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Amazon Solar Farm Purchase Agreement to Accelerate Alberta’s Renewable Energy Transformation

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By 2025, Alberta could surpass Ontario as the province with the highest concentration of installed renewable energy capacity in Canada, according to a research firm.

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In the latest sign of growing corporate investment in renewable energy, tech giant Amazon.com Inc. announced Wednesday a deal that locks out 80 percent of power from what is described as Canada’s largest solar project.

Located on 3,330 acres of rangeland in Vulcan County in southern Alberta, the $ 700 million, 465-megawatt Solar Travers Project is currently under construction and being developed by Calgary-based Greengate Power Corp., with an expected start date of late 2022.

It marks Amazon’s second announcement this year for a solar power purchase agreement in Alberta as it strives to fully switch to renewable energy by 2025. The announcement relates to a series of recent corporate investments in renewable energy, a trend that is taking shape in Canada and around the world, as Alphabet Inc., Facebook Inc. and Microsoft Corp. as well as the beer giant Labatt Brewing Co. Ltd. and baker Grupo Bimbo SAB de CV and others announce purchase agreements.

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“Renewable energy projects have historically been built on the basis of government-backed power purchase agreements,” Dan Balaban, CEO of Greengate Power, told the Financial Post, “and the industry is in transition where we are seeing some of the largest global companies now purchase renewable energy to meet their net zero ambitions. “

Amazon, which did not make anyone available for comment, announced in a press release that it had signed 14 agreements to purchase 1.5 gigawatts of renewable energy from wind and solar farms located in Europe and the United States, as well as Canada.

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In Alberta, Amazon said it had signed a purchase agreement for 375 megawatts of the Travers project, although it did not disclose the length of the contract or any other details.

Denmark’s Copenhagen Infrastructure Partners is the majority owner of the project and will also be the operator, according to Balaban. He declined to disclose the monetary value of the deal, but said that private contracts typically last 10-15 years.

In April, Amazon signed an 80MW purchase agreement for another project east of Calgary that was also developed by Greengate, a private company that develops storage and renewable energy projects, primarily in Alberta.

Balaban attributed the rise in solar projects to the increasingly attractive economy, especially compared to other energy sources.

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The cost of utility-scale solar projects has fallen 11 percent per year on average over the past five years, compared to a five percent drop for onshore wind over the same time, according to a report from October. 2020 report from investment firm Lazard.

“What we are definitely seeing is strong solar growth in Alberta and corporate deals that are behind that boom,” Rebecca Nadel, director of the Pembina Institute’s Business Renewables Center, told the Financial Post. “Almost 90 percent of the solar energy in operation that we have has a corporate agreement behind it.”

Since the beginning of the year, at least four other corporations have announced purchase agreements for large-scale renewable projects in Alberta that together would produce 268MW of renewable energy, according to the Business Renewable Center’s deal tracker.

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Since 2019, the deal tracker has identified 1,159 MW in commercial large-scale wind and solar harvesting deals in Alberta, of which solar accounts for 73%.

Nadel said energy experts had once predicted that wind power would grow faster than solar in Alberta, although it appears to be the opposite.

“Certainly what we are seeing is that renewables in general are more profitable than newly built fossil fuels,” Nadel said. “That is a global trend.”

Within Canada, Alberta has lagged behind other provinces when it comes to renewable energy development. Ontario currently leads the way with more than 8,000 megawatts of installed renewable energy, followed by Quebec and then Alberta, both with less than 4,000 MW, according to analysts at Rystad Energy.

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But the same analysts project that Alberta could overtake Ontario by 2025, adding more than 4,000 MW of wind and solar power.

Marcelo Ortega, an analyst at Rystad Energy in Houston, said Alberta’s combination of strong wind and solar resources, and a deregulated market that allows corporations to sign power purchase agreements with generators, is driving investment in sustainable energy sources. .

“We are seeing a lot of activity when it comes to renewable energy,” Ortega said. “It’s mostly about companies that set goals and then fight for that capability.”

This year, according to the International Energy Agency’s outlook for 2021, energy demand is expected to rise 4.6 percent, more than offsetting the four percent drop that occurred in 2020 when the COVID-19 crisis shut down commutes to work and various other sources of energy. demand.

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The organization said it expects $ 530 billion to be spent on all new power generation capacity. Of that, renewable projects are expected to account for 70 percent of all investment.

That shift toward investments in renewable energy comes amid a lack of investment in oil and gas, which has led analysts at banks and business houses to predict that a barrel of oil could rise to $ 100 over the next year.

But the complex dynamics of energy markets mean that a rise in oil prices would likely make renewable energy more attractive and could further accelerate the shift to renewable investments.

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“Thanks to rapid technological improvements and cost reductions, a dollar spent on the implementation of solar photovoltaic and wind energy today results in four times more electricity than a dollar spent on the same technologies ten years ago,” according to the perspective of the IEA 2021.

Until then, Nadel said the Travers project was originally envisioned as a 400MW project, but was increased to a 465MW project as a result of solar technology and engineering improvements.

It is expected to create 500 jobs during construction, but only a dozen or so once it’s up and running, according to Balaban.

“I think it’s really important to recognize that the transition to net zero is accelerating,” he said. “In the short term, high-priced oil and gas definitely make renewable energy seem more attractive, but ultimately it is underpinned by the world’s desire to move towards a more sustainable future.”

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In-depth reports on the economics of innovation from The Logic, presented in association with the Financial Post.

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