Bernd Sieker
For a brief time — between July 2012 and July 2013 to be exact — solar power wasn’t subsidizing the burning of coal and natural gas.
That’s according to an assortment of solar installers and consultants in the province referring specifically to Light Up Alberta — a grassroots solar program as simple in premise as in name which was nixed in 2013. The program started by Nick Clark of Spot Power and UTILITYNet (an electricity billing company) ensured that an Albertan with solar panels on their roof could receive 15 cents per kilowatt-hour (kWh) for unused electricity pumped back into the grid. It might seem trivial but given the pre- and post-Light Up Alberta pricing the 15 cent guarantee was an enormous boost for the rapidly growing microgeneration industry (when it started in July 2012 the retail price for electricity was just over 9 cents).
Charlie Bredo the CEO and founder of Bow Valley Power says “there was a tremendous amount of excitement and interest in solar power and microgeneration when Light Up Alberta was on. There’s a very direct correlation to it no longer being available and less interest in solar power.”
Obviously solar power is generated during the day. It’s a fact worth noting because electricity tends to be in higher demand during the day and therefore is priced higher. But such a reality wasn’t — and now isn’t — reflected in the price received by microgenerators for their excess electricity which is based on the average retail rate on their monthly bills. As a result the likes of Moustafa Youssef owner and installer for Solar Hero and David Vonesch partner for Skyfire Energy and director at Spark green energy co-op suggest the current situation subsidizes greenhouse gas-emitting production methods.
“For solar on our roof right now we export that energy to the grid during times of day when there’s most demand on the grid and highest prices” says Vonesch. “In 2013 if you looked at the value of solar in the time of day production it was actually worth about 15 cents just because that’s what the market price was. [Light Up Alberta] was just giving a fair value. Anything less at that time was a subsidy to the other way where solar producers were actually subsidizing grid prices for everyone else in the province.”
The reason for the cancellation of Light Up Alberta is like Alberta’s electricity market fairly convoluted and concerns two pieces of legislation and multiple parties. Clark had found a loophole in the legislation allowing for the increased compensation for solar microgenerators. Clark says ENMAX complained about the initiative to the Alberta Electric System Operator (AESO) a quasi-governmental body that provides access to Alberta’s electricity grid and facilitates the wholesale market. The concerns were passed along to the provincial regulator the Alberta Utilities Commission (AUC) which determined it was in contravention of rules regarding compensation.
“They were losing customers” says Clark. “The customers we picked up were being cannibalized out of ENMAX’s customer base. The exercise is how do you stop your competition? You take away the loophole. And that’s really the game that was played.”
Alberta’s Microgeneration Regulation — introduced on January 1 2009 — uses a concept called net-billing to compensate producers. In essence a so-called wires company (ENMAX in Calgary’s case) tracks power usage and generation and forwards those numbers to an electricity retailer. That retailer will then credit a microgenerator for excess power fed back into the grid and pass the bill to AESO.
The legislation requires producers to be paid for microgenerated electricity at that retailer’s energy rate “unless a microgenerator and a retailer agree in writing to different compensation.” That phrasing is what Light Up Alberta tried to capitalize on.
“The issue becomes if it’s done for 15 cents what’s to stop someone from doing if for 30 cents or 80 cents? Who’s going to pay for all this?” says Fino Tiberi executive director of regulatory policy at AUC. “The government policy is they don’t want to favour one technology over the other. Everyone is on a competitive playing field here: there’s no subsidization from one group of customers to another. We were just enforcing the policy.”
The AUC exec notes the extra money — the difference between the regulated rate option (RRO) and the 15 cent per kWh guarantee through the Light Up Alberta program — came from AESO’s coffers. It’s an argument Gordon Howell managing partner at Howell-Mayhew Engineering and a veteran solar advocate dismisses suggesting that AESO passed on the slight cost to the generators in the form of a tariff who typically pass that on to customers. In addition the tremendously small portion of the power pool that solar energy occupies couldn’t have cost that much he says.
“When Light Up Alberta came along — and in my view interpreted the act correctly — then the generators did complain even though it was only 15 cents and an absolute drop in the bucket” he says noting that Alberta’s 1079 solar sites currently make up about 5.3 megawatts of the 15000 megawatts produced in the province. “They were feeling territorial and the mantra of the Alberta government is ‘fair open and efficient.’”
