AESO 2014 Long-Term Outlook

AESO 2014 Long-term Outlook
The information contained in this document is published in accordance with the AESOs
legislative obligations and is for information purposes only. As such, the AESO makes no
warranties or representations as to the accuracy, completeness or fitness for any particular
purpose with respect to the information contained herein, whether express or implied.
While the AESO has made every attempt to ensure information is obtained from reliable
sources, the AESO is not responsible for any errors or omissions. Consequently, any
reliance placed on the information contained herein is at the readers sole risk.
Table of Contents
1.0 Executive Summary
1.1 AESO Scenarios
1.2 Forecast Results
2.0 Introduction
2.1 Overview of the Forecast Process
3.0 Economic Outlook
4
5
8
3.1 Introduction
3.3 Energy Commodity Outlook

4.0 Environmental Drivers
11
12
4.1 Introduction
12
4.2 Coal-fired Generation of Electricity Regulations
12
4.3 Specified Gas Emitters Regulation
13
5.0 Provincial Outlook
14
5.1 Introduction
14
5.2 Energy & Load
15
5.3 Generation
16
6.0 Regional Outlooks
17
6.1 Introduction
17
6.2 Northeast Region
18
6.2.1 Load
18
6.2.2 Generation
19
6.3 Northwest Region
20
6.3.1 Load
20
6.3.2 Generation
21
Table of Contents
6.4 Edmonton Region
22
6.4.1 Load
22
6.4.2 Generation
23
6.5 Central Region
24
6.5.1 Load
24
6.5.2 Generation
24
6.6 South Region
26
6.6.1 Load
26
6.6.2 Generation
26
6.7 Outlook Summary and Risks
27
6.7.1 Load Risks
28
6.7.2 Generation Risks
29
7.0 Scenarios
30
7.1 Purpose
30
7.2 Methodology and Drivers
31
7.2.1 Scenarios Drivers
31
7.2.2 Oilsands Production and Load
31
7.2.3 Environmental Policy
31
7.2.4 Technology Advances
31
7.2.5 Other Drivers
32
7.3 Low Growth Scenario

7.3.1 Low Growth Scenario Provincial Outlook
7.4 Environmental Shift Scenario
7.4.1 Environmental Shift Provincial Outlook
7.5 Energy Transformation Scenario
7.5.1 Energy Transformation Provincial Outlook
7.6 2014 LTO Results Summary and comparison
32
32
33
33
35
35
36
Appendix A Main Outlook Detailed Results
38
Appendix B Forecasting Process
40
Appendix C Forecast Considerations
41
Appendix D Forecast Comparison
66
Appendix E System Load
68
Appendix F Industry Engagement
71
Appendix G Alberta Reliability Standard Requirements
72
Appendix H Glossary of Terms
74
Table of Contents

The 2014 Long-term Outlook (2014 LTO) is the Alberta Electric System Operators (AESO)
long-term forecast of Albertas expected future demand and energy requirements over the
next 20 years, along with the expected generation capacity to meet those requirements.
The AESOs Long-term Outlooks describe the methodology, assumptions and results that
serve as key inputs to the AESOs long-term transmission planning process, and ultimately
the publication of the Long-term Transmission Plan for Alberta. The 2014 LTO is also used
as an input into many of the AESOs core business activities, including transmission system
development, system operations, customer access and market services.
The 2014 LTO is prepared in accordance with the duties of the AESO as outlined in Albertas
Electric Utilities Act (EUA) and the Transmission Regulation (AR 86/2007), and will be used
to support Needs Identification Document (NID) filings that may be submitted to the Alberta
Utilities Commission (AUC).
Stock Photograph.
The Long-term Outlook is the starting point for the AESOs transmission planning process
cycle which includes the creation of the Long-term Transmission Plan (LTP) and Regional
Plans. Transmission connection studies also rely upon the 2014 LTOs load and generation
forecasts. The LTP is a blueprint for ensuring the Alberta Interconnected Electric System
(AIES) continues to meet the provinces future electricity needs and support the fair, efficient
and openly competitive operation of the electricity market.
PAGE 1
As part of its forecast process, the AESO compared the 2014 LTO to past forecasts
including the 2012 Long-term Outlook (2012 LTO) and 2012 Long-Term Outlook Update
(2012 LTOU). Differences in forecast demand and generation were analyzed to determine if
there were material impacts which could affect previously planned transmission facilities.
Overall, the 2014 LTO is very similar to the 2012 LTOU. In most instances, changes in
the 2014 LTO from the 2012 LTO and 2012 LTOU were already studied as sensitivities in
transmission plans because potential major impacts were the result of load and generation
project changes.
The 2014 LTO includes a 20-year peak demand and electricity consumption forecast and a
generation capacity projection for Alberta. The forecasts foundation is an economic outlook
which considers global, U.S., Canadian and provincial factors that affect Albertas economy.
The 2014 LTO economic outlook assumes that throughout the forecast and especially over
the next five to 10 years, global demand for crude oil will sustain prices and support strong
investment in the oilsands, which will also drive strong Alberta economic growth. This
economic outlook is verified against other third-party economic forecasts.
Expansion of the oilsands will have major impacts on the electricity industry in Alberta. It will
increase load growth directly, especially in the northeast region of the province. Economic
growth associated with oilsands development will increase load growth across the province.
With oilsands growth, cogeneration development will also occur. To meet growing demand
and coal-fired generation retirements, and with anticipated low natural gas prices, gas-fired
generation is expected to be the predominant source of new generation over the next 20 years.
As part of its forecast process, the AESO consults with government agencies, distribution
facility owners (DFOs), policy makers, industry experts and both load and generation
entities in order to validate forecast results, incorporate the latest and expected industry
trends, and align with industry development plans. Other key considerations such as overall
economic growth trends (Canada and Alberta), policy evolution (federal and provincial),
technology development, energy efficiency, publicly announced projects, generation
economics, and the impact of Albertas market signals are also considered in creating the
2014 LTO.
PAGE 2
1.1
AESO Scenarios
Recognizing inputs into the forecast may change, the AESOs 2014 LTO incorporates the use
of three comprehensive scenarios, established by identifying key drivers and assumptions
deemed to be of high impact or importance to the forecast. These scenarios are:
1) Low Growth What if provincial growth is strongly reduced?
2) E
nvironmental Shift What if a strong environmental policy that supports oilsands
development is implemented?
3) E
nergy Transformation What if a strong environmental policy that severely limits
Albertas oilsands and electricity industries is implemented?

These scenarios allow the AESO to analyze the impacts of changes to major forecast drivers
and assumptions and test the effects on its plans and other processes.
1.2
Forecast Results
The 2014 Long-term Outlook forecasts the Alberta economy to continue to grow strongly
throughout the forecast period, driven by growth in oilsands development. The 2014 LTO
projects electricity consumption to grow in tandem with the economic outlook, also led by
growth in the oilsands energy sector. Over the next 20 years, Alberta Internal Load (AIL) is
expected to grow at an average annual rate of 2.5 per cent. Natural gas-fired generation
additions are expected to make up the bulk of the new capacity in response to this growing
demand for energy as well as generation retirements. The 2014 LTOs three comprehensive
scenarios test the major drivers and assumptions underpinning this outlook.
PAGE 3
2.0 Introduction
The 2014 Long-term Outlook (2014 LTO) is the AESOs long-term forecast of Albertas
expected future demand and energy requirements over the next 20 years, along with
anticipated generation capacity to meet those requirements.
The 2014 Long-term Outlook is the starting point for the AESOs transmission planning
process cycle which includes the creation of the Long-term Transmission Plan (LTP) and
Regional Plans. Transmission connection studies also rely upon the 2014 LTOs load and
generation forecasts. The 2014 LTO will be used by the AESO as the foundation for the next
Long-term Transmission Plan. The LTP is a blueprint for ensuring the Alberta Interconnected
Electric System (AIES) continues to meet the provinces future electricity needs and
supports the fair, efficient and openly competitive operation of the electricity market.
Stock Photograph.
As part of its forecast process, the AESO compared the 2014 LTO to past forecasts
including the 2012 Long-term Outlook (2012 LTO) and 2012 Long-Term Outlook Update (2012
LTOU). Differences in forecast demand and generation were analyzed to determine if there
were material impacts that could affect previously planned transmission facilities. Overall,
the 2014 LTO is very similar to the 2012 LTOU. In most instances, changes in the 2014 LTO
from the 2012 LTO and 2012 LTOU were already studied as sensitivities in transmission plans
because potential major impacts were the result of load and generation project changes.
PAGE 4
2.0 Introduction
The Transmission Regulation (AR 86/2007) provides additional forecast direction, requiring
that the AESO, in planning the transmission system:
must anticipate future demand for electricity, generation capacity and
appropriate reserves required to meet the forecast load so that transmission

facilities can be planned to be available in a timely manner to accommodate the
forecast load and new generation capacity;
must make assumptions about future load growth, the timing and location
of future generation additions, including areas of renewable or low emission

generation, and other related assumptions to support transmission system
planning.
In addition, the Long-term Plan must include for at least the next 20 years, the following
projections:
the forecast load on the interconnected electric system, including exports of
electricity;
the anticipated generation capacity including appropriate reserves and imports
of electricity required to meet the forecast load;

the timing and location of future generation additions, including areas of
renewable or low emission generation.
2.1
Overview of the Forecast Process
The AESOs outlook relies on trusted third party information, data, and processes, and
reflects the latest industry outlooks.
The AESO typically updates its long-term forecast every year. Alberta is growing rapidly
and the change that comes with that growth requires continuous monitoring of constantly
changing factors that affect both load and generation, including:
Albertas economy including key drivers such as crude oil, natural gas, and
oilsands industries as well as financial and commodity market conditions

Provincial, federal, and international policies and regulations concerning
economic development, the environment, and the electricity industry in Alberta

Technological changes including generation technologies, costs, and resource
availability; energy efficiency and other Demand-Side Management (DSM)

initiatives; energy storage; electric vehicles; and smart grids
Announced, applied-for, approved, under-construction, and existing oilsands,
industrial, generation and other projects

Regional factors including specific and potential sources of load and
generation changes
2.0 Introduction
PAGE 5
The AESOs 2014 Long-term Outlook is effectively a study in the above factors combining
the current and expected trends into a comprehensive outlook (main outlook) over the next
20 years for Albertas economy, load, and generation. Recognizing uncertainty inherent in
predicting the future, the 2014 LTO also contains three comprehensive scenarios which test
key assumptions and drivers in the main outlook.
The forecast process begins with the economic outlook which is derived from The
Conference Board of Canadas annual long-term provincial economic forecast.1 This
economic outlook is verified against other third-party forecasts for reasonability and
accuracy. The economic outlook is a 20-year view of the economy, and is therefore
designed to capture long-term trends such as demographic and economic shifts rather than
short-term events.
The economic outlook is used as a key input to forecast electricity consumption, or energy,
using the economic drivers specific to five customer sectors:
Industrial (without Oilsands)
Oilsands
Residential
Commercial
Farm
The Oilsands sector is separated from the Industrial sector due to its importance to the
economy and its unique electricity needs. The energy forecast is then combined with
point of delivery (POD) load shapes to produce an hourly load forecast by POD. The
POD-level data is informed by historical data, publicly available information such as the
AESO Connection Queue and Project List,2 as well as external discussions with individual
stakeholders, market participants, third-party experts, Distribution Facility Owners (DFOs),
consultants, and others. In the longer term, there is naturally more uncertainty and less
available information in terms of the location of future electricity needs, so the forecast relies
more heavily on the trending of the long-term economic outlook.
www.conferenceboard.ca > Products and Services > Reports and Recordings > Economic Trends
www.aeso.ca > Customer Connections > Connection Queue
PAGE 6
2.0 Introduction
Generation development in Alberta is a competitive business driven by independent

investment decisions. In the development of the generation forecast, the forecast load
is compared against currently installed generation and expected future retirements to
assess the amount of incremental generation needed to reliably serve the growing demand.
Generation technology drivers and costs are assessed to determine what and where
resources are expected to be developed to supply future electricity load. In a process
similar to that of the load forecast, the generation forecast is informed in the near term by
the AESO Connection Queue and Project List, as well as by discussions with stakeholders,
market participants, third-party experts, consultants, and other sources. In the longer term,
the forecast relies more heavily on expected long-term trends in generation development
such as relative technology costs and expected technology developments. A visual map of
the forecasting process is available in Appendix B.
Stock Photograph.
There are key risks and uncertainties inherent in any long-term forecast, and these
uncertainties increase the farther out the forecast extends in time. The 2014 LTO addresses
these key risks and uncertainties using scenarios which are explained in detail in Section 7.
2.0 Introduction
PAGE 7

3.1
Introduction
The economic outlook is the foundation of the 2014 LTO and is a key input to the long-term
load and generation forecasts. The way in which Albertas economy changes over the next
20 years will, along with policy drivers, determine how demand and supply of electricity will
develop. In the near term, the outlook is driven by current economic trends, policies and
expectations for sustaining growth in exports, private investment and consumer spending.
In the longer term, the outlook is driven more strongly by demographic projections and
assumptions regarding labour productivity, as well as growth in oil production.
The economic outlook is underpinned by The Conference Board of Canadas annual longterm provincial economic forecast. This forecast is validated for reasonability against other
third-party economic forecasts.
3.2
Economic Outlook
Global economic growth to drive demand

for Albertas resources
Reduced fiscal constraint and the supply-chain effect that the more successful European
countries are having on the other European Union (EU) member countries is expected
to result in economic growth following two years of recession in the EU. While Europe
accounts for less than 10 per cent of Canadian exports, positive growth in the region could
certainly help bolster demand for Canadian goods directly, and also indirectly by building on
global demand.
While the performance of developed and developing economies has been mixed recently,
the contribution of China and other developing economies to global growth continues to
rise. Moreover, Chinas reliance on exports is easing, with domestic demand and household
consumption there rapidly emerging as a source of growth for its domestic economy and as
a growing opportunity for global exporters, including Canada.
Over the past decade, raw material prices skyrocketed by nearly 80 per cent, providing
a huge influx of revenue into the Canadian economy and boosting profits, investment,
and income. While raw material prices are expected to stabilize over the near term and
rise modestly over the longer term, this will continue to stimulate exploration and mine
development throughout Canada, and it provides a solid outlook for Albertas energy
production over the medium and long terms.
PAGE 8
olid U.S. growth and retreat of Canadian dollar

S
boost Canadian economic growth
In 2013 the U.S. economic growth was slowed by untimely fiscal action, as a combination
of tax increases and spending cuts at the beginning of the year chopped around 1.5
percentage points from real GDP growth. In 2014, less restrictive fiscal policy suggests that
government will be much less of a drag, removing 0.4 percentage points from economic
growth. Low relative labour and energy costs, along with solid corporate profits, have
bolstered growth in private investment on structures and machinery. These trends are
expected to continue, lifting near-term hiring and output growth. The medium-term outlook
is relatively solid as the U.S. economy is anticipated to slowly catch up to its potential.
And, while further setbacks are possible, a strengthening U.S. economy should go a long
way in shoring up investor confidence on a global level.
Canadian economic growth driven by demand

for resources
Stock Photograph.
Over the past few years, a two-tiered Canadian economy has emerged, with resource-rich
Saskatchewan, Alberta and Newfoundland and Labrador outperforming the rest of the
country. However, the outlook for most of the provinces is positive as they benefit from
a stronger U.S. economy, improving business and consumer confidence, and a firmer
domestic economy. While the fiscal situation remains tenuous in several provinces, beyond
2017 economic growth is expected to slow as it realigns with weakening growth in potential
output. Slower population growth and the effects of an aging population will restrain labour
force growth and heavily influence income and spending patterns. Despite the negative
effects of these demographic trends on the economy, real GDP growth will average
PAGE 9
2.1 per cent annually over the 2018 to 2035 periods, thanks to heavy investment in machinery,
equipment and technology, and in firms utilizing more highly skilled workers and more
innovative production processes. Over the 20262035 period, strong labour productivity
getting more output per hour workedis a key assumption underlying the projections, with
real GDP growth forecast to ease to 1.8 per cent over the later years of the forecast.
Oilsands development continues to drive Albertas

strong economic growth
The Alberta economy will advance solidly over the next 20 years, expanding at a compound
average annual rate of 2.4 per cent with the provinces energy sector, especially oilsands,
being the driving force. While Canadian oil prices have been lower than other global crude
oil prices, the oilsands are, and are expected to remain, profitable throughout the forecast.
Strong oilsands development driving the Alberta economy is further evidenced by the
Alberta Inventory of Major Projects (Figure 3.2-1) which shows how capital investment in the
oilsands sector dwarfs all other sectors. That investment will spur construction especially in
the near term, create jobs, and support all other areas of the Alberta economy.
Significant oilsands growth driving the Alberta economy is a major assumption of the 2014
LTO. Recognizing there are potential risks to assuming strong oilsands growth, the AESO
created scenarios including a Low Growth Scenario (Section 7).
While the long-term forecast for the province is favourable, the aging of Canadas population
will take its toll on economic output across the country, including in Alberta. Weaker
demographic conditions will slow the Alberta economy in the mid-to-long term.
Figure3.21: Inventory of Major Projects in Alberta
Figure 1: Inventory of Major Projects in Alberta
Oilsands
Pipelines
Oil and Gas
Infrastructure
Power
Commercial / Retail
Institutional
Tourism / Recreation
Residential
Chemicals and Petrochemicals
Agriculture and Related
Mining
Biofuels
Other Industrial
Forestry and Related
Manufacturing
$0
$20,000
$40,000
$60,000
$80,000
($Cdn Millions)
$100,000
$120,000
Source: Alberta Enterprise and Advanced Education (Feb. 2014)
PAGE 10
3.3
Energy Commodity Outlook
Abundant tight gas supply expected to keep prices weak

