Market Snapshot: Alberta wind farms generate more power at night when demand is low and receive lower prices

Release Date: 2016-07-27

All grid-connected electricity sources in Alberta sell their power on the wholesale electricity market at the province-wide unit price (Pool price), which is settled every hour based on supply and demand. During the day, when electricity demand is highest, prices are high. Conversely, prices are lower at night when demand is low. Different power generation facilities receive different average prices depending on the time of day that a facility is most productive.

From 2007 to 2015, the average price received by Alberta wind turbines was 31 % less than the weighted averageFootnote 1 Pool price. This is primarily due to wind facilities being most productive during off-peak periods, when prices are generally lower. On an average day, wind turbine productivity is lowest at 9:00 AM. Productivity rises gradually through the high-price hours of the day and generally peaks around 10:00 PM, when prices are low. This lowers the average price received by wind turbines.

Source and Description

Source: Alberta Electric System Operator (1,2,3,4)

Description: The bar chart illustrates the annual weighted average Pool price and annual average realized price of wind per MW.h from 2007 to 2015. The line overlying the columns illustrate the discount, in per cent, of wind’s realized price from the Pool price for each year. The realized price of wind averaged 31 % less than the Pool price over those nine years. Though Pool prices fluctuate from year to year, the Pool price has steadily decreased in recent years, from $82 per MW.h in 2013 to $34 per MW.h in 2015.

Another factor contributing to the lower price received by wind farms is their concentration in southern Alberta. With 680 MW of installed capacity in a 25 km radius around Pincher Creek, a large block of wind generation always comes online simultaneously when the wind blows in that area, resulting in declines in the Pool price.

The lower prices received by wind farms have exacerbated financial challenges faced by Alberta power producers. After consistent declines since 2013, the average Pool price as of mid-July 2016 was under $20 per MW.h.

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