Micro-Generation in Alberta – Watt It’s All About

As people all over the world become more environmentally conscious, we anticipate more and more Albertans looking for a “greener” way of life. One of the “green” actions that immediately springs to mind is producing one’s own energy using renewable sources. Many of us have driven by a house with solar panels and thought about trying to do the same thing.

Alberta’s regulatory scheme makes this possible through special legislation geared towards “microgeneration”. Microgeneration under the Alberta regulatory scheme means the generation of electricity from renewable or alternative energy sources for one’s own use, in the amount of 5 MW or less.

Alberta has simplified the regulatory process and reduced costs for microgenerators, but it can still be fairly complex to get set-up to produce your own electricity. Below we provide more detail on what it means to be a microgenerator in Alberta then set out the steps required to become one.

Background on Alberta’s Energy Regulation

The legislative framework that enables the generation and provision of electricity in Alberta is extremely complex, involving both provincial and federal legislation and regulations. The two primary pieces of legislation in Alberta are the Electric Utilities Act[1] (the “EUA”) and the Hydro and Electric Energy Act[2] (the “HEEA”).

Under these Acts, all electricity generated in Alberta must generally be exchanged through Alberta’s Power Pool, that is it must be bought and sold on the wholesale electricity market operated by the Alberta Electric System Operator (the “AESO”). Additionally, any connection of generation systems to the interconnected electrical system requires an order from the Alberta Utilities Commission (the “AUC”), unless an exception applies.

Therefore, without any exemption, an individual installing and using a solar panel would need to apply to the AUC and sell the electricity generated to Alberta’s power pool. That would clearly be prohibitive to most individuals looking to simply make life a little greener by generating all or a portion of their own electricity.

To promote this type of green activity, Alberta has created a number of exceptions for “micro-generators” to simplify the process and make it much easier for an individual to generate and use their own electricity.

What Does it Mean to Be an Alberta Micro-Generator?

Where a unit used to generate electricity is used entirely for self-supply (i.e. the energy produced on the property is entirely consumed on the property), that unit is exempted from most of the provisions of the EUA and the HEEA. The electricity generated from that unit does not need to be exchanged through the power pool and the unit does not require approval from the AUC.

Alberta’s Micro-generation Regulation[3] (“Micro Reg”) takes things one step further; it creates a simple process for small Alberta microgenerators to self-supply and sell the excess electricity to the Alberta power pool.

The Micro Reg covers “small micro-generation” (i.e. capacity of less than 150 kW) and “large micro-generation” (i.e. capacity between 150 kW and 5 MW) for electricity produced using renewable, environmentally friendly fuel sources.

The Micro Reg is designed to allow these small renewable generating units to easily both self-supply and sell the excess back to the energy market through an interconnection to an electric distribution system. This is set up through provisions that require the owner of the electric distribution system to provide metering services and net billing to the micro-generator. Additionally, the microgenerator’s retailer or service provider is then required to act as the self-supplier’s market participant, meaning the owner of the unit will not need to negotiate and transact directly with the AESO.

The Micro Reg also greatly reduces the legislative “red tape” that a generating unit must pass through. For example, a microgenerator is not typically required to apply to the AUC to construct or operate the generating unit; instead, it simply provides notice to the owner of the electrical distribution system of its intent. The AUC only becomes involved if the owner disputes whether the unit appropriately falls under the Micro Reg.

Importantly, this Regulation also creates an exception from the requirement in section 18 of the EUA that power be exchanged through the power pool for small micro-generation entering the interconnected electric system. That is, small micro-generators do not need to exchange electricity through the Power Pool.

Becoming a Micro-Generator

Microgenerators are not required to complete an application to the AUC so long as the generating unit will not directly and adversely affect any person, will not have any adverse impact on the environment, and is constructed and operated in compliance with AUC’s Rule 12: Noise Control[4] (i.e. the unit will not exceed the maximum allowable sound level).

While the microgenerator does not need AUC approval, it is required to complete consultation with stakeholders in accordance with the AUC’s Participant Involvement Program Guidelines.[5] If the capacity of generation will be less than 1 MW, the microgenerator must simply notify occupants, residents, and landowners within the first row of surrounding properties. For microgenerators between 1 and 10 MW, the same notification is required and the AUC asks that the microgenerator consider “consultation” with those individuals, if the circumstances require. This must be done prior to submitting a micro-generation notice application.

Instead of an application to the AUC, the microgenerator submits a “micro-generation notice application” to the electric distribution system owner for approval. This application includes an electrical single-line diagram and may include other documents, as applicable.[6] If the system owner determines the microgeneration unit meets the requirements in the Micro Reg, the owner must approve the application and install a meter; if not, the owner must file a notice of dispute with the AUC and the AUC will make the ultimate decision.[7]

Once the microgeneration unit is approved, the system owner is responsible for (and pays for) the installation of the electrical meter and the collection of electricity data. The system owner will also bear the cost of connecting the generating unit to the interconnected electric system unless the cost is “extraordinary”. In that case, the system owner must file a notice of dispute with the AUC, and the microgenerator may be required to reimburse the system owner for a portion of the costs.^.

Microgenerators must also notify their energy retailer that they are becoming a microgenerator. The retailer then acts as the electricity market participant for the microgenerator and net bills the microgenerator. This means that any over-production of electricity, beyond that used as self-supply, will be credited to the microgenerator, any shortfall that is covered by the power pool is billed, and the net amount is either charged or reimbursed to the microgenerator.

Conclusion

While electrical regulation in Alberta is highly complex, processes for “microgenerators” are much simpler. Individuals generating small amounts of electricity for their personal use, using renewable sources, avoid complex AUC processes and interactions with the AESO. However, if the microgenerator is looking to connect its generating unit to Alberta’s electrical grid, there are still some steps that must be followed.

The microgenerator must comply with applicable AUC rules and notify neighbouring properties, the local electrical distribution system owner, and their energy retailer of their intent to become a microgenerator. Once the microgenerator has completed those processes, the “behind the scenes” work is largely conducted by the system owner and the retailer on their behalf. At that point, the microgenerator will simply reap the financial and moral rewards of contributing to a greener electrical market in Alberta.

If you have any questions about microgeneration, please do not hesitate to contact our Regulatory team. We would be more than happy to help you become a microgenerator.