Due to the abundance of unconventional natural gas resources including shale and other
tight sources, the North American gas industry has expanded considerably over the past
five years, and the 2014 LTO forecasts continued expansion. The abundance of supply is
expected to keep a ceiling on natural gas prices which rise gradually through the latter half
of the forecast.
Relatively low prices have already impacted generation development plans in Alberta with a
significant number of announced gas-fired generation projects over the near and mid term.
Natural gas as a fuel source is also attractive because it is the least carbon-intensive among
fossil fuel sources.
Continued global oil demand will sustain oil prices

Overall, the global economy is expected to grow over the next 20 years of the 2014 LTO. This
growth will result in increasing energy demand, driven mainly by increasing consumption
from countries outside the Organization for Economic Co-operation and Development
(OECD). While demand for all forms of energy is expected to increase, crude oil will remain
the dominant fuel source as demand for it rises. As demand rises and supplies of lower cost
crude oil sources become depleted, crude oil prices rise throughout the forecast.
Oilsands production to double over the next decade

Continued global interest in Albertas oilsands resources is expected due to the massive
size of the reserves, favourable and stable political and fiscal terms, and demand from
countries and companies looking for new and additional sources of crude oil supply.
Oilsands bitumen production is expected to increase from approximately 2 million barrels
per day (bbl/d) today to 3.9 million bbl/d by 2024 and to 4.9 million bbl/d by 2034. While
there are risks to the future development of Albertas oilsands, generally the conditions are
favorable for strong growth. The AESOs 2014 LTO assumes that oil export constraints will
be addressed and policies will continue to support development.
PAGE 11

4.1
Introduction
The electricity industry is affected by a wide range of environmental regulations, both federal
and provincial. The main environmental drivers that most affect the 2014 LTO are summarized
in this section. These drivers are key because they directly impact the outlook for generation
development in Alberta. However, there are several other environmental regulations, either
under development, or in existence but expected to have a lessor impact on various parts of
the forecast, which are detailed in the Environmental Considerations Section of Appendix C.
The 2014 LTO assumes that regulations currently in force at time of writing will persist
through the forecast, with existing policy lending overall direction to the forecast.
Policy and regulation are significant sources of uncertainty in the 2014 LTO. Policy change
risk to the 2014 LTO is explored through the development of comprehensive scenarios,
which are described in Section 7.
4.2
Coal-fired Generation of Electricity Regulations
Photo courtesy of TansAlta
In September 2012 the Canadian federal government enacted the Reduction of Carbon
Dioxide Emissions from Coal-fired Generation of Electricity Regulations,3 which will reduce
carbon dioxide (CO2) emissions from the countrys coal-fired generation fleet.
http://www.gazette.gc.ca/rp-pr/p2/2012/2012-09-12/html/sor-dors167-eng.html
PAGE 12
The regulation allows existing coal units up to 50 years of operational life before they
must either retire or retrofit with carbon capture and storage (CCS). The first significant
retirements are expected to occur in 2019. Given the current costs of CCS, the 2014 LTO
anticipates that no new coal-fired plants will develop. The high cost of CCS also drives the
replacement of retiring coal-fired generation with less costly technologies like combinedcycle natural gas-fired generation.
4.3
Specified Gas Emitters Regulation
While federal regulations set minimum emission standards for coal-fired generation, Alberta
also has a provincial greenhouse gas (GHG) policy. Albertas current GHG regulation, the
Alberta Specified Gas Emitters Regulation (SGER),4 was enacted in 2007. The regulation
requires industrial facilities, including electricity generators which emit more than 100,000
tonnes of GHG per year, to reduce their corresponding emissions intensity by 2 per cent per
year up to a limit of 12 per cent. The use of credits and financial contributions5 to the Climate
Change and Emission Management Fund (CCEMF),6 which invests in projects related to
Albertas climate change strategy, is also allowed as a compliance mechanism.
Since implementation of the regulation in July 2007 to the end of March 2013, the Alberta
Emissions Offset Registry (AEOR) has registered a total of 137 projects and serialized
almost 28 million tonnes (Mt) of GHG emission reductions or removals through registration
of offset projects.7
This regulation impacts the levelized cost of electricity of generation technologies. For those
units that emit more than 100,000 tonnes of GHG per year, there is additional cost from the
requirement to offset GHG emissions with credits or financial contributions. For renewable
technologies, such as wind, credits are received for emissions that they offset, decreasing
the levelized costs.
SGER is currently under review by the provincial government as the regulation expires
September 2014. The regulation is expected to be renewed but any changes to it and
alignment with federal policy initiatives are not available at time of writing.
http://environment.alberta.ca/01838.html
Currently $15/tonne for every tonne exceeding the allocated limit
http://ccemc.ca/
http://carbonoffsetsolutions.climatechangecentral.com/policy-amp-regulation/alberta-offset-system-compliance-aglance/2012-compliance-year
PAGE 13

5.1
Introduction
Oilsands growth to drive strong load growth,

especially in the Northeast Region, while gas-fired
generation becomes dominant baseload technology
As mentioned in the economic outlook in Section 3, it is expected that the energy sector,
especially oilsands, will be the driving force of Albertas economy. Strong growth in the
oilsands means significant development of load in the northeast of the province is expected.
Stock Photograph.
Oilsands growth also has secondary and tertiary effects on other parts of the province.
Pipelines to move bitumen, diluents, and other products are required both to export bitumen
from Alberta and also to move products within Alberta. Other industries such as chemicals,
metals, and machinery manufacturing also directly benefit from expanding oilsands. As
the oilsands expand, it is also expected that there will be significant job creation which will
encourage immigration to Alberta. As Albertas population increases, so too will demand for
goods and services from a wide array of businesses. With population growth and increased
business activity, residential and commercial demand will grow, especially in urban centres.
PAGE 14
As energy and load growth occurs and existing generation retires, new generation
development is expected. The types and location of future generation development depend
upon available technologies and fuel sources, comparative generation technology costs,
and policy. Based on expected trends, gas-fired generation will be a significant technology
source in providing baseload and peaking generation capacity through the addition
of cogeneration, combined-cycle, and simple-cycle. This gas-fired generation will be
complemented by additional renewable development.
The AESO uses a comprehensive methodology to forecast future energy, load, and
generation which includes third-party assessments, discussions with industry and
stakeholders, and reviews of the latest and expected economic, policy, technological,
and demographic trends. Regional forecasts are discussed in greater detail in Section 6,
while details of the AESOs overall forecast methodology and assumptions can be
found in Appendices B and C. Additional detailed forecast results can be found in the
2014 LTO data file.
5.2
Energy & Load
As mentioned, oilsands development is expected to be a major driver of overall electricity

consumption within Alberta. There are a significant number of oilsands projects currently
under various forms of development that are expected to be completed over the next five
years. These projects, along with the economic spinoff and job creation resulting from
their development, are expected to drive strong average annual Alberta Internal Load (AIL)
energy consumption growth in the near term.
As part of its forecast process, the AESO individually analyzes and forecasts electricity
consumption by five customer sector types according to each types unique characteristics
and drivers. The Oilsands sector forecast is mainly project-driven and is expected to grow
the fastest at an average annual rate of 4.5 per cent over the next 20 years. The Industrial
(without Oilsands) sector is forecast to grow at 2 per cent over the next 20 years, driven
mainly by growth in industries associated with oilsands and economic growth including
pipelines, petrochemical, and manufacturing. Residential electricity consumption is driven
by population growth as well as changes in consumption behavior. Over the forecast,
residential electricity use is expected to grow at an average annual rate of 1.6 per cent.
Commercial electricity consumption is forecast to grow at an average annual rate of 2.2 per
cent as that sector grows with the overall economy.
Over the next 10 years, AIL energy growth is forecast to remain robust as additional
oilsands projects develop and contribute to economic growth. Over the next 20 years,
energy growth is not expected to remain as strong as in the nearer term. Greater
uncertainty about future oilsands and other development in the province, reduced oilsands
and economic growth along with improvements in energy efficiency result in a lower rate
of AIL energy consumption growth. Over the next 20 years, AIL energy is forecast to grow
at an average annual rate of 2.5 per cent. The AESOs energy forecast can be found in
Appendix A and additional details and assumptions regarding the energy forecast can be
found in Appendix C.
Similar to AIL energy, AIL peak is forecast to grow at an average annual rate of 2.5 per cent
over the next 20 years. System load, which excludes load served by onsite generation, is
expected to grow slightly slower than AIL at a rate of 2.3 per cent over the next 20 years.
PAGE 15
5.3
Generation
In developing the generation forecast, assessments of each technology are performed

including location and fuel availability, current developments, relative levelized costs, and
impact of policy. Generation development over the next 20 years is expected to be strong
as a result of growth in AIL and the retirement of large coal-fired facilities. The economics
around generation has combined-cycle as the lowest cost technology while wind energy
has the second lowest cost. Other technologies such as cogeneration will see development
as the benefits of captured heat within industrial applications is strong.
In the first 10 years, generation development in the oilsands is primarily expected to be
cogeneration and baseload combined-cycle in anticipation of both coal-fired retirements
and increased AIL. In addition to the baseload generation, some developments of wind
facilities and gas-fired simple-cycle have been forecast. Wind development is economically
challenging; however, many wind projects remain interested in connection to the
transmission system.
In the latter half of the forecast, large additions of baseload generation are expected to
develop in response to further retirement of coal-fired units and continued load growth.
Combined-cycle is the main type of baseload technology developing in the forecast.
Cogeneration development in the second 10 years of the forecast is lower than the first
10 years, reflecting slower overall oilsands growth. Wind sees little growth as forecast
economics remain challenging and existing policy is not strong enough to provide adequate
incentives. Additions of other generation technologies also continue in the second 10 years
but at a reduced level.
2014 LTO: Generation Capacity Mix Comparison
Existing as of December 31, 2013
Total Capacity: 14,568
AIL Peak: 11,139
43%
29%
6%
6%
6%
7%
3%
Coal
Cogeneration
Combined-cycle
Simple-cycle
Hydro
Wind
Other
Total
6,271
4,245
843
804
894
1,088
423
14,568 MW
2019
AIL Peak: 14,274
30%
33%
14%
7%
5%
10%
3%
Coal
Cogeneration
Combined-cycle
Simple-cycle
Hydro
Wind
Other
Total
5,402
6,003
2,513
1,228
894
1,751
468
18,259 MW
2024
AIL Peak: 16,014
26%
30%
19%
8%
4%
11%
2%
Coal
Cogeneration
Combined-cycle
Simple-cycle
Hydro
Wind
Other
Total
5,402
6,302
4,001
1,679
894
2,263
498
21,039 MW
2034
AIL Peak: 18,519
10%
27%
36%
10%
4%
11%
3%
Coal
Cogeneration
Combined-cycle
Simple-cycle
Hydro
Wind
Other
Total
Source: AESO
PAGE 16
2,509
6,737
8,871
2,399
894
2,679
864
24,953 MW

6.1
Introduction
As the 2014 LTO will be used as a basis for AESO planning, it has a regional focus that
examines key features of the AESOs planning regions along with an assessment of the key
drivers and trends that affect both load and generation within each region. This regional
approach helps the AESO to understand the geographical impacts associated with forecast
load and generation.
Figure6.11: AESO Planning Regions and Areas
17
Rainbow Lake
18
High Level
25
Fort McMurray
19
Peace River
20
Grande Prairie
21 High Prairie
23
Valley View
26
Swan
Hills
24
Fox Creek
22
Grande Cache
27
Athabasca /
Lac La Biche
33
Fort
Sask.
40
Wabamun
29
Hinton / Edson
60
Edmonton
30
Drayton Valley
34
Abraham Lake
44
Seebee
AESO Planning Regions*
* Planned areas
are numbered
Source: AESO
Central
Edmonton
Northeast
Northwest
South
56
13
Vegreville Lloydminster
32
Wainwright
31
Wetaskiwin
35
Red Deer
38
Caroline
28
Cold Lake
39
Didsbury
36 Alliance/
Battle River
37
Provost
42
Hanna
43
57 Airdrie
Sheerness
6
45
Calgary
48
Strathmore/
47
Empress
Blackie
Brooks
46
High River
49
52
Stavely
Vauxhall
53
54
4
Fort MacLeod Lethbridge
Medicine Hat
55
Greenwood
PAGE 17
6.2
Northeast Region
Northeast growth contingent upon ongoing

oilsands development
The Northeast Planning Region is characterized by a relatively sparse population but
significant amounts of industrial load and cogeneration. It is also the fastest growing region in
terms of load as new oilsands and other industrial projects connect to the AIES and ramp up.
Table6.21: Northeast Characteristics
2013 Average Load (MW)
2,460
2013 Summer Peak (MW)
2,231
2013/2014 Winter Peak (MW)
2,877
Population (000s)
245
Area (000 km2)
184
Source: Alberta Municipal Affairs, AESO
6.2.1
Load
The majority of load in the Northeast Region is industrial-based. The Fort McMurray (Area 25)
and Cold Lake (Area 28) areas contain the majority of the provinces oilsands operations.
The Fort Saskatchewan area (Area 33) contains the Industrial Heartland which includes
some oilsands activity such as the Shell Scotford Upgrader, as well as a significant number
of other industrial facilities. The Athabasca/Lac La Biche area (Area 27) has a relatively low
load compared to other planning areas in the Northeast Region; however, it does contain a
number of forestry facilities.
Overall, the population in the Northeast is relatively low at approximately 245,000 or about
7 per cent of the provinces total population. Most of these residents live in the Regional
Municipality of Wood Buffalo which has a population of approximately 116,000 including a
shadow population of about 42,000 temporary workers.8 The low population in the region
means there is minimal residential and commercial load. Despite the low population, the
Northeast Region contains approximately 29 per cent of AIL.
The high amount of industrial load and relatively low amount of residential and commercial
load in the Northeast means that the region has a comparatively flat load profile. However,
there is some seasonal variation with higher load levels in winter.
The Northeast Region contains the majority of oilsands load. The 2014 LTO oilsands
forecast is based on a bottom-up approach which adds up all oilsands projects and
adjusts them based on development status so that the oilsands forecast aligns with industry
projections of oilsands growth.
Over the past 10 years, the Northeast Region experienced stronger load growth than any
other region, growing at an average annual rate of 5.1 per cent. As oilsands projects develop
and the industry expands, it is expected that the Northeast Regions load will grow rapidly
and be the fastest growing of any region with average annual growth of 3.4 per cent over the
next 20 years.
Source: Alberta Municipal Affairs http://www.municipalaffairs.gov.ab.ca/mc_official_populations.cfm
PAGE 18
6.2.2
Generation
The Northeast Region contains a variety of sources of energy that can be used to
create electricity. The region currently contains:
Natural gas-fired generation from industrial sites in the Fort Saskatchewan,
Fort McMurray and Cold Lake areas

