Economic Evaluation of Wind Power in Albera

Abstract

To meet forecasted load growth in the Alberta electricity market, various power generation technologies are available. Each has different attributes, benefits and limitations. Wind power generation technology is an attractive option for the reduction of emissions however it also imposes additional costs relative to other technology options. The location, variability and intermittency of wind power generation in the Alberta system create reliability issues (supply always equaling demand in real-time) and efficiency issues that would not exist if no wind capacity was installed. Reliability can be more efficiently attained with less total installed generation and transmission capacity when wind is not in the system. The volatility of output from wind generation also imposes or transfers costs on load and other generators to manage reliability. In order to assess the trade-off between the benefits and costs of wind power generation in Alberta, the effects of wind on the electricity system and the costs it imposes should be analyzed. The effects of various public policies on the results of that analysis will also guide decisions to improve economic efficiency. Comparison of these costs to the benefits of wind as a renewable technology can assist in determining the required willingness to pay for wind as a renewable energy source. Alberta currently has the capacity to generate 939 MW of electricity from wind power, representing approximately 7% of installed capacity. This capacity has come at a cost and reduced market efficiency, as well as affected the objectives of all market participants. It is therefore questionable whether it is efficient to add more wind power capacity to the Alberta electricity grid.