Youssef of Solar Hero agrees that Light Up Alberta was shut down due to “pressure from bigger movers against boutique retailers.” He also notes that in addition to the fact that solar-generated power is created during the most expensive part of the day people who live directly next to the microgenerator pay the same distribution and transmission fees even though the energy comes from next door. “We’re subsidizing two things” he says “the distribution and transmission system and the power that comes from coal and natural gas.”
Despite the difference in opinion on the interpretation of the Microgeneration Regulation both the AUC’s Tiberi and solar expert Howell agree that it’s ultimately up to Alberta Energy to rectify the issue. Tiberi suggests it would be helpful if compensation for microgenerators was tied to the pool price (which fluctuates with the market) as opposed to a fixed retail rate. “That’s what all the big guys are getting” he says. “So why can’t the little people get the same price as what the big guys do?”
Alberta Energy spokesperson Chris Bordeau says that the department expects to “conduct a review of the regulation before it expires at the end of 2015.” Ben Thibault program director of Pembina Institute’s electricity program notes that such a reassessment could result in the province deciding that solar-generated electricity deserves more than the retail rate concluding that such an update would be “very helpful to the system.”
Howell who in 1994 installed the first grid-connected solar system west of Toronto on his house is a bit more skeptical. “Alberta is actually losing its social license and is at great risk of losing it entirely” he says. “It is not functionally addressing the environmental issues. It’s obfuscating it’s touting it’s greenwashing. It’s throwing Band-Aids here and there and saying how great we are.”
Alberta’s in a prime position to amend the issue. Calgary receives more than 2400 hours of sunshine each year making it one of the brightest municipalities in the country. Add in the fact that solar modules and inverters continue to plummet in price and it seems like a good time to invest — if there was a solid return.
“The real key going forward is the need to have a policy where the true value of the electricity imported or exported into the grid is statistically calculated” says Clark. “That establishes a totally level playing field. The consumer knows if he invests in solar that’s what he’s going to get.”
The whole conversation seems to take on a new level of urgency when one considers the Alberta government still hasn’t completed its renewable energy framework something that has been in the works since 2007. Bordeau of Alberta Energy says the framework’s “on hold pending the release of Alberta’s renewed climate change strategy” — a plan that’s already been delayed six months.
In the interim solar installers and consultants are experimenting again. Spark the green energy co-op has created a $0.0185 per kWh offset market for microgenerators and Vonesch reports over 30 generators have signed up for the program. Howell points to municipalities like Medicine Hat and Edmonton as places that are beginning to invest in solar. Bredo’s Bow Valley Power is attempting to widen the span of its Ecologo program — which guarantees that every kWh of green energy removed from the grid is replaced with green energy — and Clark mentions a plan to create a homegrown answer to Ontario’s Bullfrog Power.
“We’re just trying to work together as a group towards something that fits Alberta’s deregulated market and provides a bit of an incentive for solar but obviously something that doesn’t disrupt the market at the same time” says Vonesch.
Some changes have been made to this article since publication: originally there was a reference to a four cent/kWh retail rate when that was the pool price. Secondly microgenerators don’t pay a fee for exporting power as originally indicated but the neighbours (who receive electricity from excess electricity) pay the same distribution and transmission fees. Finally a clarification was made that AESO passes on higher costs to generators in the form of a tariff rather than passing the cost directly on to consumers.
ENMAX has since got back to FFWD (there was a reply in the works but it wasn’t received prior to sending the paper to print). This is part of the reply: " … when the $0.15/kWh credit was launch by UTILITYNet we took great interest and wanted to offer it to our customers as well. However when we introduce new products we must seek all necessary approvals from the industry regulators (Alberta Energy and/or the AUC). In this case when we approached Alberta Energy they told us the product was outside the intent of the micro-generation regulation. Therefore we decided against it because offering the product to ENMAX customers would have represented a significant risk to us – we would likely have been ordered to stop the offer and been exposed to penalties or other repercussions (which is exactly what happened to UTILITYNet)."