Biomass generation in the Athabasca area
Over the last 10 years the Northeast Region has seen almost 1,300 MW of net generation
additions, primarily from cogeneration. The region has also seen the addition of a small
amount of biomass.
Potential generation development in the Northeast Region consists of gas-fired and
hydroelectric (hydro) generation. Gas-fired generation could come from cogeneration related
to the oilsands, baseload combined-cycle, and/or simple-cycle peaking. With growth in the
oilsands, cogeneration is an attractive source of generation where both power and heat can
be produced. The region also has potential from large combined-cycle units with capacities
in the 500 to 1,000 MW range. Currently, there are 940 MW of combined-cycle and 180 MW
of simple-cycle projects that have applied for AESO connection in the Fort Saskatchewan
area. Hydroelectric generation is also a potential source of energy in the region. Projects
have been discussed for the Slave River area with capacities of approximately 1,000 MW.
In the next 10 years, additions of cogeneration related to oilsands development and
combined-cycle generation to meet expected baseload requirements are forecast for the
region. In addition to combined-cycle, the forecast has an increase in peaking capacity in
the region.
The forecast in the second 10 years has smaller growth of cogeneration related to reduced
growth in oilsands development, but has continued growth in combined-cycle and simplecycle generation to meet load increases and coal-fired retirements.
Table6.2.21: Northeast Load and Generation Capacity Forecast
MW
Existing
2024
2034
Load at AIL Peak
2,877
5,265
5,855
Coal-fired
Cogeneration
3,372
4,739
5,174
Combined-cycle
940
2,210
Simple-cycle
180
450
Hydro
Wind
Other
149
149
149
PAGE 19
6.3
Northwest Region
New oilsands developments changing the Northwest landscape

The Northwest Region is characterized by low population, a relatively high proportion of
industrial load, low growth in recent years and a respectable amount of oilsands potential,
including cogeneration, in the Peace River area. There is currently a variety of generation in
the area including biomass, coal-fired, and gas-fired units.
Table6.31: Northwest Characteristics
1,040
883
1,111
Population (000s)
173
Area (000 km2)
230
6.3.1
Load
Over the past 10 years, load growth in the Northwest has been the lowest of any of the
regions with an average annual peak load growth rate of 1.2 per cent.
Of the five AESO planning regions, the Northwest has the lowest population with
approximately 172,000 people or less than five per cent of Albertas population. The largest
population centre in the Northwest is Grande Prairie with a population of about 55,000.
The low population means residential and commercial electricity demand is relatively
low and industrial demand is relatively high. The Northwest Region also contains some
agricultural activity. With a low population, there is a relatively small amount of residential
and commercial load compared with other regions. The relatively high amount of industrial
demand means the region has the highest load factor of any region.
Industrial load in the region is comprised of forestry sites and oil and gas, including
unconventional plays such as the Montney play. There is also some oilsands activity (mostly
small test/pilot projects) and associated pipelines, as well as some manufacturing including
chemicals.
The AESO expects that load growth will occur in the Northwest Region due to expansion of
oilsands projects in the Peace River area along with associated infrastructure development.
As a result, the Northwest Region is forecast to grow at an average annual rate of 1.8 per cent
over the next 20 years.
PAGE 20
6.3.2
Generation
The Northwest Region has many sources of energy that can be used to create electricity.
The region currently contains:
Coal-fired generation in the Grande Cache area
Natural gas-fired generation
Biomass generation
Net generation developments in the last 10 years totalled approximately 350 MW from a
variety of sources including coal-fired, gas-fired, and other technologies such as biomass.
Gas-fired generation has the highest potential for future development in the Northwest
Region. In addition, there is also potential from biomass, waste heat, hydro, and Integrated
Gasification Combined Cycle (IGCC). Gas-fired generation could come in the form of
cogeneration related to oil production, baseload combined-cycle, or from simple-cycle
peaking units. The area currently has applications from all three of these gas-fired
technologies. The potential for biomass and waste heat is expected to be small as many
existing industrial sites have already adopted generation, but there remains potential for
the growth of new developments. While there are no IGCC projects with applications at the
AESO, projects have previously been announced and could return. Hydroelectric generation,
such as the Dunvegan Hydroelectric Project, has also been proposed for the region and
could be developed in the future.
The forecast for the Northwest Region in the first 10 years includes the addition of the
690 MW Carmon Creek cogeneration project. The forecast also includes the development
of simple-cycle peaking units. The first 10 years is also expected to see some growth in
smaller generation technologies such as biomass. There is uncertainty around the timing
of larger generation sources such as combined-cycle. No units have been included in
the first 10 years, although sensitivities can be performed to test the impact of earlier
development. Retirements in the region could see the H.R. Milner plant either decommission
or significantly reduce annual generation to meet federal GHG requirements. Gas-fired
retirements from three Rainbow and two Sturgeon units have also been included.
The second 10 years forecast has continued development of gas-fired generation through
the addition of baseload combined-cycle and simple-cycle peaking. Hydro has not been
included in the outlook as the economics and capital risks do not appear to currently
support the development.
PAGE 21
Table6.3.21: Northwest Load and Generation Capacity Forecast

MW
Existing
2024
2034
Load at AIL Peak
1,111
1,443
1,628
Coal-fired
144
Cogeneration
191
881
881
Combined-cycle
73
73
773
Simple-cycle
364
523
703
Hydro
6.4
Wind
Other
171
212
262
Edmonton Region
Edmonton Region to remain major generation centre

as new combined-cycle facilities complement steady
urban load growth
The Edmonton Region contains the city of Edmonton and surrounding communities. It
contains the second largest population of the AESOs five planning regions with about
1.2 million people or about 34 per cent of the total population. It also contains the most
significant amount of generation capacity located in the Wabamun area.
Table6.41: Edmonton Region Characteristics
1,569
2,166
2,158
Population (000s)
1,234
Area (000 km2)
22
6.4.1
Load
The Edmonton Region has approximately 20 per cent of Albertas load. Much of this is
residential and commercial load associated with the City of Edmonton. However, there is
also a significant amount of industrial load including demand from Refinery Row as well as
other manufacturing and pipeline load.
Over the past 10 years, the Edmonton Region load has grown at an average annual rate of
1.9 per cent. Future growth is expected to be in line with forecast average annual growth of
2.1 per cent over the next 20 years, driven primarily by residential, commercial and industrial
development associated with the provinces expected overall economic and population growth.
The bulk of this forecast growth is anticipated to occur in the Edmonton area (Area 60).
PAGE 22
6.4.2
Generation
The Edmonton Region contains primarily coal-fired generation with the potential for gasfired generation. The region currently contains:
Coal-fired generation in the Wabamun area
Natural gas-fired generation within the Edmonton area
The Edmonton Region has seen a net increase in supply of 121 MW in the last 10 years.
There have been large retirements from the old Clover Bar units as well as coal-fired
retirements from the Wabamun units. This has been offset with both coal-fired and
gas-fired additions.
The most likely future generation fuel source in the Edmonton Region is natural gas. The
region has existing infrastructure that can be used to connect large-scale generation,
making it an attractive location for future development. In addition, as existing coal-fired
units in the region retire, the infrastructure could accommodate new baseload generation.
There is currently over 2,700 MW of interest in gas-fired generation for the region. Smaller
district energy and microgeneration have the potential for development within large urban
areas, such as the 39 MW unit at the University of Alberta. Waste heat applications have
also been announced and have the potential for development.
The forecast for the Edmonton Region in the next 10 years is for the addition of one
combined-cycle unit and the retirement of approximately 600 MW of coal-fired generation.
Given the need for baseload generation in the first 10 years and the attractiveness of the
region, combined-cycle generation could develop within the region.
In the mid-to-long term, there is continued development of large combined-cycle generation
and retirements of coal-fired generation forecast for the region. Additional smaller
technologies such as waste heat capture are also expected to develop.
Table6.4.21: Edmonton Region Load and Generation Forecast
MW
Existing
2024
2034
Load at AIL Peak
2,158
2,785
3,340
Coal-fired
4,658
4,082
1,729
Cogeneration
39
39
39
Combined-cycle
900
3,300
Simple-cycle
250
250
250
Hydro
Wind
Other
158
PAGE 23
6.5
Central Region
New pipelines in Central East drive new load growth

while generation has modest growth
The Central Region contains a relatively low population which is mainly concentrated in the
Red Deer area (Area 35). The Red Deer area contains significant amounts of chemical and
other manufacturing. In addition, there are significant pipeline concentrations, especially on the
eastern portion of the region. Recent years have seen the addition of two new wind facilities.
Table6.51: Central Region Characteristics
1,282
1,338
1,608
Population (000s)
361
Area (000 km2)
131
6.5.1
Load
The Central Region contains about 352,000 people or about 10 per cent of Albertas
population but about 15 per cent of AIL. The Red Deer area contains significant industrial
load related to chemical and other manufacturing. In addition, there is significant pipeline
load, especially on the eastern portion of the region.
An important feature of the Central Region to the load forecast is the significant number of
pipeline-related projects and development. Hardisty is a major crude oil pipeline terminal
storage centre located in the Lloydminster planning area. Several intra-Alberta pipelines are
connected to it with additional projects planned. Also, two major export pipelines, Keystone
XL and Energy East, are planning to connect to Hardisty and they will run along the east
side of the Central Region before turning east into Saskatchewan. The pumping stations
used to move crude oil through these various pipelines is expected to be a significant
source of load growth in the Central East Region.
Over the next 20 years, the AESO forecasts the Central Regions load to grow at an average
annual rate of 2.1 per cent due to increasing pipeline loads as well as urban load in the Red
Deer area and other industrial growth.
6.5.2
Generation
The Central Region has many sources of energy that can be used to create electricity. The
region currently contains:
Coal-fired generation in the Battle River area
Natural gas-fired generation
Hydroelectric generation including the large Bighorn and Brazeau facilities
Wind facilities
Biomass generation
PAGE 24
In the last 10 years there has been approximately 300 MW of new generation additions, with
232 MW from new wind facilities and the remainder from gas-fired units.
The region has generation potential from natural gas, wind, and small scale technologies
such as biomass and waste heat. Natural gas-fired generation in the Central Region
currently consists of the large 474 MW Joffre cogeneration facility and small 15 MW units
related to gas development. In addition to gas-fired generation for industrial reasons, the
region could see the development of simple-cycle peaking units or larger combined-cycle
units that utilize existing infrastructure. The AESO connection queue illustrates interest
in gas-fired generation in this region. The potential for wind is strong in this region, and
numerous projects have applied to the AESO for connection to the transmission system.
Two wind facilities have developed in the Central Region, increasing the geographic
diversity of wind in the province. While not expected to be a major contributor to generation
capacity, there is potential for biomass and the ability to capture waste heat from pipeline
compressors or other industrial processes.
The forecast for the Central Region in the first 10 years has the largest growth in gas-fired
and wind generation. Gas-fired additions are related to small industrial installments as
well as peaking generation. Wind resources in the region are attractive and there has been
considerable interest in development in the region. A change in policy that improves the
economics of renewables could increase the amount of wind that develops. The forecast
has a moderate increase in wind generation in the region. In addition to gas-fired and wind
generation, the forecast has small additions from other technologies. Possible retirements
in the first 10 years include the Battle River 3 and 4 coal-fired generators. The forecast
assumes the retirement of only Battle River 3 in the first 10 years with scenarios looking at
alternative retirement schedules.
In the mid-to-long term, gas-fired and wind generation are the primary technologies forecast
to be developed. The second 10 years assumes the development of a large combinedcycle unit in response to a need for baseload generation. Based on federal regulations, the
forecast has the retirement of the Battle River 3, 4, and 5 units within the 20-year time frame.
Table6.5.21: Central Region Load and Generation Forecast
MW
Existing
2024
2034
Load at AIL Peak
1,608
2,152
2,466
Coal-fired
689
540
Cogeneration
536
536
536
Combined-cycle
500
Simple-cycle
180
270
Hydro
485
485
485
Wind
232
439
505
Other
61
76
84
PAGE 25
6.6
South Region
Calgary to drive South load growth with large potential

for wind development
The South Region is the second smallest region in terms of land size but the most populous
of all the regions because of the cities of Calgary, Lethbridge and Medicine Hat. The South
Region is also characterized by the most wind generation of any region.
Table6.61: South Region Characteristics
2,224
3,059
3,041
Population (000s)
1,691
Area (000 km2)
95
6.6.1
Load
The South Region has approximately 1,651,000 people or about 45 per cent of Albertas
population. Most of this population is concentrated in and around Calgary (Area 6) which
is a concentration point of residential and commercial demand. The South Region also
contains industrial loads as well as the majority of farm demand. A unique feature of the
South Region is that it is the only region with higher summer peaks than winter peaks for the
past three years (2011-2013) due to higher air conditioning use and seasonal irrigation loads.
Overall, the South Region represents approximately 26 per cent of AIL.
The South Regions load is expected to grow moderately at 2.1 per cent over the next
20 years, driven principally by residential and commercial development associated with
the provinces overall economic and population growth. The bulk of this growth is expected
to occur in and around the city of Calgary.
6.6.2
Generation
The South Region contains a variety of sources of energy that can be used to create
electricity. The region currently contains:
Coal-fired generation in the Sheerness area
Natural gas-fired generation with large assets located around Calgary and
Medicine Hat
Hydroelectric generation on the Bow River and the Oldman River and
its tributaries
Large amounts of wind between the Fort MacLeod area and Medicine Hat
The South has seen a large amount of variable generation come online in the last 10 years
with a total of 703 MW of new wind. Overall the region has had a total of 960 MW of net
additions to the region.
PAGE 26
The largest potential for future generation in the 20-year timeframe is from natural gas,
wind and solar. Currently, the 800 MW Shepard Energy Centre is under construction and
expected to begin commercial operation in 2015. In addition, other gas-fired generation
has applied to the AESO for connection. Wind potential within the region is strong, with
approximately 2,500 MW of wind projects in the AESO queue. Policies for renewable energy
sources could drive strong growth in wind facilities. Southern Alberta also has the most
favourable solar resources in the province, although there are currently no transmissionconnected solar facilities. Medicine Hat is developing a 1 MW solar project with funding
from the CCEMF. Through the Alberta Micro-generation Regulation, residential and
commercial solar is continuing to develop.
The forecast for the South includes primarily gas-fired and wind facilities. In addition to the
Shepard Energy Centre, smaller gas-fired generation has been announced and development
of this generation could be expected near the end of the first 10 years. There is currently
350 MW of wind facilities under construction in the South Region. In addition to the projects
under construction, there is considerable interest in wind generation as reflected in the
amount of wind projects that have applied to the AESO.
The second 10 years of the forecast has less generation development than the first 10 years.
Again, the primary sources of development are through gas-fired and wind facilities. The
region also has the potential for development within urban areas. There is the potential for
combined heat and power facilities, similar to the 15 MW unit at the University of Calgary,
as well as the potential for microgeneration. Possible retirements in the region include the
Sheerness 1 and 2 coal-fired generators. These units are expected to retire on or before
2036 and 2040 respectively.
Table6.6.21: South Region Load and Generation Forecast
6.7
MW
Existing
2024
2034
Load at AIL Peak
3,041
3,887
4,674
Coal-fired
780
780
780
Cogeneration
107
107
107
Combined-cycle
770
2,088
2,088
Simple-cycle
185
546
726
Hydro
409
409
409
Wind
856
1,824
2,174
Other
42
61
211
Outlook Summary and Risks
The 2014 LTO captures the expected future demand and energy requirements over the next
20 years, along with anticipated generation capacity to meet those requirements. Figure 6.7-1
shows the regional outlook for load. Additional details of the outlook can also be found in
Appendix A and in the 2014 LTO data file.
PAGE 27
Figure6.71: Regional Load Forecast Summary

8,000
4,000
8,000
Edmonton
4,000
8,000
(MW)
2034
2024
2019
2024
2034
2019
2013
2,000
0
2024
South
4,000
2034
Northwest
South
2019
Northeast
South
6,000
Central
2013
Central
2008
2003
2034
2024
2019
2013
2008
2003
AESO Planning Regions

