The unravelling of Danielle Smith's case for Alberta's renewables pause
If there was any doubt re‐ maining that Alberta's nearly seven-month mora‐ torium on renewable-en‐ ergy projects was a politi‐ cal decision - made in the halls of power rather than in the offices of expertise it was erased by internal documents released to the public last week.
As first reported by The Narwhal, which obtained the documents under a freedomof-information request, the CEO of the independent Al‐ berta Electric System Opera‐ tor (AESO) was actually op‐ posed to the moratorium. In internal communications, Mike Law said it would send a "closed-for-business mes‐ sage" and could drive renew‐ able-energy investments into a "tailspin."
This, of course, flies in the face of Premier Danielle Smith's long-standing justifi‐ cation for the controversial policy, which has introduced all sorts of uncertainty into the province's once-bustling market for renewable-energy investment.
After announcing the moratorium last August, Smith claimed "the Alberta Electric System Operator asked for us to do a pause to make sure that we could ad‐ dress issues of stability of the grid."
In support of her claim, she pointed to a published letter from the AESO CEO to Utilities Minister Nathan Neudorf - even though the letter said nothing of the sort.
The internal documents now show the opposite chain of events: rather than the AESO asking the government for the pause, it was the gov‐ ernment that asked the AESO to write a letter in support of the policy.
"As you can imagine, [CEO] Mike [Law] is not com‐ fortable with this but he has agreed to provide the letter," AESO board chair Karl Jo‐ hannson wrote in an email to fellow board members in July 2023.
"I told him to support the minister without reserva‐ tion."
Seeing these contradic‐ tions spelled out in black and white may have made a splash in the news cycle, but it didn't come as much of a surprise to those in the re‐ newable-energy industry, who have long seen Alberta's official justifications for the moratorium - which lifted in March - as divorced from re‐ ality. Besides, they say, they now have larger concerns with new restrictions on re‐ newable projects and a loom‐ ing redesign of the electricity market.
Policy experts, meanwhile, say they have serious con‐ cerns about how the provin‐ cial government misled the public as to the origin and reasons for the seven-month pause, which was accompa‐ nied by a parallel inquiry into the impacts of renewable-en‐ ergy projects. They also wor‐ ry about how this may affect future decisions surrounding - and investment in - Alber‐ ta's electricity market.
And there's plenty coming down the pike on both those fronts.
'We knew this early on' Vittoria Bellissimo, presi‐ dent and CEO of the Canadi‐ an Renewable Energy Associ‐ ation, says many in the in‐ dustry have believed for some time that the premier's explanation for the moratori‐ um didn't stand up to scruti‐ ny.
"The Narwhal article was certainly very interesting but it wasn't news to industry," she said.
Smith's additional claim that the Alberta Utilities Commission (AUC) had also asked for the moratorium has been debunked, as well. And her assertion that the Rural Municipalities of Alber‐ ta (RMA) passed a motion re‐ questing the pause has been denied by the RMA, itself.
None of this surprised the industry.
"Alberta's electricity sector is fairly small and it was gen‐ erally understood by most participants and stakehold‐ ers that the pause on AUC approvals had not actually been requested by the Alber‐ ta Utilities Commission, itself, or by the Alberta Electric Sys‐ tem Operator, or by the Rural Municipalities of Alberta," Bellissimo said.
"We knew this early on." The industry and its fi‐ nanciers aren't naive, says Thomas Timmins, a Torontobased lawyer with the firm Gowling WLG who serves clients in renewable-energy project development.
"You'll see governments at the political level reaching down and interfering in en‐ ergy and other policy matters frequently pretty much wher‐ ever you go," he said.
"And so when those emails get exposed … that al‐ ways creates unease, but that's no surprise for these senior, experienced, hardweathered people who oper‐ ate in this industry."
There's nothing legally im‐ proper with the Alberta gov‐ ernment giving direction to the system operator, ac‐ cording to University of Cal‐ gary law professor emeritus Nigel Bankes. The AESO was created through provincial legislation, he noted, and its status as an "independent" operator refers to it having no stake in the ownership of power generation or trans‐ mission.
"It doesn't really mean in‐ dependent from govern‐ ment," he said.
