Microgenerators in Alberta

Alberta’s Micro-generation Regulation under the Alberta Electric Utilities Act came into effect in January

2008, allowing individuals to generate electricity for personal use while dispatching excess electricity to the grid.

Micro-generation refers to environmentally friendly, small-scale generators that produce one megawatt (MW) or less and are connected to the electric distribution system that delivers power to homes, businesses and farms across the province. Under the Micro-generation Regulation, Albertans have the option of producing electricity to meet their own needs and receiving a credit on their electricity bill for any excess power they send to the electricity grid.

Micro-generators use different types of renewable or alternative energy technologies such as solar panels, small-scale hydro, wind, biomass, and geothermal. The Micro-generation Regulation classifies generators in two categories based on their capacity:

•    Small micro-generators: less than 150 kilowatts (kW)

•    Large micro-generators: greater than 150 kW, but less than 1 MW

Eligibility Under the Micro-generation Regulation

To be eligible under the regulation, at a minimum, applicants must meet the definition of a microgeneration unit:

•    Use of renewable or alternative energy technologies

•    Electricity produced is primarily for the customer’s own use

•    Generating capacity is sized to meet all or a portion of the customer’s usage (also referred to as load)

•    Generator capacity is less than 1 MW

The requirements identified in the regulation differ depending on the capacity of the generator. For example, metering requirements and compensation are applied differently for a small micro-generator vs. a larger unit.

How many units are in service in Alberta?

For the purpose of this document, the “Co-gen/Solar”, “Gas”, “Gas Cogen” and “Other” has been combined within a single category under “Alternative Energy”, leaving the “Biomass” and “Hydro” on their own.

There is presently 30,062 micro-generators in the province, with an average installation size of 276 kW. Nevertheless, 99.5% of all micro-generators (29,918) have 10 kW Solar installations in average. The remaining 0.5% (144) have an average of 88 kW installations each.

As the market is largely dominated by small 10 kW Solar installations, there is little to no chances that the retail price offered for small micro-generator will move downward in a near future. With an accelerating installation pace – from 3,379 in 2020 to 11,239 in 2024 – the economical sustainability of an incentivised price of $0.30/kWh will remain relevant (and lucrative) for the retailers as well as attractive for the micro-generators.

Most retailers are offering the $0.30/kWh to small micro-generators conditional for them to buy back their power at the same price when required.

As the wholesale price for the past 24 months have been hovering around $0.13/kWh how are the retailer’s making money with that offer?

Here’s the “logic test” for the $0.30/kW, which is in accordance to the Micro-Generation Act of Alberta:

All excess green power sold back to the grid is purchase at cost by the line owners (grid provider):

• The retailer (Get Energy) gives you $0.30/kW for your green power and communicate the amount to the grid owner (Fortis, Atco, Epcor, Enmax…).

• The grid owner reimburses the retailer at $0.30/kW and then split the cost amongst ALL of its client through the distribution electric charges, i.e. Fortis has over 600,000 clients, the $0.30/kW represents $0.0000005 per kW paid to you per client.

• The total number or micro-generators in the province is approximately 30,000 producing a total of 312 Mw with an average or 10 kW per producer, that resells approximately 20% of their power to the grid representing $18mm per month split amongst 1.5mm connected clients, for an average cost/client of about $0.12 per month.

• While the pay-out of excess power to green energy micro-generator is cost neutral for both the retailer and the distributor, the advantage lays in the retailer hand as he will usually makes around $0.01/kW on regular power transaction, but around $0.17/kW on excess green power as the Grid Operator (AESO) will give him credit (in kW) for the power generated which he will have to pay at an average of $0.13/kW, making it a good incentive to offer the program.

• For CHP’s, as the equipment is producing a continuous feed on the grid, the retailer can take advantage of a large volume of natural gas consume to produce the power to make extra margins on the gas side.

• Unless the province gets to a large percentage of micro-generators, this price will remain without any effect on the overall charges of everyone’s electric bill.