Alberta Electric System Operator’s new Restructured Energy Market design puts renewables at risk
Calgary, August 27, 2025—The Canadian Renewable Energy Association (CanREA) is concerned that the final Restructured Energy Market (REM) design, released today by the Alberta Electric System Operator (AESO), does not provide sufficient protection for investments made under the previous, energy-only market design.
“Alberta has shifted from being a magnet for investment to a market where companies now question the security of the investments they’ve already made,” said Vittoria Bellissimo, President and CEO of CanREA. “Today’s announcement creates significant challenges for the wind, solar and energy storage sector in Alberta. But certain solutions could still be implemented to balance the AESO’s objectives with the government’s commitment to protecting operating investments in this province.”
Today’s announcement does not reduce the serious risk of cost increases for operating renewable investments, nor the risk that electricity from operating projects will face increasing congestion constraints. Billions were deployed in this province with the expectation of a stable investment environment. As proposed, the transition to REM does not offer a stable investment environment.
Not only do the changes put gigawatts of low-cost wind and solar projects at risk, but the evolving policies and market rules are also deterring investment in future projects. Investing in renewable energy, the most affordable, quickly deployable form of new electricity generation available today, would make it easier to meet Alberta’s growing demand while keeping rates down for Albertans. Discouraging renewables will make it harder for Alberta to succeed, especially with the increased demand caused by AI data centres.
With some critical changes, Alberta can still course-correct and mitigate these risks by implementing the following changes to its proposed market structure:
1. Introduce longer-term Financial Transmission Rights, to provide protection against increasing system congestion.
- The proposed eight-year transition period for temporary transmission rights will strand many assets in less than a decade. In the absence of new transmission, these rights should be implemented for the full lifetime of a generation facility build under the previous market rules.
- We expect the AESO to explore this approach during their fall 2025 engagement.
2. Address current constraints by building South East and South West transmission projects now.
- Wind and solar projects in southern Alberta have faced significant levels of congestion year over year.
- The AESO has been developing plans to reinforce transmission access via construction of the South East and South West transmission lines, running from Bowmanton to Whitlaw, for the better part of a decade.
- Completing these projects will reduce congestion, permit the flow of constrained renewable power and reduce pool prices significantly. The best time to build these projects is today.
3. Insulate renewable projects from new Ancillary Services charges
- Most wind and solar projects in Alberta moved forward with fixed-revenue contracts and small margins. There is very little margin for the increased costs, such as those that will be allocated for new ancillary services costs, like R30.
- The announcement speaks to new costs that will be shared by generators and load, “based on the extent to which each causes the need for these services.”
- The AESO must provide further clarity on the methodology to be used to determine causes and must provide comfort that not all costs will be allocated to wind and solar in Alberta.
“CanREA members are deeply concerned about the proposed market changes. We have been working together to actively advocate for existing operating facilities with both the government and the AESO, and we will continue to do so going forward,” said Radha Rajagopalan, Alberta Director at CanREA.
Renewables are the lowest-cost sources of new generation available today and, at a time when everyone, everywhere needs more electricity, Alberta would do well to ensure that investments made in good faith are honoured and protected.
Quotes
“Alberta has shifted from being a magnet for investment to a market where companies now question the security of the investments they’ve already made. Today’s announcement creates significant challenges for the wind, solar and energy storage sector in Alberta. But certain solutions could still be implemented to balance the AESO’s objectives with the government’s commitment to protecting operating investments in this province.”
—Vittoria Bellissimo, President and CEO, Canadian Renewable Energy Association (CanREA)“CanREA members are deeply concerned about the proposed market changes. We have been working together to actively advocate for existing operating facilities with both the government and the AESO, and we will continue to do so going forward.”
—Radha Rajagopalan, Alberta Director, Canadian Renewable Energy Association (CanREA)
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Communications
Canadian Renewable Energy Association
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About CanREA
The Canadian Renewable Energy Association (CanREA) is the voice for wind energy, solar energy and energy storage solutions that will power Canada’s energy future. We work to create the conditions for a modern energy system through stakeholder advocacy and public engagement. Our diverse members are uniquely positioned to deliver clean, low-cost, reliable, flexible and scalable solutions for Canada’s energy needs. For more information on how Canada can use wind energy, solar energy and energy storage to help achieve its net-zero commitments, consult “Powering Canada’s Journey to Net-Zero: CanREA’s 2050 Vision.” Follow us on Bluesky and LinkedIn here. Learn more at renewablesassociation.ca.