Albertas Electricity Sector: Sweeping Change Marcy Cochlan, Manager, - - PowerPoint PPT Presentation

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Alberta’s Electricity Sector: Sweeping Change

Marcy Cochlan, Manager, Market Regulation TransAlta Corp.

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TransAlta: Canada’s Largest Investor-Owned Clean Power Company

• Diversified generation portfolio: wind, hydro, solar, gas and coal facilities.
• Headquartered in Calgary. Leading provider of hydro in Alberta.
• Leading provider of wind energy in Canada.
• Employs 2,300 people in Canada, the U.S. and Australia.

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Getting to 2030: What Albertan’s Need

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Sweeping Change

Coal Coal

Rapid introduction of new regulations

• 1. Provincial carbon tax of $20/tonne in 2017, $30/tonne in 2018
• Federal government wants $50/tonne by 2022…how does this fit with

Alberta’s announcement?

• 2. All coal-fired generation facilities in Alberta to retire by 2030
• Federal and provincial announcement
• 3. 30% electricity produced by renewables in Alberta by 2030
• 5000 MW of Renewable Generation subsidies with generation on-line

by 2019

All of these policies pose large challenges for AB’s electricity sector and will result in MAJOR CHANGE

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Getting to 2030: Major Transition Required

2016

2030

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Getting to 2030: Massive Capital Investment Required

Alberta will need 11,000 MW of new generation capacity by 2030. Requires at least $25 billion in new capital investment.

Source: Multi-Client Study of Potential Impacts on the AB Electricity Market of Policy Implementation Choices for the Climate Leadership Plan (EDC Associates)

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Highly Complex Challenges to be Managed

Carbon Tax Raises Costs

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… And it seems issues may get even more complex soon …

Source: Calgary Herald, November 18, 2016

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Residential Electricity Rates Across Canada Today Calgary’s electricity rates are currently amongst the lowest in Canada

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Our Electricity Market is Very Unique

High percentage of coal-fired generation Small market in terms

• f installed capacity

Large industrial load Energy-only market design Relatively low retail rates Important differences to consider when evaluating options for Alberta

Note: retail prices were from spring-summer 2015, and converted to Cdn$ using 9/8/2015 exchange rate Source: EIA, ERCOT, Germany Energy Blog, Frauenhofer Institute, CA Energy Almanac, UK Government, UK DECC, Manitoba Hydro

Alberta Texas Ontario California United Kingdom Germany RPS FiT Energy Efficiency Carbon Tax FiT 16,151 MW 80,149 MW 34,780 MW 78,865 MW 84,987 MW 177,140 MW Coal: 39% Cogen: 28% Gas: 11% Gas: 63% Coal: 25% Nuclear: 6% Nuclear: 37% Gas: 29% Hydro: 24% Gas: 59% Hydro: 18% Solar: 7% Gas: 40% Coal/oil: 29% Nuclear: 12% Coal: 28% Solar: 22% Wind: 20% 65% 26% 25% 17% 26% 46% 12.18 cents/kWh 15.70 cents/kWh 16.5 cents/kWh* 22.79 cents/kWh 32 cents/kWh 42.81 cents/kWh

Real Time Mkt

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Day Ahead Mkt

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Tx Rights

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Capacity Mkt

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Centrally Planned

    Policy Assessed Installed capacity (MW) Capacity by fuel (Top 3) % industrial load Recent residential retail (delivered) price ($CAD) Type of wholesale market

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Firm Capacity Needs and Renewable Additions

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Prices Expected to Increase

0% 50% 100% 150% 200% 250% 300% Today 2030

Energy Transmission Distribution Green Subsidy

• Even a well managed transition will see much higher prices
• Carbon costs, subsidy costs, transmission costs, coal transition costs,

replacement generation costs

$60/MWh $148/MWh

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Estimated Electricity Sector Emission under the Climate Leadership Plan

Mt CO2e

Source: EDC Assumptions: Coal Retires per Federal regulation until 2030, 350MW of wind added annually until 4,200 MW target reached

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Percentage of Total Construction Costs Spent Locally by Technology Type

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Local spend based on reported equipment and external engineering procurement costs relative to total project costs

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Source: London Economics International (LEI) with assistance from TransAlta

30% 35% 35% 10% 20% 62% 60% 70% 0% 10% 20% 30% 40% 50% 60% 70% 80%

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O&M Jobs per Megawatt by Fuel Type

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Note: these O&M estimates do not include job estimates for upstream coal mining

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Source: London Economics International (LEI) with with assistance from TransAlta

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 O&M jobs / MW

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TransAlta is prepared and competitively positioned to play an integral role in the future of Alberta. TransAlta: Positioned For the Future

We will continue to be a supplier of choice in Alberta

Growth Opportunities _______

New Solar and Wind Cogeneration Expertise Hydro Expansion

Alberta is our Base ________

Relationships with Stakeholders Deep Market Knowledge Coal-fired to Gas Conversions

Expert Energy Managers ________

Custom Products & Services Flexible to Meet Changing Needs Emissions Management

Ensuring Alberta stays competitive.

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The Right Focus = The Right Outcomes

TransAlta’s Focus:

Aggressively pursuing growth in gas and renewables to support our transition to a Clean Power Company by 2030 Growth in Clean Energy Ensure we arrive at 2030 with a strong and reliable electricity system that supports economic growth. System Reliability Investors treated in good faith. A reasonable return on investment. All contracts honoured. Existing and new generation treated equally. Ensure Alberta Can Attract Future Investment A “made-in-Alberta” solution that protects jobs, local investment and competitive power prices. Accelerate Economic Recovery and Growth

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Questions? We’re listening!