Edmonton
2013
2,000
Edm
4,000
2008
2,000
Central
6,000
(MW)
6,000
2008
NE
2003
2034
2019
2024
2013
NW
2003
8,000
2008
2003
(MW)
4,000
2,000
2,000
6.7.1
Northeast
6,000
(MW)
6,000
(MW)
8,000
Northwest
Load Risks
The main risks for the load forecast concern factors that affect load growth and load
potential. Since the 2014 LTO assumes strong oilsands growth will drive strong economic
and load growth, the primary risk is that the strong forecast growth rates do not materialize
as expected. Numerous factors could affect future oilsands development. In the near term,
these include: rising costs of materials and labour, commodity prices, export constraints,
environmental policy including air emissions, land use, water use tailings, taxes and royalties,
and financial market conditions. In addition, technological change within the oilsands could
change the outlook for electricity demand. Risk of lower oilsands growth is addressed
through the Low Growth Scenario (Section 7.3) while technological change that could increase
oilsands demand is addressed through the Environmental Shift Scenario (Section 7.4).
Another risk is how demand-side management (DSM) changes could impact load.
Improvements in residential and commercial energy efficiency could reduce load. The
AESOs Environmental Shift and Energy Transformation scenarios test increases in energy
efficiency in the residential and commercial sectors.
Additional load risk comes from regional factors. In the Northwest Region, oilsands
have started to expand and develop at a more rapid rate. The ultimate potential of this
development and affiliated load is uncertain. The Northwest also contains a significant
amount of forestry operations. The 2014 LTO does not assume significant changes in the size
of the forestry industry; however, changes including either expansion or contraction could
also affect the load forecast. The Northwest also contains large amounts of unconventional
PAGE 28
natural gas potential. While the 2014 LTO expects development of that natural gas to
continue, significant changes to the natural gas industry could also affect the load forecast.
The main load risk in the Edmonton, Central, and South Regions is the pace of load growth
associated with overall provincial economic development and population growth. The
forecast urban growth in Calgary and Edmonton as well as smaller urban centres is largely
associated with immigration caused by job creation in Albertas growing economy. These
regions could be impacted if economic growth does not occur as expected. In addition,
there are a number of pipelines expected to be built in the Edmonton and Central Regions
that will increase load. The timing of these pipelines will affect the load forecast, especially
if they are delayed or not approved. The AESOs strategy for handling pipeline risk can be
found in the Energy and Load Considerations Section of Appendix C.
6.7.2
Generation Risks
There are several key risks to the generation forecast. Coal retirements are guided by current
regulations; however, those regulations allow certain flexibility in the timing of retirements.
The location of combined-cycle is also a risk because combined-cycle projects can develop
in a variety of locations as demonstrated by recently announced combined-cycle projects.
Also, the amount of future development of renewable and low-emitting generation sources
will be dependent on policy, which could potentially change from existing regulations.
There are risks associated with the generation forecast for each region. In the Northeast
and Northwest Regions the cogeneration potential is linked to the amount of total
oilsands development. Significant changes to that development could affect cogeneration
development. While cogeneration can generally be considered economic in some
applications, companies vary in their preference for cogeneration development. Some
companies prefer no cogeneration at all, while other companies prefer large-scale
cogeneration development. In addition to cogeneration, there is also the possibility that
other technologies like hydro could develop, given a change in policy or increased focus on
water management.
Risks around generation in the Edmonton Region are related to both the timing of new
developments and retirement of existing coal-fired units. The timing of new developments
has been adjusted in scenarios based on changes in overall load growth. As well, various
retirement schedules have also been considered in the scenarios.
The key risk to generation in the Central and South Regions is around the development of
wind resources. The amount of wind that develops could be increased from the outlook
given a change in policy related to renewable sources. Two scenarios, Environmental Shift
and Energy Transformation, address increases in the amount of wind by looking at drivers
that would increase wind penetration.
PAGE 29
7.0 Scenarios
7.1
Purpose
Changing policies and economic drivers can significantly impact the development of load
and generation in the province. This uncertainty is managed in the 2014 LTO through
the creation of three integrated economic, load and generation scenarios that consider
variations of key drivers. These scenarios quantify the effects of high impact, lower
probability outcomes on the 2014 LTO.
Scenarios are a series of alternative visions of futures which are possible, plausible, and
internally consistent, but are deemed less likely. Their purpose is to confront the main
outlook with possible future conditions, so that the availability and usefulness of options
can be analyzed against an unknown future state. Scenarios allow the AESO to understand
the potential impacts resulting from changes in key assumptions based upon assessed
major risks.
Stock photograph.
While scenarios are useful tools for analyzing what if type outcomes, the AESO does not
specifically assume they will occur. They are meant solely as a tool for quantifying possible,
but less likely, futuresas opposed to the main outlook, which is primarily used for planning
and other purposes.
PAGE 30
7.0 Scenarios
7.2
Methodology and Drivers
7.2.1
Scenarios Drivers
Development of the 2014 LTO scenarios was driven by three main factors:
Oilsands production and load
Environmental policy
Technology advances
7.2.2
Oilsands Production and Load
Oilsands development and production affects load growth both directly and indirectly.
First, investment in oilsands production directly increases load from the Northeast area as
the amount of bitumen production increases. Second, energy investmentand investment
in the oilsands in particularripples across the economy. Investment supports other
industries, creates jobs that encourage immigration, and drives residential and commercial
load growth.
Assumptions about the growth of the oilsands sector are crucial to the forecast and there
is uncertainty and risk around how much growth will ultimately occur within the industry.
Numerous factors could impact the rate of development within the oilsands sector. Rising
labour or materials costs, declining prices, export constraints, policy shifts, and financing/
capital availability could all negatively impact growth. There are currently numerous oilsands
projects under construction or about to commence construction, and it is very likely these
projects will be completed. However, further into the future, the certainty that growth will
occur is reduced.
7.2.3
Environmental Policy
The 2014 LTO represents current federal and provincial legislation as of the end of March
2013. The outlook assumes that current laws and regulations affecting the energy sector are
largely unchanged throughout the projection period.
Among all the forecast drivers, environmental policy has the greatest uncertainty in terms of
both the target and the tool. The policy target could be broad across industries or specific
to an industry, technology, or emission type. The policy tools could include commandand-control, taxes, and cap-and-trade. This uncertainty is even greater for deregulated
electricity markets like Alberta that do not have centralized integrated resource planning like
other jurisdictions.
7.2.4
Technology Advances
Technological advances are often unpredictable and unforeseen. For example, few industry
experts predicted how rapid and impactful hydraulic fracturing technology would be on the
North American oil and gas industry. Technological advances could affect both load and
generation. Load could either decrease (through energy efficiency) or increase (through
electricity-based oilsands extraction). Technology advances could also affect generation
by changing costs of existing technologies, introducing new sources of generation, and
affecting the location and magnitude of generation development.
7.0 Scenarios
PAGE 31
7.2.5
Other Drivers
While the main forecast drivers are outlined above, other factors could potentially impact
the main outlook. The AESO continues to monitor and analyze developments in the energy
industry, both through internal and external research and through stakeholder engagement.
7.3
Low Growth Scenario
What if provincial growth is strongly reduced?

The Low Growth Scenario examines a world where the oilsands industrys development
and overall provincial economic growth is significantly impacted. Since the primary driver
of economic growth in the 2014 LTO is oilsands development, oilsands growth is reduced in
this scenario to cause slower Alberta economic growth.
7.3.1
Low Growth Scenario Provincial Outlook
To create the Low Growth Scenario, the AESO contracted The Conference Board of Canada
to shock its economic models in a manner that slows oilsands development and growth.
The forecast economic data created through this shock was then used in the AESOs
forecast models. In order to test just the impact of reduced oilsands and economic growth,
no additional impacts from policy or technological changes were assumed.
Economic
As part of the reduced growth, there is a strong impact to the oilsands industry, especially
in later years, once the available export capacity is used up. In the main outlook, oilsands
production reaches 3.9 million barrels per day (bbl/d) by 2024 and 4.9 million barrels per day
by 2034. However, in the Low Growth Scenario oilsands production reaches just under
3 million barrels per day by 2024 and only 3.2 million bbl/d by 2034.
Real GDP growth over the 20 years is reduced from 2.4 per cent in the main outlook to
1.5 per cent in the Low Growth scenario. Effectively, the province continues to grow, albeit
at a much slower pace.
Energy/Load
To quantify the impacts of lower growth on Alberta energy and load, the impacted economic
variables were used in the AESOs forecast models and the results were compared. The
most significant impacts were in the Northeast Region of the province where the average
annual growth rate over the next 20 years is 1.4 per cent in the Low Growth Scenario
compared with 3.4 per cent in the main outlook.
Generation
Load from the Low Growth Scenario was incorporated into the generation forecast process.
With decreased growth in demand the overall level of generation development is reduced.
Cogeneration is strongly impacted as the reduction in industrial activity leads to lower heat and
steam requirements. Compared to the main outlook, other generation technologies continue
PAGE 32
7.0 Scenarios
to develop but at a slower pace. The comparative cost of generation technologies remains the
same as the main outlook. Existing coal-fired generation remains a dominant form of power in
the next five to 10 years as other technologies do not develop as quickly.
Table 7.6-1 compares the Low Growth Scenario to the main outlook and other scenarios.
7.4
Environmental Shift Scenario
What if a strong environmental policy that supports oilsands

development is implemented?
The Environmental Shift Scenario considers a world where policy makers introduce
environmental regulations that improve the environmental performance of the province
while still supporting oilsands development. To accomplish this, it is assumed that there is
support for low-emitting technologies such as wind and cogeneration. At the same time,
it is also assumed there are measures put into place requiring oilsands development to
reduce land, air and water pollution while maintaining growth of the oilsands industry.
7.4.1
Environmental Shift Provincial Outlook
To create the Environmental Shift Scenario, the AESO assumed there would be a fairly
significant regulation shift on the part of the provincial government to improve the
environmental performance of the province while still encouraging strong growth of the
oilsands. Since new environmental policy would likely result in added costs to major
emitting industries such as the oilsands, it is assumed that oilsands development and
growth would be impacted as projects with marginal economics become unprofitable and
are delayed or cancelled. To achieve this effect, a modest drop in oilsands investment was
modeled and the impacts to the economy were factored into the AESOs forecast models.
Major projects under construction still proceed as planned but some future projects were
removed. Assumptions in addition to the economic effect, including changes to energy
efficiency, were then also modeled. While this policy would increase costs to large-emitting
industries, the policy would increase revenues to low-emitting generation technologies. This
could be accomplished by increasing current incentives as found in the existing Specified
Gas Emitters Regulation (SGER).
Economic
To improve the environmental performance of the oilsands, it is assumed in this scenario

that the provincial government introduces measures to reduce land, air and water pollution
in the oilsands. There are costs associated with this pollution reduction, causing some
oilsands projects with marginal economics to become uneconomic. As a result, oilsands
development and production is less in this scenario compared to the main outlook. With
less oilsands development and production, there are also fewer economic spin-off effects
and the overall economy grows slightly slower at 2.2 per cent compared to 2.4 per cent in
the main outlook.
7.0 Scenarios
PAGE 33
Energy/Load
In the first 10 years of the scenario, load is lower compared to the main outlook as costs
associated with environmental improvement cause oilsands growth delays. However, in
the last 10 years there is a counter-intuitive effect of strongly increasing oilsands demand
related to that environmental improvement.
To improve upon land-use impacts, it is assumed that there are fewer oilsands facilities;
however, this results in the need to transport more products greater distances by pipeline
which requires additional pipeline load. It is also assumed in this scenario that water
recycling increases to 100 per cent at oilsands facilities requiring additional load associated
with more pumping. To reduce carbon emissions, carbon capture equipment is assumed
to be used which also increases load. Finally, a significant amount of new electric-based
extraction technologies are used in place of natural-gas burning Steam-Assisted Gravity
Drainage (SAGD) technology to also reduce carbon emissions and this too increases
oilsands load. While some efficiency gains occur, these are limited because of the already
relatively high efficiency of electric motors currently used in the oilsands. These efficiency
gains are overwhelmed by the adoption of new sources of load associated with improving
environmental performance.
Other sectors (Industrial without Oilsands, Commercial, Residential) are lower in the
Environmental Shift Scenario for two reasons. With lower overall economic development
resulting from slower oilsands growth, there is lower load growth. Also, as part of provincial
policy to improve environmental performance, energy efficiency measures such as new
building codes further reduce electric demand.
Changes in the various sectors due to the policy and technological assumptions in the
Environmental Shift Scenario result in an interesting change from the main outlook,
especially in later years. Across most of the province, load is generally lower; however, load
increases in the Northeast Region of the province.
Generation
In this scenario, low-emitting generation technologies are given incentives through

a stronger regulation similar to the SGER. This has the overall impact of increasing
development of low-emitting generation. Specifically, the relative cost of cogeneration, wind
and hydro are all improved, leading to increased development of these technologies. In the
near term, cogeneration and wind have higher development than the main outlook, even
given a reduction in overall load. Combined-cycle in the same timeframe continues to be a
required baseload technology that develops, and there is also an increase in simple-cycle
generation. With an assumed development period for hydro of eight to twelve years, largescale hydro doesnt develop until into the second 10 years.
Table 7.6-1 compares the Environmental Shift Scenario to the main outlook and other scenarios.
PAGE 34
7.0 Scenarios
7.5
Energy Transformation Scenario
What if a strong environmental policy that severely limits

Albertas oilsands and electricity industries is implemented?
In the Energy Transformation Scenario, the assumption is that a major policy shift results
in a new, strong environmental policy which greatly affects the growth of Albertas energy
industries and promotes renewable energy production. In this scenario, restrictions on new
oilsands emissions and development are so severe they drastically slow down oilsands
development. In this scenario there is an increase in natural gas prices, leading to higher
costs for gas-fired generation. Major restrictions on coal-fired generation cause a rapid
increase in retirements resulting in a significant need for new cleaner generation. Policies to
improve energy efficiency also impact industry as well as residential and commercial load.
7.5.1
Energy Transformation Provincial Outlook
Economic
In contrast to the Environmental Shift Scenario, in the Energy Transformation Scenario

the desire to improve environmental performance outweighs the desire to maintain strong
economic growth. Consequently, the new policy impacts the oilsands industrythe major
economic driver of Alberta. While new growth is restricted, the bulk of existing projects are
grandfathered in and are able to maintain their existing size and production. Because of the
impact to growth, oilsands development and production in the first 10 years are very similar
to the Low Growth Scenario. However, after 10 years, it is assumed that the emergence of
new technologies and processes allow the oilsands industry to continue growing again at a
modest pace. Overall economic growth in the Energy Transformation Scenario is fairly low
compared to the main outlook, as limited oilsands growth impacts the rest of the economy.
Energy/Load
Energy growth in the Energy Transformation Scenario is low compared to the main outlook.
The reduction in growth originates from two sources. First, the impact to Albertas economy
resulting from the strong environmental policy reduces overall demand for electricity across
all sectors. Second, it is assumed that the new environmental policy also includes energy
efficiency mandates which further reduce electricity demand.
Overall, total electricity demand in the Energy Transformation Scenario is similar to the Low
Growth Scenario; however, the patterns of consumption are somewhat different. Compared
to the Low Growth Scenario, the Energy Transformation Scenario has lower commercial
and residential growth but slightly higher industrial and oilsands growth. This is because
the primary driver in the Low Growth Scenario is economic, impacting the industrial and
oilsands sectors the most, while the energy efficiency impacts in the Energy Transformation
Scenario impact the commercial and residential sectors the most. Because the commercial
and residential sectors see the greatest reduction in growth compared to the main outlook
and other scenarios, the greatest impact geographically in the province is a reduction of
load compared to the main outlook in urban areas, especially Calgary and Edmonton.
7.0 Scenarios
PAGE 35
Generation
Generation development in the Energy Transformation Scenario is characterized by a more

aggressive coal retirement schedule and an increased penetration of renewable energy
sources during low load growth. Retirements are assumed to be more aggressive than
the main outlook with coal plants retiring at either the later of 40 years of operations, or
the expiration of a PPA, or one year after the expiration of the PPA if eligible to recover
decommissioning costs. The economics around low-emitting forms of energy are improved
as a result of incentives from policy, improvements in technology and reduced capital costs.
Higher gas prices in the scenario also increase the costs of gas-fired generation, again
making renewable forms of energy more attractive.
In the first 10 years, approximately 3,700 MW of coal-fired generation is assumed to retire.
Given the need to develop baseload generation quickly to offset the retirements, combinedcycle generation is developed. In addition, a stronger policy than in the Environmental Shift
Scenario provides further incentives to renewable energy sources and leads to strong
development of wind generation.
In the second 10 years there are continued retirements with an additional 1,500 MW of coalfired retirements. In addition to combined-cycle, longer lead time generation sources such
as hydro are able to develop and meet some of the required energy needs. There is also
continued development of renewable sources such as wind generation.
Table 7.6-1 compares the Energy Transformation Scenario to the main outlook and
other scenarios.
7.6
2014 LTO Results Summary and comparison
In the Low Growth Scenario, the main effect of lower growth is reduced load and generation
development across the province, but especially in the Northeast Region as oilsands load
and cogeneration are most affected.
In the Environmental Shift Scenario, there is reduced demand growth in the nearer term as
environmental policy impacts development. However, after 10 years, oilsands technology
increases due to higher intensity production including electricity-based extraction. The
result is significantly higher load growth in the second 10 years. Additional generation
development of wind, cogeneration and hydro supports this additional load growth.
The impacts from strong environmental policy in the Energy Transformation Scenario cause
lower load growth across the province as the economy is impacted from lower oilsands
development, and as stronger energy efficiency measures take effect. Generation in the
Energy Transformation Scenario shifts towards renewables including wind and hydro, while
coal-fired generation is retired at an accelerated rate compared to the main outlook.
PAGE 36
7.0 Scenarios
Table7.61: 2014 LTO Load and Generation Comparison (MW)