But, he stressed, that's not to say the government's actions were appropriate.
'To me, it's just deliber‐ ate misrepresentation'
Bankes says it is now "crystal clear" that the government misrepresented the origins of the renewables pause and what it had been told by the electric system operator.
"To me, it's just deliberate misrepresentation of the ad‐ vice received - and I'll put it as bluntly as that," he said.
"No doubt in my mind: it was a political decision, not an expert-driven decision."
The contradiction be‐ tween the government's claims and what the AESO
was saying internally risks eroding trust in Alberta's free-market electricity sys‐ tem, according to Sara Hast‐ ings-Simon, a University of Calgary professor in the de‐ partment of earth, energy and environment and the School of Public Policy.
"This competitive system only works if investors have trust in it," she said.
She worries it can also skew the public's under‐ standing of how the system works, which can affect fu‐ ture policy directions.
"The more that, say, elec‐ tricity becomes politicized in that way, you don't necessar‐ ily get the good kinds of dis‐ cussions and decision-mak‐ ing that you want to have," she said.
And there are some big decisions looming.
Market redesign and shelved projects
The renewable-energy pause and subsequent restrictions on wind and solar projects including a new 35-kilometre buffer zone around "pristine viewscapes" - have attracted much of the public attention lately, but industry insiders are also watching closely as Alberta mulls another major policy change.
The provincial govern‐ ment has also tasked the AESO with drafting some fun‐ damental changes to the structure of the province's electricity market, itself.
That could include the in‐ troduction of a "day-ahead market" that would allow power generators to offer their electricity for the next day's use, in contrast to the real-time market in which generators currently operate. This could help the system operator improve grid stabil‐ ity and reduce price volatility but, depending on the de‐ tails, it could also create fur‐ ther complications for wind and solar generators, who can't predict with certainty how much power their facili‐ ties will generate in 24 hours' time.
The province wants AESO to provide a detailed plan by this fall, with the aim of hav‐ ing the new rules take effect by 2027.
"How that plays out and where it goes is very much of keen interest to parties who were building and developing projects on the basis of the status quo, before those an‐ nouncements," said Timmins.
"They're very, very cau‐ tious investors, so they need to understand how their cash flow models are going to work."
Last week, TransAlta an‐ nounced it was cancelling one wind-energy project near Cardston, Alta., due to the province's new restrictions on renewables, and putting three other renewable projects on hold because of uncertainty in the market.
Bellissimo expects more projects to be cancelled or shelved in the near future.
"Nobody knows what their revenue streams will look like going forward, and nobody knows if they can get their generation to market," she said. "So it's very, very difficult to proceed with a project in this type of risk en‐ vironment."
Sidesteps and next steps
Asked why she said the AESO had asked for the pause - in light of the internal commu‐ nications published by The Narwhal showing its CEO was opposed to the idea - Pre‐ mier Danielle Smith didn't di‐ rectly answer the question.
"Whatever they're sug‐ gesting, I would have to beg to differ," the premier said.
"My job is to make sure the power grid doesn't fail and, if solar and wind policy needs to be changed so that it can be integrated better with our system and we can bring on baseload power, that's my job to make sure we do."
For his part, the system operator's chief executive said he was simply doing his job.
"After internal discus‐ sions, in keeping with our mandate, the AESO provided our independent advice to the Government of Alberta to help them make an informed decision, and once that deci‐ sion was made, the AESO supported the policy direc‐ tion of government," Law said in an emailed statement to CBC News.
Despite the concerns he's heard from clients about the turmoil in Alberta, Timmins said he doesn't want to "paint too gloomy a picture" of the future of renewableenergy investment in the province.
"When Alberta compares itself to hundreds of other ju‐ risdictions around the world, it still comes off quite favourably," he said. "It's still a great place to invest. It still has incredible engineering talent, incredible financial markets, incredible depth of capital."
Bellissimo agreed all is not lost for future invest‐ ment, but said the future looks starkly different from the recent past. Alberta at‐ tracted 75 per cent of new development in renewable energy in Canada two years ago, she noted, and more than 90 per cent last year.
"So we really were leading the country, but times are changing," she said.
"I think Alberta is losing its edge, and I think other juris‐ dictions will start to look much more attractive in the future."