generation in the Canadian province's fossil-fuel-dominated electricity system. The program consisted of a series of reverse auctions for contracts-for-differences which provided successful proponents with a project-specific guaranteed price for power generation. We find that the Renewable Electricity Program was successful in three important ways. First, it contracted for new renewable generation at prices in the range of CA$30 to CA$43/MWh (US$23 to US$33/MWh), well below expectations and among the lowest procurement costs globally at the time. These contracts have resulted in gains to the government of CA$75.5 million (US$60 million) to date. Second, the program ushered new entrants into Alberta's power market, including through mandated Indigenous equity participation in one round of auctions. Third, we find that price discovery and the incentive to develop new projects provided by the program spurred privately-financed development. While the program was a success, we argue that its design did not adequately reward high-value generation, which could have become an issue in future auction rounds. We analyse design alternatives that would have improved the program's dynamic efficiency.

Automated summary

The case study and analysis of Alberta's Renewable Electricity Program demonstrates its success in contracting for new renewable generation at low prices, attracting new entrants into the power market, and spurring privately-financed development. However, the program's design did not adequately reward high-value generation, which could pose a challenge in future auction rounds.