2019
Demand
Generation
Capacity
AIL Peak
Generation
Capacity
Generation
Capacity
14,274
12,000
13,380
11,777
Coal-fired
5,402
5,402
5,402
5,247
6,003
4,803
6,153
5,059
Combined-cycle
2,513
1,643
2,113
1,643
Simple-cycle
1,228
763
1,118
1,053
Hydro
894
894
894
894
Wind
1,751
1,635
2,014
2,014
Other
468
468
468
468
Main Outlook
Low Growth
16,014
12,689
15,288
12,470
AIL Peak
Environmental
Energy
Shift
Transformation
Coal-fired
5,402
5,402
5,402
2,509
Cogeneration
6,302
4,953
6,697
5,144
Combined-cycle
4,001
2,043
2,983
3,783
Simple-cycle
1,679
1,019
1,769
1,794
Hydro
894
894
894
894
Wind
2,263
1,751
2,791
2,920
Other
498
498
548
783
Main Outlook
Low Growth
AIL Peak
18,519
13,504
18,804
13,568
Coal-fired
2,509
2,509
2,509
929
2034
Demand
Low Growth
Cogeneration
2024
Demand
Environmental
Energy
Shift
Transformation
Main Outlook
Environmental
Energy
Shift
Transformation
Cogeneration
6,737
5,153
7,527
5,384
Combined-cycle
8,871
4,921
7,471
4,283
Simple-cycle
2,399
1,834
2,939
2,074
Hydro
894
894
1,894
2,294
Wind
2,679
2,071
3,777
4,015
Other
864
764
914
1,343
Source: AESO
7.0 Scenarios
PAGE 37
Appendix A
Main Outlook Detailed Results
Table A-1: Annual Energy and Load Outlook
Year
Industrial
(without
Oilsands)
(GWh)
Oilsands
(GWh)
Residential
(GWh)
Commercial
(GWh)
2004*
2005*
2006*
2007*
2008*
2009*
2010*
2011*
2012*
2013*
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
33,610
33,973
34,042
32,973
31,998
30,950
31,525
31,631
32,768
33,065
33,200
33,724
34,182
35,282
36,727
38,007
39,124
39,842
40,509
41,478
42,437
43,370
44,307
45,152
45,940
46,663
47,481
48,208
48,915
49,392
49,926
6,485
6,695
8,347
8,576
9,431
10,660
11,134
11,917
13,364
14,341
15,097
16,774
19,122
22,241
24,950
27,334
29,631
31,117
32,009
32,711
33,386
33,734
34,260
34,637
35,008
35,183
35,428
35,611
35,807
35,913
36,040
7,559
7,769
8,254
8,539
8,833
9,090
9,071
9,333
9,412
9,678
9,959
10,153
10,343
10,527
10,708
10,889
11,068
11,244
11,416
11,586
11,754
11,925
12,089
12,252
12,413
12,575
12,737
12,900
13,062
13,224
13,386
11,672
12,081
12,733
13,114
13,526
13,534
13,748
14,207
14,596
14,778
15,253
15,609
15,932
16,225
16,608
16,990
17,411
17,800
18,194
18,609
19,031
19,455
19,865
20,289
20,720
21,151
21,597
22,049
22,503
22,948
23,401
Farm (GWh)
Sector Total
(GWh)
Losses
(GWh)
Other**
(GWh)
AIL
(GWh)
AIL Winter
Peak
(MW)
AIL Summer
Peak
(MW)
1,733
1,705
1,769
1,806
1,803
1,900
1,708
1,828
1,800
1,836
1,839
1,846
1,853
1,861
1,869
1,877
1,885
1,894
1,902
1,910
1,919
1,927
1,937
1,945
1,955
1,964
1,974
1,983
1,993
2,003
2,014
61,060
62,223
65,144
65,007
65,592
66,135
67,186
68,916
71,941
73,699
75,349
78,106
81,432
86,136
90,862
95,097
99,119
101,896
104,031
106,294
108,526
110,411
112,458
114,275
116,036
117,536
119,217
120,751
122,281
123,481
124,766
4,024
3,869
4,048
4,485
4,138
3,595
4,342
4,529
3,432
3,556
3,716
3,862
4,039
4,289
4,540
4,765
4,979
5,126
5,239
5,360
5,478
5,578
5,687
5,783
5,877
5,957
6,046
6,128
6,209
6,272
6,341
175
176
178
167
217
184
196
155
201
202
245
245
245
245
244
245
246
244
244
244
244
244
245
244
245
244
245
245
245
244
244
65,259
66,268
69,371
69,660
69,947
69,913
71,723
73,600
75,574
77,457
79,310
82,214
85,716
90,669
95,646
100,106
104,344
107,267
109,514
111,898
114,249
116,234
118,390
120,303
122,158
123,737
125,508
127,124
128,734
129,997
131,351
9,236
9,580
9,661
9,710
9,806
10,236
10,226
10,609
10,599
11,139
11,323
11,811
12,531
13,192
13,783
14,274
14,722
15,033
15,376
15,672
16,014
16,318
16,643
16,869
17,137
17,403
17,647
17,870
18,102
18,308
18,519
8,578
8,566
9,050
9,321
9,541
9,117
9,343
9,552
9,885
10,063
10,421
10,765
11,170
11,799
12,390
12,938
13,429
13,865
14,148
14,460
14,731
15,048
15,327
15,627
15,817
16,083
16,329
16,554
16,760
16,975
17,167
* Denotes actuals
** Other includes Fort Nelson (supplied by AIES)
Note: The data presented in this table are for the Alberta Balancing Authority area which also includes Fort Nelson, British Columbia.
Energy and loads are counted once and only once.
PAGE 38
Appendix A: Main Outlook Detailed Results
Table A-2: Generation Additions and Installed Capacity (MW)

Anticipated generation additions
2019
Forecast Alberta winter peak demand (2014 LTO)

Market reserve margin range
Effective generation capacity range
2024
2034
14,274
16,014
18,519
15%-25%
15%-25%
15%-25%
16,415 17,842
18,416 20,018
21,297 23,149
Existing generation capacity (end of 2013)
14,568
14,568
14,568
Effective existing generation capacity (end of 2013)
13,276
13,276
13,276
975
975
3,868
Net effective generating capacity after retirements
Retirements
12,301
12,301
9,408
Expected effective generating capacity additions
4,114 to 5,541
6,115 to 7,717
11,889 to 13,741
2019
2024
2034
Cogeneration
1,758
2,057
2,492
Combined-cycle
1,670
3,158
8,028
530
981
1,701
Additions by fuel type

Coal-fired
Simple-cycle
Hydro
Wind
663
1,175
1,591
45
75
441
Total additions
Other
4,666
7,446
14,253
Total effective additions
4,135
6,506
12,980
2019
2024
2034
Coal-fired
5,402
5,402
2,509
Cogeneration
6,003
6,302
6,737
Combined-cycle
2,513
4,001
8,871
Simple-cycle
1,228
1,679
2,399
Capacity by fuel type
Hydro
894
894
894
Wind
1,751
2,263
2,679
468
498
864
Total effective generation capacity
Other
16,427
18,792
22,300
Total installed capacity
18,259
21,039
24,953
Appendix A: Main Outlook Detailed Results
PAGE 39
Appendix B
Forecasting Process
Inputs
Third-party
economic
forecast
STAKEHOLDER CONSULTATION
Historical
consumption
data
Products
Additional Information
ECONOMIC FORECAST
AND ASSUMPTIONS
ENERGY FORECAST
(annual consumption forecast
by customer sector)
Historical load
by POD
Distribution
Facility Owner
(DFO) forecasts
Project specific
information
LOAD FORECAST
(hourly load data
by POD)
Economic forecast from third-party experts

cross-referenced with other economic forecasts
to confirm reasonableness and consistency.
Energy forecasts by customer sector to

reflect sector-specific drivers and relationships.
Historical growth and load shapes at existing

PODs are combined with DFO forecasts and
project information. This creates a POD outlook
which uses the energy forecast to produce
hourly load projections by POD.
Market-wide assessment of generation

requirements and development opportunities
by technology and fuel type.
Aggregated and tested to ensure market

signals support generation development
and that forecast load is adequately met.
SYSTEM LOAD
FORECAST
On-site generation forecast

combined with load
forecast to create the
system load forecast.
Generation
resource
assessments
Levelized unit
electricity cost
Project specific
information
PAGE 40
GENERATION FORECAST
(annual capacity addition
by resource type)
Appendix B: Forecasting Process
Appendix C
Forecast Considerations
Introduction
This appendix is intended to provide additional background and details of other forecast
considerations that were analyzed as part of the creation of the 2014 LTO.
Alberta, its electricity industry, regulations, technologies, and economy are constantly
changing. To ensure that the 2014 LTO is aligned with current and expected trends, the
AESO continually monitors relevant industry developments that could affect the outlook.
Factors likely to be key drivers are incorporated into the forecast. Factors that could be
key drivers in the future are examined and understood as best as possible so the AESO
can prepare in the event trends change. Part of this examination includes the creation of
comprehensive forecast scenarios which allow the AESO to quantify the impact of changes
to key forecast drivers (see Section 7).
The Environmental Considerations Section in this appendix outlines the major development
and environmental regulations which can affect future load and generation development. The
Energy and Load Section describes some of the key inputs factored into the energy and load
forecasts. The Generation Section summarizes the AESOs research into the generation types
and costs used as part of the basis of the generation outlook. The AESO continues to track
developments and will adjust future Long-term Outlooks as required.
This appendix discusses the following forecast considerations related to policy, energy and
load, and generation.
Appendix C: Forecast Considerations
PAGE 41
Table C-1: Forecast Considerations

Environmental Drivers
Oilsands
Development
Climate
Change
Federal policies
Provincial policies
Energy and Load
Customer
Sector Energy
Demand Side Management

Energy
efficiency
response
Demand
Oilsands
Alternative
extraction
technologies
Electric intensities and
efficiencies
Upgrading capacity
Export
Pipelines
Generation
Current
Generation
Technologies
Coal
Natural Gas
Wind
Hydro
Biomass/Other
Other
Generation
Technologies
Solar
Energy Storage
Geothermal
Nuclear
Levelized
Unit
Electricity Costs
Environmental Considerations
The energy industry is affected by a wide range of environmental regulations, both federal
and provincial. The 2014 LTO considers only those regulations currently in force at time of
writing, with existing policy lending overall direction to the forecast.
Policy and regulation are a significant unknown with regard to the long-term forecast. Risks
to the 2014 LTO are explored through the development of comprehensive scenarios, which
are described in Section 7.
Oilsands Development
The oilsands sector is the key economic driver of the Alberta economy. The federal
government has been considering environmental regulations for the petroleum industry,
including the oilsands, since 2011, with industry and provincial consultations continuing at
time of writing.
The provincial government continues to balance environmental protection with sustained
economic growth through frameworks such as the Comprehensive Regional Infrastructure
Sustainability Plan (CRISP)9 and the Provincial Energy Strategy (PES).10
http://www.energy.alberta.ca/Initiatives/3224.asp
10
PAGE 42
New technologies and efficiency improvements have reduced the greenhouse gas (GHG)
intensity of oilsands production, largely as a result of:
Improvements to the energy efficiency of bitumen extraction
Fuel switching from petroleum coke to natural gas and replacement of grid
electricity by onsite heat and electricity cogeneration

Upgrading efficiency gains from optimization and integration of processes
Use of nitrogen oxide burners, sour water treatment equipment and flue gas
desulphurization
The addition of newer, more efficient facilities
Climate Change Policy
Environmental concerns present unique forecasting challenges due to the continuously

evolving nature of regulation. Although the Canadian government is now implementing a
sector-by-sector regulatory approach to reduce greenhouse gas emissions, uncertainty still
exists regarding GHG regulation at time of writing.
Federal Climate Change Policy
Canada is taking a sector-by-sector regulatory approach toward achieving its commitment

to reduce economy-wide greenhouse gas emissions to 17 per cent below 2005 levels by
2020 under the Copenhagen Accord. Greenhouse gas emissions from coal-fired electricity
are responsible for approximately 11 per cent of Canadas total GHG emissions,11 and the
federal government has responded to this challenge with regulations described below. The
government is continuing to work on regulations for other major sources of GHG emissions,
including gas-fired electricity generation and the oil and gas sector.
Coal-fired Electric Generation
In September 2012 the Canadian federal government enacted the Reduction of Carbon
Dioxide Emissions from Coal-fired Generation of Electricity Regulations,12 which will reduce
carbon dioxide (CO2) emissions from the countrys roughly 13 gigawatt (GW) coal-fired
generating fleet. In the first 21 years, the regulations are expected to result in a cumulative
reduction in GHG emissions of about 214 megatonnesequivalent to removing some 2.6
million personal vehicles per year from the road.13
The regulation allows existing coal units up to 50 years of operational life before they must
either retire or retrofit with carbon capture and storage (CCS) technology. Given the current
economics of CCS, the 2014 LTO anticipates that most units will retire by 2034. With the first
significant retirements occurring in 2019, the regulation allows ample time for constructing
replacement generation.
11
http://www.ec.gc.ca/default.asp?lang=En&n=714D9AAE-1&news=4D34AE9B-1768-415D-A546-8CCF09010A23
12
http://www.gazette.gc.ca/rp-pr/p2/2012/2012-09-12/html/sor-dors167-eng.html
13
http://www.ec.gc.ca/default.asp?lang=En&n=714D9AAE-1&news=4D34AE9B-1768-415D-A546-8CCF09010A23
PAGE 43
Canadas CO2 performance standard is similar to the U.S. Environmental Protection

Agencys (EPA) proposed standard for new baseload generators. In both cases new
supercritical coal units must capture about half their CO2 emissions to comply, while natural
gas-fired combined-cycle can achieve the same standard without CCS.
Renewables
The ecoENERGY for Renewable Power program14 was launched in April 2007 to encourage
the generation of electricity from renewable energy sources such as wind, low-impact hydro,
biomass, photovoltaic and geothermal energy. Although the program ended on March 31,
2011, many projects with contribution agreements will continue to receive payments up to
March 31, 2021. At March 31, 2011, 104 projects qualified for funding under the program,
representing investments of about $1.4 billion over 14 years and almost 4,500 megawatts
of renewable power capacity.15 However, the tax incentives for renewable and emerging
projects remain in place.16
Through Sustainable Development Technology Canada (SDTC), the federal government has
supported more than 245 clean technology projects that are part of an SDTC portfolio now
valued at more than $2 billion, of which $1.4 billion is leveraged from partners in the private
sector. Building on this, $325 million in funding over eight years was earmarked for SDTC
in the 2013 federal budget to support the development and demonstration of new clean
technologies, including:
Electrical vehicle charging stations
A system to convert municipal solid waste into energy-rich gas to produce heat
and electricity in remote and rural areas

Wind hybrid power plants
Federal Carbon Capture and Storage (CCS) Initiatives
Over the past five years, the Government of Canada has committed over $500 million to
carbon capture and storage (CCS) initiatives.17 One of these initiatives is the provision of
$240 million18 of research funds towards the Boundary Dam CCS project in Saskatchewan.
Once completed, this project will be one of the worlds first and largest commercial scale
CCS projects for coal-fired electricity. The total cost of the project is expected to be $1.24
billion, of which approximately $180 million has already been spent. SaskPower announced
in October 2013 that the project was $115 million over budget.
14
https://www.nrcan.gc.ca/ecoaction/14145
15
http://www.nrcan.gc.ca/ecoaction/6444
16
CCA 43.1 & 43.2; CRCE; SR&ED and ITCs
17
http://www.climatechange.gc.ca/default.asp?lang=En&n=72F16A84-1
18
http://www.climatechange.gc.ca/default.asp?lang=En&n=72F16A84-1
PAGE 44
Air Quality Management System
The Air Quality Management System (AQMS) is a comprehensive approach for improving
air quality in Canada and is the product of collaboration by federal, provincial and territorial
governments and stakeholders. It includes:
New Canadian Ambient Air Quality Standards (CAAQS) to set the standard for
outdoor air quality management across the country

