In a surprising move that has sent shockwaves through the renewable energy industry, Alberta, the major oil and gas producing province in Canada, has hit the pause button on approving new renewable power projects for seven months. This decision has forced several major international companies, both at various development stages, to halt their plans, causing concerns about the future of renewable investments in the province.
The abrupt decision has not only impacted global players but has also prompted domestic companies to reconsider their investment strategies, contemplating shifting their focus towards other provinces or even the United States. Critics argue that this unexpected move by Alberta Premier Danielle Smith has created a cloud of uncertainty around business dealings, potentially endangering billions of dollars in potential investments in the fast-growing renewable sector, Reuters news report said.
The pause, which was implemented on August 3rd, applies to new renewable electricity generation projects over one megawatt and is set to last until February 29th of the following year. Alberta’s utilities minister spokesperson stated that the pause is a necessary measure to address concerns regarding the reliability of renewables and land use.
This decision has further strained the relationship between Premier Smith and Prime Minister Justin Trudeau’s Liberal government. The federal government is actively working on drafting regulations that would require provinces to eliminate greenhouse gas emissions from their power grids on a net basis by 2035.
International companies that had ongoing plans related to renewable power projects in Alberta have been hit hard. One company had applied to build a renewable power project in the province, while another had paused design work on its inaugural Alberta project. A third company delayed plans for securing office space in Calgary, and a fourth was in the preliminary stages of considering investments in Alberta before deciding to hold off.
The impact of these investment delays could be significant, as they put multiple ongoing and planned projects in jeopardy. While the spokesperson for the Alberta government clarified that the pause directly affects 15 projects awaiting approval, the Pembina Institute suggests that a total of 91 projects in early development stages are at risk due to this freeze.
Alberta has previously been a leader in renewable energy projects and was on track to phase out coal-powered electricity ahead of schedule. However, this sudden pause has raised concerns about the province’s commitment to renewable energy and its long-term goals.
Foreign companies, including notable names like Berkshire Hathaway’s BHE Canada, EDF Renewables, and Enel Green Power, have made substantial investments in renewable power generation in Alberta. Since 2019, these companies have collectively poured nearly C$5 billion ($3.7 billion) into the sector, according to data from the Pembina Institute.
The uncertainty surrounding the pause has even affected companies that were considering potential projects in Alberta. BluEarth Renewables, based in Calgary, is reassessing its plans for around 400 megawatts of wind and solar projects it was contemplating for the province. CEO Grant Arnold highlighted that without clarity on the situation, they would prioritize investments in other regions where certainty prevails.
The Alberta Utilities Commission is also weighing its options during this pause, considering whether to halt the acceptance of new applications altogether. This potential action could signal an even longer freeze on development, introducing further concerns about the province’s stability for investors.
As the situation unfolds, some experts speculate that investors might perceive Alberta as a riskier environment for their capital due to the political uncertainty. Dan Balaban, CEO of Greengate Power, emphasized the potential for investors to demand higher returns to account for the increased political risk, a factor that could impact the province’s competitiveness in attracting renewable investments.
Despite the uncertainty caused by this pause, the renewable energy sector’s future in Alberta remains a pivotal topic, with implications that reach far beyond the province’s borders.