Alberta-Power: 2024 in Review
[This article is not financial or investment advice, but provided for general information purposes only. All information is subject to change and should not be relied upon for any decision making. See Webpage Terms of Use.]
First things first - Happy New Year to all of our clients, partners and followers! We hope that you have had a good start to 2025, and we wish you All the Best for the year ahead.
Our Insights series will soon focus on business cases for thermal energy storage technology, but, before we do so, we’ll look back at key developments in the Alberta electricity market in 2024.
There certainly has been no lack of attention from politicians, regulators, journalists, power producers, trade associations, and others, with many divergent views expressed on what will be the right regulatory framework going forward. Here, we will focus on statistics and offer explanations for drivers behind the numbers, and steer clear from political arguments.
Specifically, we will look at select Outliers, Patterns and Trends that caught our attention, with our Conclusion at the end. For a more comprehensive review of developments we recommend reviewing the forthcoming AESO Annual Market Statistics Report (expected for release in early March) and the Market Surveillance Administrator’s Quarterly and Annual Reports (expected in February and April, respectively).
Here, we’ll aim to provide a spoiler with the most significant developments of last year -
Let the statistics begin!
Outliers
When comparing key metrics between years, the biggest outlier was the number of zero-dollar hours in the Alberta power pool. As a reminder, AB pool prices have a price floor of zero dollars, and a ceiling of CAD 1,000/MWh. From 2005-2023, six years had no zero-dollar hours at all, and the largest number of such zero-dollar hours per year was 47 in 2023. Then came 2024, with a total of 376 zero-dollar hours. That’s right - more than one per day on average.
The graphic shows it best:
Annual number of zero-dollar hourly prices in the Alberta electricity pool
Is this truly an outlier event? More likely it’s a sign of structural market changes, as we outlined in Alberta Power: The Change is Structural, not Cyclical!
Why are zero-dollar hours so special? They represent the current price floor and usually coincide with excess supply and power curtailments. Therefore, they indicate the number of hours that would likely turn negative once the price floor is lowered, expected for 2026/7.
When and how do these hours occur, and how do they fit into the broader market environment? This brings us to Patterns.
Patterns
Let’s examine hourly electricity pool prices for 2024:
This heat map shows the months of 2024 across the top (Jan - Dec), the day of each month across the bottom, and the time of day along the left side.
The purple / darker colours represent less expensive / normal power pricing, sliding up to the golden / yellow colours to reflect expensive times.
Here we can see that prices looked “normal” most of the year, with notable exceptions during the extreme cold spell in January and heat waves in the summer. But since this continuous color scale doesn’t do a good job of distinguishing between prices in the “normal” range, let’s instead create price buckets with distinct colors:
This heat map again shows the months of 2024 across the top (Jan - Dec), the day of each month across the bottom, and the time of day along the left side. This time, the color scale is not continuous but discrete:
black - “zero-dollar” (CAD 0/MWh);
grey - “ultra cheap” (CAD 0.01-30/MWh),
light green - “cheap” (CAD 30-50/MWh),
dark blue - “normal” (CAD 50-70/MWh),
yellow - “expensive” (CAD 70-100/MWh),
orange - “very expensive” (CAD 100-300/MWh)
red - “extremely expensive” (CAD 300-500/MWh)
maroon - “peak prices” (CAD 500-1,000/MWh)
Zero-dollar prices (black) and “ultra-cheap” prices (grey) were more frequent in the second half of the year as more generating capacity came online. Very noticeable are the expensive prices of the “red blob” around the extreme cold spell in January. Interestingly, there were still a lot of low-priced hours even in Q1.
We can see this more clearly when we color any price above CAD 50/MWh in white - what is left in black / grey / green are zero-dollar / “ultra-cheap” / “cheap” hours. You can see this below, again with the months of 2024 across the top (Jan - Dec), the day of each month across the bottom, and the time of day along the left side.
