Alternative Energy

Assignment 2
ECON 300 Economics
Instructor: Rick Bell
Student: Sam Ioughlissen

What are the practical arguments in favor of adopting wind, solar, nuclear or other forms
of generating electrical power for Alberta?
In 2011, the Government of Alberta mandated that no future coal plants are to be built.
The old coal plants are also to be phased out. This initiative now leaves Alberta with
roughly 10-15 years of coal-generated power. Now it is unlikely that we will see natural
gas completely phased out in Alberta mainly due to its economic benefits in areas such
as job creation (AEATB, 2014). This leaves the door open alternative means of power
generation.
The Alberta Government has already paved the way for many homeowners to sly away
from the traditional means of power. Self-sufficient homes are the new craze in Alberta
and there are many government programs that offer significant rebates and incentives.
Leading the way is solar powered energy. Solar powered systems are easily installed
and offer prices that are very similar to fossil fuel type power. Figure 1 below explains:

(Kelly, 2012)

The above graph is calculated with levelized level of electricity, this means that the dollar
per kW on the X-axis includes the initial and ongoing capital investment (power facility).
This means the dollar per kW includes the initial outlay of setting up a facility this is
usually the number one complaint for switching to alternative power. Now if we analyze
the numbers we realize that in 2012 the costs for fossil fuel and solar power are nearly
the same. Fossil fuels come in at 0.167 to 0.305 per kw and solar comes in at 0.122 to
0.204 per kw, the fluctuation is due to time of year. These numbers are a welcome
change to a more modern clean Alberta (Kelly, 2012).
Another alternative power worth considering is geothermal. It also happens also
happens to be the most neglected alternative power source in Canada. Geothermal is
the process of drilling a one to three km hole down to the center of the earth; cold water
is then pumped down hole. The resulting heat from the earths natural warmth heats the
cold water, which then produces steam. The Canadian Geothermal Energy Association
estimates that Canada is neglecting nearly 5000KW of geothermal energy (Smart,
2010). This would be enough energy to power nearly a third of Alberta or the combined
power needs of New Brunswick, PEI, and Nova Scotia. The most important
consideration that Alberta must contemplate is that if the province is truly attempting to
phase out coal power, then all alternative power types must be considered. In the end it

will be a combination of hopefully all clean power alternatives that will create a greener
Alberta.
What are the political and economic arguments opposed to using anything other than
fossil fuels to generate electrical power?
You only have to glance at the numbers to understand the extensive foundation and
infrastructures that fossil fuel based facilities have in Alberta. Figure 2 below explains:

(Andre, 2009)

Nearly 50% Albertas capacity comes from coal and 38% comes from natural gas based
facilities. Additionally fossil fuel based facilities have far greater initial outlay in
comparison to their clean fuel alternatives. Existing facilities have enough excess future
capacity that can handle all of Albertas future growth. Also upgrading these facilities is
traditionally cheaper than building brand alternative fuel based facilities. If down the road
Albertas future energy needs cannot be met with its current fossil fuel based facilities,
then these facilities can always be upgraded or inversely, the excess power can be sold
or transferred through the large network of pipelines and transmission lines laid across
North America.
Canadas economy in most future considerations is customarily always based to
continually go up, this may usually be true in the long term but any economist will tell you
that any market will have short-term recessions. This is where the operational
considerations of natural gas facilities must be considered. Most of the technology
related to natural gas and coal facilities has an on-off flexibility within their daily
operation. Excess power can be sold or transferred or plant capacity can be reduced
(Andre, 2009).

If you were just elected as Albertas premier, and you firmly believed in adopting
alternative ways of generating electrical power, without using fossil fuels, how would you
go about selling your ideas to the people of Alberta, and its business community?
If I was elected as Albertas Premier and I firmly believed in adopting alternative fuel
types I probably would not be Albertas Premier, but for the purpose of this assignment
well assume a miracle has occurred. Firstly, the most important consideration would be
the speed or timeline in which Alberta can transition from fossil fuel types to alternative
fuel types. If over 88% of our power is from fossil fuels then we cant transfer to
alternative fuel overnight.
As an example, between now and 2016, it is estimated that Alberta will need an
additional 31% of power over todays current capacity; this excess energy requirement
will be in the region of 3800MW. In the long-term, Alberta will need between 46009500MW by 2024 (Andre, 2009).
The rate in which we transition is the most important. Kevin Anderson, who is a leading
British climate scientist, had a chance to consider Albertas current position on its use of
fossil fuels. Transferring 100% fuel tomorrow is merely impossible, there simply isnt
enough power in the short to medium term in order to maintain this transition. But lets
assume Alberta set a goal to increase its energy efficiency by 2-3% per year. This may
sound like an admirable goal, but Albertas economy is growing by 2% per year, this
means that the 2-3% increase would go nearly unnoticed. Anderson believes that in
order to gain compatible growth, Alberta needs to set a goal of 10% fossil fuel energy
reduction per year. This number may seem high but it is important to understand that at
minimum 3% of this reduction will be cannibalized by traditional power facilities (Foster,
2013). This rate of reduction also gives a chance for Albertas economy to transition to
the new capital based projects required for alternative fuel use.

References:
AEATB. Alberta Energy and Alberta Treasury Board and Finance. Economic Trends.
(2014, March 1). Retrieved November 3, 2014, from
http://finance.alberta.ca/aboutalberta/economic-trends/2014/2014-03-economictrends.pdf
Kelly, David. The Economics of Solar Alberta. (2012, January 1). Retrieved November 3,
2014, from http://www.skyfireenergy.com/wp-content/uploads/2011/04/White-PaperEconomics-of-Solar-in-Alberta.pdf
Smart, A. (2010, October 1). Canadas new geothermal energy industry. Retrieved
November 3, 2014, from
http://www.canadiangeographic.ca/magazine/oct10/discovery3.asp
Andre, H, P. E. P. (2009). Nuclear Power and Alberta: Background Report. Edmonton,
AB, CAN: Government of Alberta. Retrieved from http://www.ebrary.com
FOSTER, J. B. (2013). The Fossil Fuels War. Monthly Review: An Independent Socialist
Magazine, 65(4), 1.
Figure 1:
Kelly, David. The Economics of Solar Alberta. (2012, January 1). Page 2. Retrieved
November 3, 2014, from http://www.skyfireenergy.com/wpcontent/uploads/2011/04/White-Paper-Economics-of-Solar-in-Alberta.pdf
Figure 2:
Retrieved from SAIT Library:
Andre, H, P. E. P. (2009). Nuclear Power and Alberta: Background Report. Edmonton,
AB, CAN: Government of Alberta. Page 42. Retrieved from http://www.ebrary.com