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18 October 2019 05:49

Jason Kenney Alberta United Conservative Party

From energy firms to tech giants and food and beverage chains, a growing number of North American companies are signing deals for green electricity and spurring excitement within Alberta's wind and solar industries. At a first-of-its-kind event in Calgary on Thursday, the members of Business Renewables Centre Canada gathered to discuss opportunities related to corporate renewable energy procurement. A non-profit initiative founded by The Pembina Institute and modelled on a successful U.S. program, BRC-Canada aims to spur the growth of the renewables sector by serving as a modern marketplace where businesses can learn how to source green electricity directly from developers. Non-utility procurement of green electricity is not a new concept in Alberta. For several years now, a consortium of Alberta school boards have been purchasing power directly from a southern Alberta wind farm to offset the electricity needs of up to 500 schools, and the City of Calgary also sources green power for its CTrain system in this way.

But the concept has not taken off here as quickly as it has south of the border, where companies such as Facebook, Amazon, Nike, Starbucks and ExxonMobil have all signed power-purchase deals with wind and solar companies to enhance their own environmental performance or meet mandated emissions-reductions targets. In 2018, U.S. companies secured a total of six gigawatts of green electricity through private procurement. "2018 was a real turning point in the U.S., doubling the amount of deals from the year before," said Sara Hastings-Simon, BRC-Canada's founding director and a senior fellow at The Pembina Institute. "The marketplace started off small with just a few companies dipping their toes in the water, and then it became a situation where businesses saw their peers doing it and said, 'I should do this, too.'" Hastings-Simon said there are signs Alberta's market could be close to a turning point as well. Earlier this month, Calgary-based Perimeter Solar Inc. announced that TC Energy (formerly TransCanada Corp.) has agreed to purchase 74 MW of electricity from its proposed Claresholm Solar project about 125 kilometres south of Calgary.

And this week, the Canadian subsidiary of Warren Buffett's Berkshire Hathaway Energy announced plans for a $200 million, 117 MW wind farm near Medicine Hat. BHE Canada said a large Canadian corporate partner has signed a long-term power-purchase agreement for the facility, though that partner has not been publicly identified. William Christensen, vice-president of corporate development with BHE Canada, said signing a long-term power offtake deal makes it easier for renewable developers to finance the costs of their projects. And he said since the cost of renewable energy has come down so much in recent years, some corporate customers are actually choosing to purchase green electricity contracts as a hedge against future electricity prices. Evan Wilson, regional director for the Canadian Wind Energy Association, said Alberta's open and competitive wholesale electricity market gives this province a leg up when it comes to growing the renewables sector through corporate procurement. In attendance at Thursday's BRC-Canada event were many of Alberta's green power companies as well as representatives of large corporations — including TC Energy, Cargill and Amazon — that have either purchased green electricity in the past or are interested in doing so.

Alberta has big potential when it comes to providing renewable energy, advocates say. The Pembina Institute says the practice of corporations committing to buy renewable energy is just taking off in Canada, and Alberta has both the energy sector and the skilled workforce to provide it. Earlier this week, a company owned by U.S. billionaire Warren Buffett announced a large new wind farm near Medicine Hat. It has a buyer for the power. Sara Hastings-Simon, director of the Pembina's Business Renewables Centre, says this is part of a trend. "We're talking about the practice of corporate institutions purchasing renewables to meet their own electricity demand.

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And this is a really well-established driver for renewable energy development in the U.S.," she said. The Business Renewables Centre (BRC) is a not-for-profit working to accelerate corporate and institutional procurement of renewables in Canada. Hastings-Simon says shareholders and investors are encouraging more use of solar and wind energy. With the cost of renewables falling, she says it makes sense for companies to invest and lock in power prices. And so we see multinational companies coming to Canada to start to procure here, as well as Canadian companies understanding that this is an opportunity for them as well," Hastings-Simon said. "It's really exciting to see business interests driving renewable energy development." Hastings-Simon says renewable procurement could help dispel the narrative that it's all about oil and gas in Alberta. She says the practice started with a handful of tech companies in the U.S. and has become more mainstream there, with more and more large companies wanting to reduce their energy footprint. Mark Porter, a director at the Renewable Energy Buyers Alliance, attended Thursday's meeting. He says his U.S.-based organization has been working for years to speed up and expand the renewables market for companies that want to address their own sustainability. The Motley Fool Canada » Energy Stocks » Warren Buffett Is Betting on Wind Power: Should You? Warren Buffett's Berkshire Hathaway Energy (BHE) will start building a 117.6 MW wind farm in Alberta next year. When it comes to renewable energy, most investors tend to focus on solar panels or hydroelectricity. However, wind power has become one of the cheapest sources of energy on the planet. In 2017, Alberta's provincial government secured 600 MW of wind energy capacity at a weighted average price of only 3.7 cents per kilowatt hour (kWh). On a global scale, on-shore wind power now costs roughly US$0.06 per kilowatt hour (kWh). Corporations are now willing to sign long-term agreements to purchase renewable energy on an ongoing basis to meet local emissions regulations and to position themselves as climate conscious to consumers. Buffett's planned Alberta wind farm, for example, already has a "long-term power-purchase agreement" with a "large Canadian corporate partner" for most of the energy produced. For local investors, there couldn't be a better time to invest alongside the Oracle of Omaha in Canada's emerging clean energy sector. With 21 wind farms spread across North America, TransAlta Renewables (TSX:RNW) is probably one of the largest clean energy companies in the country. According to its latest report, 46% of cash flow can be attributed to wind power generation. Backed by a larger parent organization, the company has enough resources to keep expanding its network of clean energy production facilities. In fact, it already has a few natural gas sites in Australia and is planning to spend billions in transitioning Alberta's energy production away from coal over the next few years. Management is also expected to spend millions in stock repurchases and reduce debt levels over the next few years. At the moment, the stock trades at a little over 12 times expected free cash flow in 2019. Another option for investors seeking exposure to renewable assets is Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP). Backed by the country's largest and most efficient asset managers, this firm has deployed a jaw-dropping $50 billion in renewable energy production facilities over the past five years. At the moment, roughly 22.7% of the company's generation capacity is derived from wind farms spread across four continents. This year, the stock is up 54% and is still trading at roughly 22 times FFO per unit. The company pays out most of its free cash flow every year, resulting in a 5% dividend yield. In other words, investors willing to pay a higher premium for a more diversified portfolio should pick Brookfield's renewable subsidiary over TransAlta's clean energy stock. A company linked to investor Warren Buffett is planning to build a wind farm near Medicine Hat next year. "BHE Canada is excited to take this first step into the Alberta market, providing low-priced, renewable energy". Privately financed by BHE Canada through a combination of equity and debt, the project will be built by Renewable Energy Systems (RES), which is now constructing two other Alberta wind projects totalling 134.6 MW. The new United Conservative Party government, elected in April, ended renewable energy subsidies and Premier Jason Kenney said Rattlesnake Ridge development was a vote of confidence in the provincial economy. RES has extensive experience in building large-scale renewable energy projects around the world, and is now building two further Alberta wind projects totaling 134.6 MW in 2019. BHE Canada has financed the 28-turbine Rattlesnake Ridge through a combination of equity and debt totalling over $200m. BHE Canada and RES are now looking for power purchase partners for the proposed Forty Mile Wind Farm in southeastern Alberta - they say with generation capacity of 398.5 MW, it could potentially be the largest wind power project in Canada. BHE Canada is focused on identifying and investing in business opportunities within all aspects of the energy infrastructure market across Canada. It will be developed by United Kingdom -based Renewable Energy Systems (RES).