This heat map again shows the months of 2024 across the top (Jan - Dec), the day of each month across the bottom, and the time of day along the left side. This time, the discrete color scale is trunkated:
black - “zero-dollar” (CAD 0/MWh);
grey - “ultra cheap” (CAD 0.01-30/MWh),
light green - “cheap” (CAD 30-50/MWh),
any prices above CAD 50/MWh: “white”
Those “cheap” prices were present during almost every day of the year, with “ultra-cheap” and zero-dollar hours taking over from the end of Q3.
Trends
How does this compare to prior years? The following heatmap shows the monthly split of “price buckets” since 2005:
Price Heat Map of hourly Alberta electricity pool prices grouped by month on a discrete scale:
black - “zero-dollar” (CAD 0/MWh);
grey - “ultra cheap” (CAD 0.01-30/MWh),
light green - “cheap” (CAD 30-50/MWh),
dark blue - “normal” (CAD 50-70/MWh),
yellow - “expensive” (CAD 70-100/MWh),
orange - “very expensive” (CAD 100-300/MWh)
red - “extremely expensive” (CAD 300-500/MWh)
maroon - “peak prices” (CAD 500-1,000/MWh)
The large number of expensive hours during 2021-2023 are now very visible!
Again we can see the increase in cheap hours more clearly through a “white-out” of any prices above CAD 50/MWh:
Price Heat Map of hourly Alberta electricity pool prices grouped by month on a discrete scale, trunkated at CAD 50/MWh:
black - “zero-dollar” (CAD 0/MWh);
grey - “ultra cheap” (CAD 0.01-30/MWh),
light green - “cheap” (CAD 30-50/MWh),
any prices above CAD 50/MWh: “white”
What is notable here is that the amount of “ultra-cheap” hours does not appear to be unusual - we had a lot more of those hours during 2015-2017. Very different though, as we will see shortly, is the degree to which zero- and near-zero dollar hours are driving down the average cost of the lowest-cost hours of each day. And that creates significant risks and opportunities, especially for Cogen and renewable assets.
But first, let’s have a look at what most observers typically focus on: average prices. The average pool price in 2024 was CAD 62.78, 53% below 2023’s average of CAD 133.63/MWh. Here, a comparison to average prices since 2005:
Average annual Alberta electricity pool prices, 5005-2024 (CAD/MWh)
It looks like the high prices of the past years have largely been cured by the investment triggered by those high prices.
Averages are important, but they also mask significant opportunities and risks, Let’s split the overall average into the average of the lowest-cost daily 8 hours and highest-cost daily 16 hours:
Alberta electricity pool prices 2005-2024 (CAD/MWh):
Annual average: “blue”
Annual average of daily lowest-cost 8 hours: “green”
Annual average of daily highest-cost 16 hours: “red”
Why would we do this? To outline the opportunity for any power consumer who can dispatch his load during these lowest cost 8 hours and avoid the highest cost hours. And the risk to a power producer who has to provide power into the pool 24/7 regardless of prices (like most Cogen facilities). And the opportunity for such Cogen facilities to add dispatchable loads (like thermal energy storage) to use cheap power on-site for 8 hours a day while still capturing the valuable pool hours for 16 hours per day. More on that risk & opportunity shortly in an upcoming article!
Conclusion
Nice pictures, interesting statistics, but what is the main takeaway?
Here is ours: We have further strong evidence for a strong structural trend toward more zero-dollar and ultra-cheap hours during most days of the year. This shift has already started to cause headaches for inflexible generators. If and when the price floor becomes negative, expected for 2026/7, this effect will be amplified in particular for Cogen assets that need to keep producing due to industrial steam requirements. These “assets” will turn into liabilities during hundreds, if not thousands of hours each year.
Luckily, remedies are available - more on those in upcoming articles.
Stay tuned!
PS: If you are a large power consumer in Alberta and interested in exploring opportunities associated with these changes in the electricity market, please get in touch - we are keen to work with you!