A framework for air zone management within provinces and territories that
enables action tailored to specific sources of air emissions in a given area

Regional airsheds that facilitate coordinated action where air pollution crosses
a border
Industrial emission requirements that set a base level of performance for major
industries in Canada (BLIERs)

Improved intergovernmental collaboration to reduce emissions from the
transportation sector
On October 11, 2012, the provinces, with the exception of Qubec, agreed to begin
implementing the Air Quality Management System. Although Qubec supports the general
objectives of AQMS, it will not implement the system since it includes federal industrial
emission requirements that duplicate Qubecs Clean Air Regulation.
Canadian Ambient Air Quality Standards
Canadian Ambient Air Quality Standards (CAAQS) will be established as objectives under
the Canadian Environmental Protection Act, 1999, and will replace existing Canada-wide
air standards. Standards for fine particulate matter and ground level ozone19 have been
developed and were published to Canada Gazette in May 2013. Work has begun to assess
the health and environmental impacts of nitrogen dioxide and sulphur dioxide.
Base-Level Industrial Emissions Requirements
Base-Level Industrial Emissions Requirements (BLIERs) are intended to ensure that

all significant industrial sources in Canada, regardless of where facilities are located,
meet a good base level of performance. BLIERs are a requirement under the Air Quality
Management System (AQMS).
BLIERs are quantitative or qualitative emissions requirements proposed for new and existing
major industrial sectors and some equipment types. These requirements are based on what
leading jurisdictions inside or outside Canada are requiring of industry in attainment areas,
or airshed zones adjusted for Canadian circumstances. BLIERs are focused on nitrogen
oxides, sulphur dioxide volatile organic compounds (VOCs), and particulate matter (PM).20
For electricity generators, BLIERs would establish stack emission intensity limits. Similar to
the federal Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity
Regulations, BLIERs would require control equipment and would apply on a unit-by-unit basis,
with no trading. At time of writing, BLIERs for electricity generators are still being drafted.
19
http://www.ccme.ca/assets/pdf/caaqs_and_azmf.pdf
20
http://www.ccme.ca/assets/pdf/cams_proposed_framework_e.pdf for proposed levels
PAGE 45
Demand-side Management/Energy Efficiency
New demand-side management and energy efficiency technologies and regulations have the
potential to affect the long-term forecast. Canadas Energy Efficiency Act and Regulations
eliminate the least energy-efficient products from the Canadian market. Of the many federal
initiatives, the new light bulb standard has the greatest potential impact on the LTO.
Lighting Standards
In December of 2008, as part of its effort to reduce energy consumption and greenhouse
gas emissions, the Government of Canada established new energy-efficiency regulations to
phase out the use of inefficient light bulbs. On April 16, 2011, an amendment was proposed
to delay the implementation of the standard by two years. This delay was approved and
published on November 9, 2011. As a result, the standard will affect 75- and 100-watt
bulbs manufactured after January 1, 2014, and 40- and 60-watt bulbs manufactured after
December 31, 2014.21
The standard for lighting efficiency is a performance or technology neutral standard. It does
not prescribe any particular light source technology and is set at a minimum performance
level that ensures a wide array of choices will be available to Canadians once it comes into
effect. It applies to bulbs imported in Canada or sold inter-provincially and will phase out
standard, medium screw-base, A-shape incandescent bulbs. The U.S. and a number of
other countries are either developing or have already implemented similar standards for the
elimination of the least efficient light bulbs from their markets.
Provincial Climate Change Policy
Albertas current climate change strategy, Responsibility/Leadership/Action, was published

in January 2008.22 It targets a reduction of annual emissions by 20 million tonnes (Mt) below
the business-as-usual level by 2010 by identifying three distinct approaches:
Energy conservation and efficiency
Carbon capture and storage (CCS)
Greening energy production
The plan anticipates that two thirds of the anticipated emission reductions are to come
from CCS. The provincial government released Clearing the Air: Albertas Renewed Clean
Air Strategy23 in 2012, which links with Albertas established Comprehensive Air Quality
Management System24 (CAMS), the decision making process established by the provincial
Clean Air Strategic Alliance (CASA).
21
http://oee.nrcan.gc.ca/regulations/17724
22
http://environment.gov.ab.ca/info/library/7894.pdf
23
http://environment.gov.ab.ca/info/library/8692.pdf
24
http://casahome.org/DesktopModules/Bring2mind/DMX/Download.aspx?Command=Core_Download&EntryId=898&PortalI
d=0&TabId=78
PAGE 46
While the main instrument of provincial climate change policy is the Specified Gas Emitters
Regulation (SGER), Alberta has initiated a number of other programs, including:
Grants supporting CCS technology
Government purchase of green power
Micro-generation Regulation
Light it Right program
Renewable Fuels Standard Regulation
Bioenergy Producer Credit Program
GreenTRIP, hybrid taxi and Trucks of Tomorrow programs
Rebates for energy-efficient home upgrades
Initiatives for meeting LEED standards for public buildings
On-Farm Energy Management program
Clean Air Strategic Alliance (CASA)
The Clean Air Strategic Alliance (CASA) is a multi-stakeholder partnership established in

1994 as a way to manage air quality in Alberta. CASA is composed of representatives from
industry, government and non-government organizations to provide strategies to assess
and improve air quality using a collaborative consensus process. CASA is tasked with the
implementation of the Comprehensive Air Quality Management System (CAMS) for Alberta.
In 2003 CASA finalized An Emission Management Framework for the Alberta Electricity
Sector (the Framework) that was accepted by the Government of Alberta and implemented
through regulations, standards and facility approvals such as SGER. To ensure continuous
improvement and to keep the Framework timely and relevant, a formal review process is to
be undertaken every five years. The first five-year review occurred in 2008 and the second
review commenced in 2013. This review includes a multi-stakeholder group consisting of
industry, government, non-government organizations, and communities with an interest in
the electricity sector.
CASA is responsible for responding to the difference between the Framework, Environment
Canadas proposal for Base-Level Industrial Emissions Requirements (BLIERs) for existing
coal-fired electricity generation units, and the Canadian governments Reduction of Carbon
Dioxide Emissions from Coal-fired Generation of Electricity Regulations. At time of writing,
CASA was continuing to address stakeholder concerns that the requirement to implement
BLIERs at existing coal-fired facilities would have the effect of negating much of the existing
Alberta framework.25
25
CASA Annual Report: 2012, pg. 19
PAGE 47
Specified Gas Emitters Regulation
While federal regulations set minimum standards, Alberta also has a provincial GHG
regulation. Albertas current GHG regulation, the Alberta Specified Gas Emitters Regulation
(SGER),26 was enacted in 2007 and is set to expire in 2014. The regulation requires industrial
facilities, including electricity generators that emit more than 100,000 metric tonnes of GHG
per year to reduce their corresponding emissions intensity by 2 per cent per year up to a
limit of 12 per cent. The use of credits and financial contributions to the Climate Change
and Emissions Management Fund27which invests in projects related to Albertas climate
change strategyis also allowed as a compliance mechanism. Since the implementation of
the regulation in July 2007 to the end of March 2013, the Alberta Emissions Offset Registry
(AEOR) has registered a total of 137 projects and serialized almost 28 million tonnes (Mt)
of GHG emission reductions or removals through registration of offset projects.28 SGER
is currently under review by the provincial government before expiry in 2014 to ensure
alignment with federal policy initiatives.29
Alberta Carbon Capture and Storage (CCS) Initiatives
The provincial government has committed a total of $1.3 billion over 15 years to fund two
large-scale CCS projects; the Alberta Carbon Trunk Line project and the Quest project. It is
anticipated that these projects will reduce Albertas GHG emissions by 2.76 million tonnes
annually beginning in 2015.30
The Alberta Carbon Trunk Line project is a 240 km pipeline that will transport CO2 from
a fertilizer plant and a bitumen refinery to producing oil fields in central Alberta for
enhanced oil recovery. The Quest project is designed to capture and store 1.2 million
tonnes of CO2 annually from Shell Canadas Scotford oilsands upgrader and expansion
near Fort Saskatchewan.
Two power generation projects were selected to receive funding from the Alberta
government; Swan Hills Synfuels ISCG generation facility and TransAlta Corporations
Project Pioneer. These projects have since been cancelled but details on Project Pioneer
and the feasibility of the project are available in a final project report.31 Given the estimated
costs related to CCS, no CCS is assumed for generation projects in the 2014 LTO.
26
27
http://environment.alberta.ca/01838.html
http://ccemc.ca/
28
http://carbonoffsetsolutions.climatechangecentral.com/policy-amp-regulation/alberta-offset-system-compliance-aglance/2012-compliance-year
29
Stakeholder Presentation December 2012
30
31
http://www.transalta.com/newsroom/feature-articles/2013-05-24/project-pioneer-publishes-its-final-report-pioneer-still-sharin
PAGE 48
Table C-2: Environmental Considerations Summary

Policy
32 33 34 35 36 37 38 39 40 41 42 43
Federal
Provincial
CO2 Emissions
Coal-fired Regulation32 (2012)
SGER33 (2007)
Non-CO2 GHG Emissions
BLIERs34 (in progress)
CAMS35 monitoring
Renewable Energy
Tax incentives:
(CCA,36 CRCE,37 SR&ED38)
In-province tradable green

offsets via SGER
Emerging Technology
SDTC39
($325 million budgeted in 2013)
CCEMF40 ($213 million in 2013)41
Demand Side Management/

Energy Efficiency (DSM/EE)
Energy Efficiency Regulations
C342 targeted programs43
Energy and Load Forecast Considerations

Customer Sector Energy
The AESO forecasts energy consumption in the province by individually analyzing and
forecasting the electricity consumption of five customer sector types. The forecasts
are based upon economic, demographic and end-use data, and project and customer
information collected from a variety of sources. The energy sector models are based on
models that were reviewed by a third-party independent load forecast expert. The models
also use economic variables from The Conference Board of Canada as inputs, ensuring
consistency with the 2014 LTO economic outlook. Table C-3 outlines the key drivers for each
of the sectors.
32
Federal Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations
33
Alberta Specified Gas Emitters Regulation
34
Base-Level Industrial Emission Requirements
35
Comprehensive Air Management System
36
Capital Cost Allowance Classes 43.1, 43.2, 49, 7
37
Canadian Renewable & Conservation Expense
38
Scientific Research and Experimental Development
39
Sustainable Development Technology Canada
40
http://ccemc.ca/media_release/climate-change-and-emissions-management-ccemc-corporation-releases-annual-reportccemc-funding-51-clean-tech-projects-valued-at-more-than-1-56-billion/
41
Climate Change and Emission Management Fund
42
Includes: Albertas Home Electricity Use Evaluation; municipal rebates; BioFleet; Carbon Offset Solutions; Heartland Energy
Mapping Study; Alberta Industrial Energy Efficiency Program
43
http://c-3.ca/projects/
PAGE 49
Table C-3: Electricity Consumption Drivers

Customer Sector
Industrial
(without
Oilsands)
Drivers
Manufacturing GDP
2013-2019
Growth
Rate
2013-2024
Growth
Rate
2013-2034
Growth
Rate
2.5%
1.9%
1.8%
Oilsands production
7.0%
5.6%
3.9%
Natural gas production
-4.3%
-3.0%
-1.8%
Non-oilsands crude oil production
-2.1%
-2.2%
-2.2%
Oilsands production
7.0%
5.6%
3.9%
Electrical per barrel of in situ, mining,

and upgrading
4.6%
2.7%
0.9%
Commercial
Alberta service-producing GDP
2.8%
2.8%
2.6%
Residential
Real Disposable Income
2.4%
2.3%
2.1%
Energy Efficiency Improvement

(weighted-average across end uses)
0.7%
0.5%
0.2%
Population
1.7%
1.6%
1.4%
Acres of irrigated land
0.5%
0.5%
0.5%
Agricultural GDP
1.8%
1.9%
2.0%
Oilsands
Farm
Demand-side Management
Demand-side Management (DSM) refers to activities and initiatives undertaken to influence

the level or timing of customer electricity demand. DSM can be broken into several
subcategories. Energy efficiency and conservation are initiatives aimed to reduce overall
electricity demand. Demand response programs typically involve a temporary reduction in
the demand for electricity by load entities whether for reasons of reliability or through price
signals and other incentives.
Energy Efficiency
Energy efficiency and conservation programs and initiatives are generally designed to
reduce overall electricity demand and can vary greatly in size and scope. The pace of
energy efficiency changes depends on policy as well as the economics of investments in
energy efficiency and conservation.
The AESO incorporates anticipated effects of energy efficiency through its Statisticallyadjusted End-Use Residential (SAE) model which was developed in consultation with Itron
Inc. The SAE model uses residential end-use data including appliance and lighting saturation
rates and other household data for Alberta from Natural Resources Canadas Comprehensive
End-Use Database.44 That data is combined with end-use efficiency projections from the U.S.
Energy Information Administration (EIA)45 and economic forecasts from The Conference Board
of Canada. Through combining that data, estimates of residential electricity use are created
and then statistically adjusted using historical actual residential energy use. The result is a
comprehensive model that factors in economic trends aligned with the economic outlook,
Alberta residential end-use data, and expected trends in household energy efficiency.
44
http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/trends_res_ab.cfm?attr=0
45
http://www.eia.gov/forecasts/archive/aeo13/sector_residential.cfm
PAGE 50
The residential energy forecast resulting from the residential SAE model are shown in
Appendix A. These results were compared with the econometric model used in prior AESO
forecasts. Generally, the results were in line; however, the SAE model is able to capture
the effects of the recent federal lighting standards. Therefore, the residential forecast is
slightly lower compared to an equivalent econometric-based residential forecast. The AESO
continues to monitor energy efficiency initiatives and progress, and will continue to adjust its
forecast processes accordingly.
Demand Response
There are a number of different demand response type programs that vary with intended
purpose. The AESO has implemented a combination of demand response programs to
assist in managing or preventing emergency system operating conditions:
Load Shed Service for imports (LSSi) an ancillary service that enables an
increase in import capacity on the B.C. intertie by mitigating potential frequency

drops caused by the sudden loss of the intertie and during periods of high imports
Demand Opportunity Service (DOS) an opportunity transmission service with
regulated rates for each level of interruption (seven minutes and one hour)
Supplemental operating reserve (SUP) ancillary service available to arrest
frequency decline but not required to respond directly to frequency deviations.

