Capital Power CEO planning no Canadian gas-fired plants due to Trudeau's regulations
29/11/2023 21:00
(Adds CEO quotes on changes needed, possible government power
company; adds comment from federal minister, think tank)
By Rod Nickel
WINNIPEG, Manitoba, Nov 29 (Reuters) - Alberta's Capital
Power is not planning to build new natural gas-fired power
plants in Canada as Prime Minister Justin Trudeau's proposed
electricity regulations to fight climate change make new
investments in such facilities unviable, CEO Avik Dey said.
The concerns raised by Capital CPX.TO , Alberta's
second-biggest power generator, mirror those of Alberta Premier
Danielle Smith, who on Monday said the province would defy the
federal government's proposed clean electricity regulations
(CER). Ottawa's regulations aim to eliminate emissions on a net
basis from the country's power grid by 2035.
"Am I looking at building new capacity? The answer is no,
today, because of the ambiguity of the CER," Dey told Reuters,
adding the company has no plans to buy any Canadian plants
either.
The CER in its current form doesn't justify investment in a
new gas-fired plant meant to operate 30 years, he said.
Capital Power's previously unreported position on new
plants underscores how the Trudeau Liberal government's draft
power regulations risk curtailing investment in a grid that
Ottawa expects to face growing demand as more Canadians buy
electric cars.
Unlike other provinces with hydro or nuclear power, Alberta
burns high-emitting natural gas to produce most of its
electricity. Smith has warned the regulations would lead to grid
brownouts and blackouts, a scenario that Dey said he sees as
well.
Delaying the federal net-zero goal by a decade to 2045 along
with changes to the prescribed end of life for plants,
restrictions on peak-use plants and use of offsets could make a
net-zero grid realistic and change Capital's position, Dey said.
"If those aren't changed, (CER) does not work for a place
like Alberta," Dey said.
While Capital is not planning new plants, it is currently
adding gas-fired capacity to existing facilities in Alberta and
Ontario.
Under the CER, some natural gas-fired plants can keep
operating past 2035 but under emissions limits that require use
of carbon capture and a 20-year cap on the lifetime of plants
commissioned before 2025.
In Ottawa, federal Environment Minister Steven Guilbeault
accused Smith of making "inflammatory comments that are not
based in facts" in her opposition to the regulations.
Smith also said on Monday her government is considering
creating its own power-generating company "of last resort" to
keep natural gas-fired power plants running in Alberta.
Dey said while a government-owned generator would add
another player to the market, it is unclear if the idea will
chill investment.
"I don't know that I would sit here today saying it's either
threatening or emboldening investment decisions in the province
because it is very hypothetical," Dey said.
Simon Dyer, deputy executive director of the Pembina
Institute climate think tank, said a government power generator
would create unnecessary red tape.
"Alberta looks completely out of touch, not just with the
national conversation but the global conversation," Dyer said.
By contrast to its concerns about the future of Canada's
gas-fired power, Capital Power is actively acquiring mid-life
natural gas-fired plants in the United States. Those plants will
provide critical supply when wind and solar power is
insufficient and Capital is seeking more such purchases in the
western U.S. and Midwest, Dey said.
Edmonton-based Capital Power this month bought two
U.S.-based natural gas-fired generating plants, even though
costs of batteries, an alternative way to manage renewables'
intermittency, are dropping.
"One size, one solution doesn't fit all," Dey said.
(Reporting by Rod Nickel in Winnipeg, Manitoba; additional
reporting by Steve Scherer in Ottawa and Nia Williams in British
Columbia
Editing by Denny Thomas, Chizu Nomiyama and Lisa Shumaker)
((rod.nickel@tr.com; X: @RodNickel_Rtrs;))