Market Snapshot: Alberta's wholesale electricity price reached a record low in 2015
Release Date: 2016-02-04
Wholesale electricity prices in Alberta reached their lowest level since deregulation of the province’s electricity market in 2000Footnote 1. Prices averaged 33 dollars per megawatt hour ($/MWh) during the year, down 33 per cent from 2014. When compared to the five and ten year monthly averages, 2015 prices were down by 44 and 48 per cent, respectively.
The 2015 price decline was the result of many factors, including Alberta’s economic downturn, significant capacity additions, and a mild winter season. Although wholesale prices were at record lows for the majority of 2015, they spiked in May and June due to warmer than usual temperatures and higher electricity demand for cooling.
Source and Description
Description: This chart contains three lines that illustrate Alberta’s monthly average wholesale electricity prices in $/MWh. The first line shows monthly prices for 2015 and the other two lines capture monthly prices averaged over five and ten year periods. In 2015, the province’s wholesale prices were approximately $25-30/MWh lower than the five and ten year averages, with the exception of a spike to historical averages in May and June. Prices in 2015 averaged $33/MWh, which is 44 per cent below the five year average and 48 per cent below the ten year average.
Changes to Alberta’s supply-demand balance in 2015 had a direct impact on prices. The economic downturn curbed demand for electricity which, in Alberta, mostly comes from the industrial sector. In 2015, electricity demand increased by only 0.4 per cent year-on-year, compared to 3.2 per cent in 2014. While demand stalled, installed capacity increased eight per cent in 2015 to reach 16 GW. Notably, the Shepard Energy Centre, an 800 MW natural gas-fired plant, came online in March 2015.
As a result of low prices and excess supply, Alberta’s 2015 electricity deliveries to the U.S. and neighbouring provinces reached record levels between January and October 2015: 745 GWh compared to 477 GWh during the same period in 2014 (an increase of 56 per cent). British Columbia is the main external market for Alberta’s power, followed by Saskatchewan and Montana.
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