This service can be provided by load or generation
These demand response programs are in place for reliability purposes. The 2014 LTO does
not assume that reliability issues will materially affect future load.
In addition to reliability-based demand response programs, the Alberta market also has
approximately 300 MW of voluntary price-responsive load, primarily from a small set of
industrial customers. The ability for load to respond to the energy market depends on the
ability of load to react to market price signals and to adjust consumption in response to
those signals. At approximately 300 MW, price-responsive load currently represents about
three per cent of AIL.
Oilsands
The oilsands sector is a key driver of the provincial economy and a pivotal industry for
electricity demand and supply. Several forecast considerations were examined related
to the oilsands sector, including alternative extraction technology, increasing electricity
intensities and efficiencies, and increased upgrading capacity.
Alternative Extraction Technologies
With 20 per cent of current recoverable oilsands reserves located near the surface, roughly
50 per cent of current bitumen production is extracted using a strip-mining process.
Approximately 80 per cent of recoverable deposits are too deep for surface mining
extraction techniques, and so the remaining 50 per cent of current production is extracted
using a thermal extraction process known as Steam Assisted Gravity Drainage (SAGD).
Near-term oilsands growth is expected to be largely driven by SAGD operations.
PAGE 51
Environmental concerns such as water usage and GHG emissions are encouraging the
development of new extraction technologies. These new technologies have the potential to
affect demand for electricity in the oilsands. The AESO monitors the development of these
technologies and has incorporated their potential impact in the 2014 Long-term Outlook.
Electric heating is one such technology. It is a process where electric energy is used
to stimulate and heat bitumen deposits. Depending on the electrical current applied,
the energy can be transferred numerous ways: dielectric heating, resistive heating,
conductive or induction heating. A number of electric heating processes are currently in
early development, including Thermal Assisted Gravity Drainage (TAGD) by Athabasca Oil
Corporation (AOC), Electro-Thermal Dynamic Stripping Process (ET-DSP) by E-T Energy,
and electromagnetic heating (EM-SAGD) being developed by Siemens AG. With no steam
requirements, and considerably lower reservoir temperatures, electric heating technologies
aim to access resources unreachable with current SAGD technology. Early indications
suggest that electric heating technologies will require upwards of ten times the electricity
requirements of current SAGD operations. While several of these technologies are in pilot or
demonstration phases, a commercial deployment timetable has not yet been determined for
these technologies.
Hybrid solvent extraction together with electric heating technologies are also being
developed, with the objective of lowering energy intensity by operating at 50 degrees
Celsius and requiring little amounts of water. This technology is being developed in
partnership between operators and technology providers including Nexen Inc., Laricina
Energy Inc., Suncor Energy Inc. and Harris Corporation.
In situ combustion technologies produce bitumen using heat generated within the reservoir
from combustion. Heat from combustion reduces the bitumens viscosity and mobilizes
it. The burning progresses through the reservoir, mobilizing the oil and combustion gases,
which then drain to the production well zone by gravity. Potential benefits over current SAGD
processes include lower water demand and lower GHG emissions. Petrobank Energy and
Resources Ltd.s Toe-to-Heel Air Injection (THAI) method and AOCs combustion overhead
gravity drainage (COGD) are both examples of this technology.
A technique similar to SAGD injects solvents such as ethane, propane or butane instead
of steam into the oilsands reservoir to mobilize the bitumen. These processes have the
potential to eliminate natural gas requirements for heating water into steam, thereby
reducing GHG emissions and water consumption. Vapour extraction process (VAPEX) being
explored by industry and solvent aided process (SAP) developed by Cenovus Energy Inc.
are examples of this technology.
The AESO anticipates near-term growth in the oilsands to occur using existing mining
and SAGD technologies. Over the longer term, the technologies discussed above could
potentially develop on a commercial scale, causing a measurable impact to oilsands
electricity consumption and generation. Electricity consumption could be greatly increased
if electric heating production techniques prove successful. At the same time, cogeneration
development would be reduced if less steam is required for production, due to in situ
combustion, solvent or electric heating techniques. The impact of these new technologies
remains uncertain at this time; however, their development is closely followed and will be
incorporated into future forecasts as they evolve.
PAGE 52
Electricity Intensities and Efficiencies
The AESO conducts significant research into oilsands electricity intensities and efficiencies
as part of its forecast process.
As a result of its research, the AESO finds that, in general, oilsands electrical intensities are
more likely to rise in the future than decrease. The primary use of electricity at oilsands sites
is for motors which are typically used to drive pumps. Oilsands sites move large quantities
of bitumen, water, steam and other liquids using pumps and compressors driven by electric
motors. As sites expand, and distances from central processing facilities to wells increases,
materials need to be transported greater distances which increases load. The introduction
of electrical submersible pumps (ESPs) to reduce steam-to-oil ratios also increases load.
As discussed, new technologies are currently being tested such as solvent-assisted SAGD
which require the addition of injectors and pumps. These would also increase electric load.
Other new electricity-based extraction techniques are being tested at pilot projects. If
successful, these technologies could significantly increase the average electrical intensity of
the oilsands industry.
Environmental considerations could also increase electrical intensities. Higher elevation
tailings ponds would increase pumping load, as would centrifuges, an alternative to tailings
ponds. Any carbon capture equipment added to a site would increase load, as would
equipment added to increase the amount of water recycling at sites.
Factors which can decrease electrical intensities are fewer. Part of the reason for this is the
electrical motors used at oilsands sites are already very efficient. However, there is some
opportunity for efficiency gains through the use of variable speed motors as a replacement
for multiple motors. Also, improved extraction efficiency could reduce electrical intensity.
For example, improved well-pairing communication between well pairs allows for the wells
to share heat and pressure which can lower the need to pump steam, thus reducing the
pumping load required to extract a given barrel of bitumen. Alternative tailings solutions
such as Suncors TROTM process, which can speed up and improve tailings reclamation,
may also reduce electricity demand.46
The AESO finds that, based on its assessment of oilsands electrical intensities, there are
more factors that could increase than decrease electrical intensity of the oilsands. Slight
growth in the electrical intensity of the oilsands is forecast in the 2014 Long-term Outlook
and is reflected in its oilsands energy forecast; however, it is within a historical range. The
growth in electrical intensity is based upon information from individual project information
combined with third-party forecasts of oilsands production. The forecast electrical
intensities are also compared with historical intensity trends in order to assure consistency
and reasonableness.
46
http://www.suncor.com/en/responsible/3229.aspx
PAGE 53
Efficiency efforts in the oilsands are driven by a need to minimize costs. This implies that
when companies seek to lower their costs, they will spend capital where it will have the
strongest cost-savings effect. Since natural gas represents a significantly larger share of
costs than electricity, oilsands producers tend to focus on lowering their steam-oil ratios as
much as possible, and in some cases this may mean increasing electricity consumption.
Upgrading Capacity
Upgrading is the process of converting heavy oil such as bitumen into more easily used
hydrocarbon derivatives such as synthetic crude oil. Currently, all mined bitumen and 11
per cent of all in situ bitumen is upgraded to synthetic crude oil in Alberta. There are five
upgraders in the province, one under construction and another undergoing expansion. The
first phase of North West Redwater Partnerships47 231,000 barrel per day upgrader is under
construction in the Fort Saskatchewan area with support from the Alberta government
under the Bitumen Royalty-In-Kind (BRIK) program.48 Canadian Natural Resources Limited
is currently working on a phased-in expansion of its Horizon site, which will increase
upgrading capacity from 110,000 to 250,000 bbl/d.
The decision to build upgrading facilities in Alberta depends on the long-term profitability
of supplying synthetic crude oil, the light-heavy differential, and government programs that
support development. Light-heavy differential refers to the difference between the price
of light crude and heavy oil. The price of light crude needs to be approximately 30 per cent
higher than the price of heavy oil, and sustained for a period of time, for upgraders to break
even. These economic considerations are weighed against the costs of transporting the
heavy crude to other markets. Major influences on the cost of transporting heavy crude
to other markets to be refined are the price and availability of the diluents needed for
pipeline transport.
Based on industry assessments of the future of upgrading in Alberta, it is generally
expected that upgrading will not be sufficiently economic for new upgraders to be built
beyond those currently planned over the next 20 years. The cancellation of Suncors
Voyageur upgrader in March 2013 due to challenging economics supports this outlook.49
However, it is possible that government support such as the BRIK program will be
implemented to support additional upgrading capacity. In the event additional upgraders
are constructed, they have the potential to add large, concentrated pockets of electric load
within the province.
Based on data from current and expected upgraders, an upgrader generally uses between
40 MW and 120 MW per 100,000 barrels per day of upgrading capacity, depending on
technology choice and products created.
47
In February 2011, North West Upgrading entered into a 50/50 joint venture partnership with Canadian Natural Resources
Limited. This collaboration is now called North West Redwater Partnership.
48
http://www.energy.gov.ab.ca/BRIK.asp
49
http://www.cbc.ca/news/business/suncor-cancels-proposed-voyageur-upgrader-1.1362462
PAGE 54
Export Pipelines
There are a significant number of pipelines either under development or about to develop
to support the growth in oilsands production as well as to move other natural gas and
petroleum-based products. Most are intra-Alberta pipelines which have a high likelihood
of being constructed. However, the large bitumen-exporting pipelines require special
consideration. These large export pipelines are subject to greater regulatory uncertainty
than intra-Alberta pipelines. They also have large potential loads which can dramatically
alter regional load forecasts.
The AESO assessed the likelihood of these pipelines entering service based on third-party
industry information (including assessments by PIRA Energy Group and IHS CERA) and
decided to include three of the four major new export pipelines explicitly in the 2014 LTO.
The remaining pipeline (Northern Gateway) was not included due to industry pessimism that
it will be approved within the next few years; however, its future load potential was analyzed
and studied as a sensitivity in case it does proceed. This strategy allows the 2014 LTO to be
aligned with industry expectations of pipeline development while allowing the AESO to be
prepared in the event that development occurs differently. The overall AESO export pipeline
strategy is outlined in Table C-4 below.
Table C-4: AESO Export Pipeline Forecast Strategy
Project
Capacity
In Service Date
AESO Strategy
TransCanada
Keystone
590,000 bbl/d
In service
N/A
TransCanada
Keystone XL
830,000 bbl/d
Late 2015
Included late 2015
TransCanada Energy
East Conversion Line
1,100,000 bbl/d
End of 2017 to early

2018
Included 2017
Kinder Morgan
TransMountain
Pipeline Expansion
+590,000 bbl/d
2017
Included 2017
Enbridge Northern
Gateway
520,000 bbl/d
Late 2017
Not in main forecast but

studied as sensitivity
Enbridge Clipper
(Line 67)
+120,000 bbl/d
Mid-2014
Included 2014
PAGE 55
Generation Forecast Considerations
As part of its forecast process, the AESO evaluates the potential of various forms of
generation. This evaluation helps guide the AESO to understand which forms of technology
are most and least likely to develop. Figure C-1 shows the type and location of existing
generation sources in Alberta.
Figure C-1: Type and Location of Generation in Alberta
Fort McMurray Area Detail
Wabamun / Edmonton Area Detail
Coal
Gas
Cogeneration
Hydro
Wind
Other
Major Transmission Lines
Calgary Area Detail
Source: AESO
PAGE 56
Existing Technologies
Coal Generation
As of December 31, 2013, Alberta has six coal-fired power generation facilities with a total
installed capacity of 6,271 MW. This represents 43 per cent of the installed capacity, with
the majority located in the Wabamun area.
Albertas large coal reserves are estimated to be 33 billion tonnes,50 equivalent to 1,000
years of supply at the provinces current production rate. A significant portion of the
reserves can be mined using open-pit methods. These coal reserves arc from northwest of
Edmonton to southeast of Calgary with coal quality declining from northwest to southeast.
Not all of the coal in Alberta would be economically viable for power production.
In 2012 the Canadian federal government enacted the Reduction of Carbon Dioxide
Emissions from Coal-fired Generation of Electricity Regulations. The regulation allows
existing coal units up to 50 years of operational life before they must either retire or retrofit
with carbon capture and storage (CCS). Additionally, new units would be required, starting
in 2015, to meet a 420 kg/MWh emission level that is roughly equivalent to a natural gas
combined-cycle unit. This means new units would need to implement carbon reducing
technologies. Given the current economics of CCS, development of new coal-fired
generation is not expected to occur.
Natural Gas Generation
Alberta had 5,892 MW of gas-fired generation as of December 31 2013, consisting of 4,245

MW of cogeneration, 843 MW of combined-cycle, and 804 MW of simple-cycle generation.
Cogeneration is located at industrial sites, with a large portion of the generation in the
Northeast Region of the province. Combined-cycle and simple-cycle generation have
flexibility in location siting and are found throughout the province. The 850 MW combinedcycle Shepard Energy Centre is also expected to energize in 2014 with commercial
operation in 2015.
The resource potential of gas-fired generation is large. The technology is mature, has
location flexibility, relatively low GHG emissions, and good economics. There are also few
barriers to its development.
Gas-fired generation plays an important role in the Alberta electricity market by providing
reliable baseload, flexible mid-range, and peaking capacity. The main driver of cogeneration
growth is related to increases in industrial activities. As large industry develops and there
is need for both heat and energy, cogeneration is a suitable technology. Combined-cycle
generation provides flexible baseload generation. It provides larger amounts of power for
the market and can serve as a replacement for retiring coal-fired units. Given options around
baseload generation such as nuclear, hydro, clean coal and others, combined-cycle is the
expected choice for baseload generation in the future as it has the fewest barriers and
lowest levelized costs of assessed technologies. Simple-cycle units have a short start-up
time and the ability to ramp up and down rapidly, making them well suited for providing
peaking capacity and operating reserves. Simple-cycle generation is an important part of
any electrical system as the fast-ramping characteristic is valuable.
50
ERCB, ST98-2011: Albertas Energy Reserves 2010 and Supply/Demand Outlook 2011-2020, June 2011
PAGE 57
Wind Generation
As of December 31, 2013 there were 16 transmission-connected wind farms operating in

Alberta, with a total capacity of 1,088 MW, representing nine per cent of the provinces
total installed capacity. There are two additional wind projects expected to commission in
2014 totalling 350 MW. The majority of the wind farms are located in southern Alberta in the
Pincher Creek area, with two facilities located in the Central Region.
There are three areas in Alberta where wind speeds are attractive for the development of
wind facilities. These locations are in the South and Central Regions and a smaller area
in the Northwest Region of the province. The theoretical potential of wind development in
Alberta is large. In a 2013 study on potential wind development in Alberta,51 it was estimated
that there is 4,000 MW of wind potential with a capacity factor above 40 per cent, while
there is 32,000 MW of wind potential with a capacity factor above 35 per cent.
The development of wind depends on several considerations including comparable cost
economics, green attributes, and provincial, federal and U.S. policy. As such, the main
drivers of wind are the expected long-run economics, including impact from policy, and
currently developing projects. While wind has the second lowest levelized cost of the
technologies assessed, it typically receives lower average revenue than other asset types.
This is because wind is a price-taker and its generation displaces marginal units from the
merit order, thereby lowering the system marginal price. Policy supporting renewable sources
of energy can help the economics of wind, as can market-based mechanisms such as the
AESOs project to make wind dispatchable, currently in development. Depending on policy,
the relative economics or the market prices received can be improved. Various policies
have supported the development of wind over the last 10 years in Alberta. Examples of
these include the ecoEnergy for Renewable Power program and the Specified Gas Emitters
Regulation. Policy in the U.S. as well as individual company policy have also supported wind
development in Alberta.
Hydroelectric Generation
Albertas hydro capacity is 894 MW and represents six per cent of the total installed
capacity in the province. Facilities are primarily legacy units developed prior to market
deregulation, and they provide operating reserves and peaking capacity. The largest units
are the Bow River hydro system, the Brazeau hydro plant and the Bighorn hydro plant.
Future hydro potential is possible throughout the province, with the majority of potential on
the Athabasca, North Saskatchewan, Peace, Slave and South Saskatchewan River basins.
In a report to the Alberta Utilities Commission in 2010,52 the ultimate annual energy potential
was estimated at 53,000 GWh, or 10,000 MW of capacity at a 60 per cent capacity factor. Of
this total ultimate developable energy potential, only 20 per cent of this value was estimated
to be developed in the next 30 years. Depending on the capacity factor assumed, this
means 1,500 MW to 6,000 MW of hydro capacity could be developed.
51
Solas Energy Consulting, Alberta WindVision Technical Overview Report, 2013, pg. 15
52
http://www.energy.gov.ab.ca/Electricity/pdfs/AUCHydroelectricStudy.pdf
PAGE 58
Biomass/Other Generation
Alberta currently has 423 MW of other generation capacity fueled by biomass and waste
heat. The majority of this capacity is located in northern Alberta, although a small amount
can be found in central and southern Alberta.
Biomass fuel resources are available in Alberta largely from the forestry industry (industrial
and commercial wood residues) and the agricultural sector (crop and livestock waste). In
some cases, these facilities are able to run cogeneration units producing both steam and
electricity, increasing overall industrial efficiency. Power production from biomass power
facilities typically runs as a baseload generator. Generation from biomass is generally
restricted to locations at the fuel source to eliminate transportation costs. The potential for
new biomass generation is expected to come from relatively small installations.
The development of biomass generation will be influenced by the ability to economically
utilize any waste material from processes. This could be further incented through government
policy or through an increase in the costs to other fuel sources such as natural gas.
Other Technologies
Solar
Alberta has strong solar resources with photovoltaic potential of approximately 1,200 kWh
per year per installed kW in Calgary and Edmonton. CanSIA has estimated that between
9,000 MW and 15,000 MW could be developed within Canada by 2025.53 While no largescale transmission-connected solar facilities have developed, there is potential. Overall,
opportunities exist for smaller residential and commercial development, rural applications,
and large-scale transmission-connected facilities.
Drivers for the development of solar can be split into smaller applications of 1 MW or less,
and large transmission-connected facilities. Smaller applications fall under the Alberta
Micro-generation Regulation. Through this regulation, which began in 2009, Alberta has
seen 4 MW of solar develop to the end of 2013. Given this amount of interest with little
direct policy supporting it, and with the expectation that the solar industry will grow, small
solar applications can be expected to continue developing, growing at least as fast as
has been seen. Policy could be implemented that would increase the amount of residential
and commercial solar. This impact of policy has been recognized in other locations around
the world.
For the development of large-scale solar, the main driver is around relative costs. Either
a decrease in solar costs or an increase in costs of other technologies could increase
the development of solar. Decreases in the cost of solar could come from technology
improvements or from supportive policy. Increases in the cost of other technologies could
come from increased fuel costs, such as higher natural gas prices, or from increased costs
on emissions. Large-scale solar is included in the main outlook. Nominal amounts of solar
are included in the Energy Transformation Scenario grouped into the Other category.
53
Solar Vision 2025, CanSIA, December 2025
PAGE 59
Energy Storage
Alberta interest in utility-scale energy storage has increased in recent years. The AESO
has received applications for connection of multiple energy storage projects including
batteries, compressed air energy storage and pumped hydro. In addition, in September
2012, the AESO launched an energy storage initiative which will review the effectiveness
and applicability of existing market rules and technical standards as they apply to energy
storage resources. Further information on energy storage can be found in the AESOs
Energy Storage Initiative Issue Identification paper.54
As energy storage technologies develop, the overall potential will be related to market
dynamics with two drivers for the application. First, storage technologies are well suited to
receive energy during times of surplus and to release energy during times of energy scarcity.
This serves well as a time-shifting function within the market to decrease price volatility
while capturing arbitrage opportunities. The second driver for storage is related to the
firming of variable generation.
Geothermal
As a renewable energy source that can generate baseload electricity, geothermal

