The Alberta government is currently consulting with a cross-section of stakeholders to determine whether the province should maintain the current energy-only market or create a capacity market for electricity.

How an energy-only market works

In an energy-only market, generators are paid for the electricity they produce based solely on the wholesale price of electricity, which fluctuates.

These companies decide on the type of generation they produce and on the location of facilities.

How a capacity market works

In a capacity market, private power generators are paid through a mix of competitively auctioned contracts which pay their fixed capital costs and revenue from the spot market.

A capacity market requires a government-appointed entity – the AESO, in Alberta’s case – to plan, determine, approve and administer the contracts to procure the capacity required to meet expected demand.

Next steps

The Minister of Energy is meeting with a variety of industry experts and will report back to Albertans within 90 days (mid-September).