Alberta’s Capital Power is not planning to build new natural gas-fired power plants in Canada as Prime Minister Justin Trudeau’s proposed electricity regulations to fight climate change make new investments in such facilities unviable, CEO Avik Dey said.
The concerns raised by Capital, Alberta’s second-biggest power generator, mirror those of Alberta Premier Danielle Smith, who on Monday said the province would defy the federal government’s proposed clean electricity regulations (CER). Ottawa’s regulations aim to eliminate emissions on a net basis from the country’s power grid by 2035.
“Am I looking at building new capacity? The answer is no, today, because of the ambiguity of the CER,” Dey told Reuters, adding the company has no plans to buy any Canadian plants either.
The CER in its current form doesn’t justify investment in a new gas-fired plant meant to operate 30 years, he said.
Capital Power’s previously unreported position on new plants underscores how the Trudeau Liberal government’s draft power regulations risk curtailing investment in a grid that Ottawa expects to face growing demand as more Canadians buy electric cars.
Unlike other provinces with hydro or nuclear power, Alberta burns high-emitting natural gas to produce most of its electricity. Smith has warned the regulations would lead to grid brownouts and blackouts, a scenario that Dey said he sees as well.
Delaying the federal net-zero goal by a decade to 2045 along with changes to the prescribed end of life for plants, restrictions on peak-use plants and use of offsets could make a net-zero grid realistic and change Capital’s position, Dey said.
“If those aren’t changed, (CER) does not work for a place like Alberta,” Dey said.
While Capital is not planning new plants, it is currently adding gas-fired capacity to existing facilities in Alberta and Ontario.
Under the CER, some natural gas-fired plants can keep operating past 2035 but under emissions limits that require use of carbon capture and a 20-year cap on the lifetime of plants commissioned before 2025.
In Ottawa, federal Environment Minister Steven Guilbeault accused Smith of making “inflammatory comments that are not based in facts” in her opposition to the regulations.
Smith also said on Monday her government is considering creating its own power-generating company “of last resort” to keep natural gas-fired power plants running in Alberta.
Dey said while a government-owned generator would add another player to the market, it is unclear if the idea will chill investment.
“I don’t know that I would sit here today saying it’s either threatening or emboldening investment decisions in the province because it is very hypothetical,” Dey said.
Simon Dyer, deputy executive director of the Pembina Institute climate think tank, said a government power generator would create unnecessary red tape.
“Alberta looks completely out of touch, not just with the national conversation but the global conversation,” Dyer said.
By contrast to its concerns about the future of Canada’s gas-fired power, Capital Power is actively acquiring mid-life natural gas-fired plants in the United States. Those plants will provide critical supply when wind and solar power is insufficient and Capital is seeking more such purchases in the western U.S. and Midwest, Dey said.
Edmonton-based Capital Power this month bought two U.S.-based natural gas-fired generating plants, even though costs of batteries, an alternative way to manage renewables’ intermittency, are dropping.
“One size, one solution doesn’t fit all,” Dey said.
(Reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Steve Scherer in Ottawa and Nia Williams in British Columbia Editing by Denny Thomas, Chizu Nomiyama and Lisa Shumaker)
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