Restructured energy market design ‘disincentivizing’ renewables in southeast Alberta

By ZOE MASON on October 10, 2025.

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zmason@medicinehatnews.com

Changes to the Alberta energy grid announced this summer will disproportionately affect renewable energy generation projects in the Medicine Hat area.

Details of the overhaul of the provincial energy grid, called the “Restructured Energy Market,” were revealed at the end of August.

Several aspects of the plan threaten to damage recent and future investments in renewables in southeast Alberta.

The first is the change to transmission policy. The province has previously adhered to a “zero-congestion transmission policy,” which required the government to invest in power lines to ensure electricity generated by new developments would make it to market. Under the new energy market structure, this policy has been scrapped, leaving developers on the hook for constructing their own transmission infrastructure.

The policy change is designed to encourage developers to build new electricity generation projects in areas where there is less congestion on existing power lines. But it is also likely to have the effect of discouraging investment in areas where there is more congestion, like Medicine Hat.

The Alberta Energy System Operator identified southeast Alberta as needing $3 billion in “near term” power line expansions to support growth in production in a long-term transmission report earlier this year.

Congestion on the power lines surrounding Medicine Hat has already caused the delay of several major renewable energy projects in the area. The Bull Trail and Buffalo Trail wind farms both applied to the Alberta Utilities Commission for timeline extensions in the last year, citing congestion on transmission lines as the reason for the extension.

Brooks Solar Farm also applied for an extension in late 2024, stating that the regulatory uncertainty introduced by the REM was such that financing the project was unjustifiable until further clarity was provided.

The second change to the energy market set to impact Medicine Hat is the shift toward localized marginal pricing, advanced as a measure to address congestion. According to a presentation given by consulting group Power Advisory LLC to the AESO in July, obtained by The Narwhal, LMP would leave Medicine Hat with the lowest prices for power in the province. Resulting revenue losses for renewable projects in Medicine Hat are projected to reach more than 25 per cent by 2029.

The same study predicts that generators that do not qualify as incumbents – which qualify for limited, short-term government support – may be forced to cancel their projects altogether. It also indicates that $11.5 billion of capital invested in renewables in the Medicine Hat area since 2020 is put at risk by these changes.

The changes to the grid also include other measures that function to reduce the profitability of renewables province-wide.

For example, the REM also requires the party responsible for uncertainty in the grid to take on the cost for power generation that can be brought on to prevent blackouts or brownouts when the demand for electricity unexpectedly exceeds supply. Since renewables produce intermittent output, that translates to another cost for renewable generators.

A report commissioned by AESO surveying eight anonymous major financial institutions invested in Alberta’s energy sector highlighted private-sector skepticism about the changes.

One participating institution commented: “In general, it appears that Alberta is disincentivizing renewables.”