Big money has some big concerns about investing in Alberta’s electricity market. A report commissioned by the Alberta Electric System Operator relied on interviews with eight unidentified “major financial institutions” to gauge reaction to the operator’s massive overhaul of the provincial electricity grid. Financial institutions are critical to loaning money to electricity generators, including renewable energy projects. Just three of the companies in the report account for almost $9 billion invested in Alberta’s market. The report shows those investors are nervous. “Financial institutions emphasized that their prior willingness to support Alberta’s [electricity market] was based on a long-standing perception of the province as a stable and predictable jurisdiction,” it reads. “That perception has been significantly undermined in recent years due to the sheer volume and pace of regulatory and policy changes.” Investors highlighted a long list of things adding to their uncertainty. From the renewable energy moratorium in 2023, to federal clean electricity regulations, interim steps to curtail market power for big generators in Alberta, changes to transmission planning, carbon pricing shifts and now the major market reforms, known as the Restructured Energy Market. “This climate of uncertainty has increased the cost of capital, reduced appetite for new investments and led to delayed or cancelled projects,” reads the report, authored by consulting firm Morrison Park Advisors. “Some lenders reported that projects in advanced financing stages were paused or abandoned altogether in response to recent announcements.” The report says the slowdown in project development was already underway, but the new plan for the electricity market “appears to have accelerated this trend.” The system operator said it believes investors will embrace the new market. “The Alberta Electric System Operator welcomes [Morrison Park Advisors’] summary of discussions with financial institutions investing in Alberta, which indicated general support for efforts to strengthen investment signals through market reforms,” a spokesperson said in response to questions from The Narwhal. “Notably, no institution reported that the Restructured Energy Market introduces barriers to future investment.” While investors did express hope “improved clarity and thoughtful adjustments” could address many of their concerns, they also made it clear that will require transparent consultation and predictable changes. The first eight pages of the report, largely an executive summary and details of the data collection, paint a rosy picture of responses to the new market reforms. But the tone shifts dramatically once details of the actual responses from financial institutions are highlighted. Of particular concern for investors is the impact on renewable power generation. The industry was first hit with new regulations and is now facing unexpected costs under the Restructured Energy Market. Renewable generators will be hit harder than other electricity generators by rules requiring payment for new transmission lines, and by congestion on existing power lines that could prevent them from selling their power. Wind and solar will also be disproportionately impacted by new regional pricing schemes that could reduce their profits, as well as new charges that will force renewables companies to cover costs associated with contingency power in cases of sudden shortages. “In general, it appears that Alberta is disincentivizing renewables,” one financial company surveyed for the report said. Investors also expressed concern that existing projects could shutter, particularly if power purchase agreements, the contracts with industrial consumers that have fuelled Alberta’s renewable surge in recent years, are negotiated or cancelled with the transformation of the market. Power purchase agreements, like one made by Amazon to buy almost all the electricity from a massive wind farm in Alberta, have brought billions in investment into Alberta. Two recent reports have predicted that Alberta’s planned reforms to its electricity market will make it harder for renewable energy projects to access financing and turn a profit. Photo: Leah Hennel / The Narwhal The concern that existing projects like these could shutter was backed up by another report, from consultant firm Power Advisory, presented to the system operator in July. That report modelled the price impacts of market reforms on renewable generators. It found renewables projects in the area around sunny Medicine Hat in southeastern Alberta would likely lose money if they continued operating. Additional modelling looking at the hypothetical impacts on renewable generation built in an area without any transmission constraints would still struggle to turn a profit. The new market will also make it difficult for renewable projects to access financing, according to the Morrison Park report. One unidentified lender said it is already seeing “a shift in the capital allocation and general appetite to invest in the power generation space away from Alberta.” But it’s not just renewables. ‘We don’t need two decades’: grid operator seeks to move quickly to overhaul market Investors cited the change to a new scheme that will see different prices for different regions in Alberta based on the amount of congestion on transmission lines as an issue. The scheme is meant to incentivize projects in some areas — particularly those with less congestion on existing power lines — and away from others. The report says that sort of regional pricing has been successful in larger markets, but financial companies “questioned its applicability to Alberta, given the province’s relatively small and isolated grid.” That calls into question the assertion from Aaron Eggen, the CEO of the system operator, that the market reforms were able to be implemented so quickly because other jurisdictions had already undertaken similar overhauls. “As we think about modernization of our grid and think about the kinds of changes we want to make and how much time we have to spend thinking about it, we’re able to stand on the shoulders of giants,” he said in response to a question from The Narwhal in August. “We’ve seen what other people have done. We’ve seen what the experiences have been. We didn’t need a decade. We don’t need two decades.” The Restructured Energy Market consultation, which the system operator said was its most comprehensive market consultation ever, took 18 months. That’s a quick turnaround compared to other jurisdictions, as indicated by Eggen. But the implementation of the new design will take years, leading to more uncertainty for developers — renewable and otherwise. The final design was unveiled on Aug. 27, but the specific rules governing the market won’t be drafted until the fall. Then there is a two-year period of testing the reforms before they begin to be implemented in 2027. The reforms will then be reviewed by the Alberta Utilities Commission, the regulator of the grid, which could lead to more changes. The finalized market isn’t expected to be fully operational until 2030, making it difficult for investors to make decisions on projects that cost hundreds of millions of dollars or more. “The Alberta Electric System Operator is working to design and implement the market in a timely manner to reduce uncertainty for developers and support timely investment decisions,” a spokesperson for the operator said by email. It says the province is coming out of a period of substantial investments, “which could lead to a short-term slowdown in new projects,” but that investor interest in the market remains strong. Recent Posts Appetite for investing in electricity projects shifting ‘away from Alberta,’ say investors A report quietly released this summer by Alberta’s electricity grid operator finds investment has been… The former head of Canada’s busiest national park reflects on ‘dark times’ and what to do about them Oct. 1, 2025 12 min. read ‘When people organize their lives around matters of principle, they become unstoppable,’ Alberta nature writer… How do we commemorate the sites of former residential schools? Sept. 29, 2025 13 min. read Some survivors want residential schools dubbed historically significant; others want them demolished. They’re forging ahead,…
Appetite for investing in electricity projects shifting away from Alberta, say investors