technology extracts heat from the earths inner layers to produce electricity. In most cases,
this is accomplished by pumping fluids from several thousand feet below the earths surface
to an electrical generation facility. Geothermal energy is considered a renewable energy
source because when managed efficiently, a site will provide a long-term supply of heat
which does not burn fossil fuel.
Early estimates limit the future geothermal generation in Alberta to 300 to 500 MW.55
In addition, there are opportunities for residential and commercial heating and cooling
systems.
Geothermal provides baseload electricity, and development would be in response to that
requirement. Given high estimated capital costs, and the low overall potential in Alberta,
geothermal is not expected to provide significant generation capacity to the system.
Nuclear
Nuclear power generation is a type of thermal power in which electricity is generated from
steam produced by the fissioning, or splitting, of uranium atoms. These power plants
range in size from smaller 10 MW designs to larger 1,200 MW designs. Currently there are
international efforts to develop micro-scale nuclear generation units that are self-contained
and require minimal operational oversight.
In 2013, there were reports that Toshiba had plans to develop a 10 MW 4S nuclear reactor to
be used in the oilsands. The reactor would create steam for use in an in situ operation and
would not need to be refueled for up to 30 years. The reactor design still needs to obtain
regulatory approval before any development could proceed.
While Alberta has no nuclear generation, in 2008 Bruce Power had applied for a license to
build a nuclear power plant but abandoned the project in 2011. During that time the Alberta
54
http://www.aeso.ca/downloads/Formatted_ES_IS_Paper_Final_20130613.pdf
55
Borealis GeoPower. CanGea 3rd Geothermal Power Forum, November 4, 2011
PAGE 60
government conducted consultations with Albertans56 to identify the opinions held on

nuclear energy. One key finding was that the majority of Albertans preferred that nuclear
power plants be considered on a case-by-case basis.
The potential for the development of nuclear reactors will depend on the ability of reactors
to obtain regulatory approvals, public perception, and the ability to secure a role within
industrial operations and the market. Given the withdrawal of the 2008 Bruce Power project
and the required regulatory approvals for small nuclear, nuclear projects are not expected to
develop within Alberta at this time.
Levelized Unit Electricity Costs
The relative cost of different generation technologies is considered in developing the

generation forecast. This section estimates the comparative cost of several commercial
generation technologies. The Levelized Unit Electricity Cost (LUEC) is used to calculate the
break-even cost of electricity over the lifetime of a project; it is not, however, an indication
of profitability. While the LUEC is a summary measure of the overall competitiveness of
different generating technologies, actual plant investment decisions are affected by the
specific technological and regional characteristic of a project, which involve numerous other
priced and unpriced considerations.
The comparative cost is represented by the LUEC, which is the constant electricity
price required to cover all costs, including a specified rate of return, over the entire life of
the project. The LUEC is derived using a discounted cashflow approach, which sets the
present worth of revenue equal to the present worth of expenses, determining the
constant price required to cover all expenses. The costs included in the calculation
are capital, operating and maintenance (O&M), fuel, emission and taxes, and excludes
transmission-related charges.
The assumptions used in the LUEC are based on publicly available information but are
Alberta-specific. These assumptions are benchmarked for validity against other external
estimates, estimates for existing Alberta-based projects, and stakeholder input. In addition,
sensitivities were created around the assumptions to test the impact on the overall
comparative cost ranking.
56
http://www.energy.alberta.ca/Electricity/pdfs/AlbertaNuclearConsultationFull.pdf
PAGE 61
Technology Considerations
For the 2014 LTO, the LUEC was calculated for the following technologies:
Renewables
Wind
Photovoltaic Solar
Hydro-electricity
Gas-fired
Simple-cycle
Combined-cycle
Cogeneration
Coal-fired
Coal Generation with Carbon Capture and Storage (CCS)
Key inputs into the calculation of the LUEC include operating characteristics and costs
for each technology. Operating characteristics include net capacity, operating heat rate,
average annual capacity factor, CO2 emission intensity, and project life. Cost assumptions
include overnight57 capital costs, construction time, fuel prices, fixed and variable operating
and maintenance costs, tax rates, and CO2 emission prices or revenues (if applicable).
The assumptions used in the LUEC are representative only of the various technologies as
their value can vary because of geography, application, site specifics, as well as change
as technologies evolve. All inputs are assumed for generic utility-scale plants. The costs
may not necessarily match those derived in other studies that employ different approaches
or definitions to cost estimation. The estimate for hydro generation is a high-level generic
estimate for a medium-sized reservoir facility; cost to develop an actual facility may differ
due to site-specific factors.
LUEC Results
The relative ranking of the costs of different generation technologies can be seen in Figure C-2.
The costs of coal-fired generation are noticeably higher than for other technologies due
to the cost of installing and operating CCS systems. While CCS significantly lowers the
net emission intensity for coal-fired generation, it also requires roughly one-third of gross
capacity output in auxiliary load, which adds to the overall cost of the facility. CCS is a
new technology which is still in the development stage, and so there is a great deal of
uncertainty regarding the impact on the LUEC. However, given current cost estimates,
coal-fired generation with CCS is not likely to be developed in Alberta without significant
capital subsidies, very high carbon costs, or both.
57
Interest incurred during construction is not included
PAGE 62
Figure C-2: Comparative Generation Cost

$300
$250
(2013 $Cdn/MWh)
$237
$200
$176
$150
$105
$100
$82
$89
$110
$106
$69
$50
$0
Combinedcycle
Wind
Hydro
Cogeneration
Simplecycle
PV Solar
Coal w/
CCS
The LUEC confirms the current preference to develop gas-fired generation plants, as the
lowest cost technology is for combined-cycle, followed by wind. The two other gas-fired
technologies then follow in relative ranking with hydro.58 Note that the cost for the generic
hydro facility above is not site-specific and so may vary significantly from an actualized
project in Alberta.
Sensitivities
Sensitivities for the levelized generation costs were analyzed around the following key
drivers: capital cost, capacity factor, fuel prices59 (if applicable), and CO2 emission prices.
These sensitivities were used to test boundary conditions which would alter the relative
ranking of generation costs. Sensitivities were also used to develop the scenarios in Section 7.
The impact of the sensitivity varied by type of technology. For example, rising fuel prices had
no effect on renewable technologies but a significant impact on combined-cycle generation.
In general, the larger the cost of construction, the smaller the impact of other drivers.
Scenarios
The levelized unit electricity costs were adjusted for the Environmental Shift and Energy
Transformation Scenarios to reflect the different conditions from the main outlook.
The assumptions used for scenarios are summarized in the table below. All scenarios
incorporate the Alberta Specified Gas Emitters Regulation (SGER) framework, but the
Environmental Shift and Energy Transformation Scenarios utilize more restrictive parameters.
58
Cogeneration is treated as a stand-alone facility and is net fuel allocated to steam
59
Natural gas prices for the main outlook are discussed in Section 3.3.1 and additional details are included in the
2014 LTO data file.
PAGE 63
Table C-5: LUEC Environmental Assumptions60

Main Outlook and
Low Growth*
Environmental
Shift
Energy
Transformation
SGER
Annual
Reduction
2%
5%
10%
Ceiling
12%
50%
None
CO2
Price 2013
$15
$25
$25
CO2
Price 2020
$15
$55
$55
CCS Production Subsidy61
No
No
Yes
No
No
Solar, CCS
Reference
Reference
High
Reduction
Technology Breakthrough
Thermal Fuel Prices
* Based on existing policy
Source: AESO
Compared to the main outlook, renewable technologies in the Environmental Shift Scenario
become more cost competitive relative to thermal technologies due to stronger revenues
from increased CO2 prices.
In the Energy Transformation Scenario, the use of fossil fuels is restricted due to strong
global environmental concerns. These concerns result in higher natural gas prices which
increase the cost of thermal generation. There is also research and development support
for emerging low-emission generating technologies such as solar and CCS. CCS is further
advantaged by a production subsidy, and natural gas and coal prices increase due to
environmental regulations. Cumulatively, these changes raise the costs of thermal generation
relative to other low-emitting technologies. The LUEC for generation technologies in the main
outlook and the environmental scenarios is summarized in Figure C-3.
60
2013 $Cdn 20/MWh for 20 years
PAGE 64
Conclusion
The levelized cost is an important input into the generation forecast for the 2014 LTO
and is one of many factors considered. The results show that given current cost inputs,
combined-cycle generation is the lowest cost generation technology followed by wind.
This is consistent with current projects that have applied to the AESO for connection in
that there are large amounts of both of these technologies. Baseload technologies such
as hydro and coal with CCS are higher cost as both have large up-front capital costs.
Even if considerable reductions in capital costs were to occur, coal-fired generation with
carbon capture is a high-cost baseload technology and would not be as competitive
as other technologies. Solar has been assessed as a higher-cost technology, but if
reductions in capital costs occur and if the cost of other generation sources increase
from either fuel input costs or emission-related costs, solar could be competitive. The
costs of simple-cycle reflect its operational output style of peak load operation and low
capacity factors. Cogeneration costs are primarily related to the cost of power output.
The AESOs cogeneration LUEC assumes economic benefits from natural gas efficiencies
compared to standalone boilers and generation sources as well as from SGER. However,
additional economic benefit is derived from the value of heat and steam or from operational
efficiencies such as shared operation and maintenance costs are not included in the AESOs
cogeneration LUEC.
Figure C-3: LUEC Scenario Comparison
$300
(2013 $Cdn/MWh)
$250
$200
$150
$100
Main Outlook and Low Growth
Solar
Coal w/ CCS
Cogen
Simple Cycle
Wind
Hydro
Combined Cycle
Solar
Environmental Shift
Coal w/ CCS
Cogen
Simple Cycle
Wind
Hydro
Combined Cycle
Solar
Coal w/ CCS
Cogen
Simple Cycle
Wind
Hydro
$0
Combined Cycle
$50
Energy Transformation
Source: AESO
PAGE 65
Appendix D
Forecast Comparison
As part of its forecasting process, the AESO assesses past forecasts along with Albertas
actual demand and electricity usage to verify methodology and identify variances that could
impact the current energy and load forecast. Furthermore, since the 2014 LTO is intended
to be used as a key input into transmission planning, the AESO also identifies any material
changes between forecasts so that impacts to current and future transmission plans can
be addressed.
Table D-1: Historical Forecast Accuracy
Comparison of AIL Energy Forecast and Actual
Year of Forecast
1st Year of Forecast
FC 2009
2012 LTO
2012 LTOU
GWh
GWh
GWh
271
0.4%
591
0.8%
582
0.8%
1,124
1.5%
2nd Year of Forecast
735
1.0%
1,057
1.4%
3rd Year of Forecast
1,712
2.3%
1,987
2.6%
4th Year of Forecast
3,389
4.5%
5,427
7.0%
Comparison of Peak Load Forecast and Actual
Year of Forecast
FC 2009
MW
2012 LTO
%
MW
2012 LTOU
MW
1st Year of Forecast
-390
-3.8%
-41
-0.4%
316
3.0%
2nd Year of Forecast
-26
-0.3%
242
2.3%
180
1.6%
3rd Year of Forecast
-32
-0.3%
174
1.6%
477
4.5%
525
4.7%
Note: Positive numbers indicate the forecast values exceeded actuals. Negative values indicate actuals exceeded what was forecast.
PAGE 66
Appendix D: Forecast Comparison
Regional Comparison of Forecasts
As can be seen in Table D-2, the 2012 LTOU showed a marked increase over the 2012 LTO
in the Northeast and Northwest Regions. As was noted in the 2012 LTOU, many oilsands
projects advanced through their regulatory and development processes which increased the
oilsands forecast. Furthermore, the 2012 LTOU was slightly higher than the 2012 LTO in later
years (2028-2032) due to a higher oilsands forecast.
From the 2012 LTOU to the 2014 LTO, there were minimal differences overall. The relatively
minor differences between the 2012 LTOU and the 2014 LTO are primarily caused by
changes in projects (projects added and removed as well as timing changes). Overall, the
fundamentals driving the 2014 LTO are highly consistent with those of the 2012 LTOU.
Table D-2: Comparison of Regional Forecasts (MW)
Northwest
Northeast
Edmonton
Central
South
Losses
AIL
2012 LTO
2019
1,109
4,118
2,596
1,888
3,687
380
13,778
2012 LTOU
1,337
4,527
2,466
1,963
3,604
417
14,314
2014 LTO
1,317
4,613
2,500
1,951
3,464
429
14,274
Northwest
Northeast
Edmonton
Central
South
Losses
AIL
1,232
4,669
2,844
2,073
4,083
423
15,325
2024
2012 LTO
2012 LTOU
1,408
5,465
2,580
2,039
3,843
460
15,795
2014 LTO
1,443
5,265
2,785
2,152
3,887
482
16,014
Northwest
Northeast
Edmonton
Central
South
Losses
AIL
1,377
5,254
3,212
2,283
4,678
477
17,281
2032*
2012 LTO
2012 LTOU
1,625
6,154
3,004
2,337
4,545
530
18,194
2014 LTO
1,600
5,770
3,246
2,416
4,525
545
18,102
* 2032 values compared because 2012 LTO and 2012 LTOU did not forecast to 2034
Appendix D: Forecast Comparison
PAGE 67
Appendix E
System Load
Table E-1:
Year
System Load Energy (GWh)**
Total AIL
Total On-site
Generation
Energy
[A]
BTF Energy
(Energy served
by On-site
Generation)
System
Load Energy
[A]
[A] - [B]
2012*
75,574
15,918
59,656
2013*
77,451
16,980
60,471
2014
79,310
27,508
17,387
61,780
2015
82,214
28,078
18,024
63,918
2016
85,716
29,326
18,793
66,404
2017
90,669
32,567
19,877
69,940
2018
95,646
36,743
20,969
73,883
2019
100,106
37,124
21,947
77,214
2020
104,344
38,162
23,495
79,447
2021
107,267
38,961
24,264
81,601
2022
109,514
40,541
25,108
83,004
2023
111,898
41,546
25,518
84,977
2024
114,249
41,907
25,696
87,150
2025
116,234
25,895
88,936
2026
118,391
26,096
90,892
2027
120,303
26,298
92,603
2028
122,158
26,502
94,254
2029
123,737
26,707
95,628
2030
125,508
26,914
97,191
2031
127,124
27,123
98,599
2032
128,734
27,333
99,999
2033
129,997
27,545
101,050
2034
131,351
27,758
102,191
* Denotes actuals
** Table data corrected June 2014
PAGE 68
Appendix E: System Load
Table E-2: System Load at AIL Peak (MW)**

Year
Total AIL Peak

Load
Total On-Site
Generation
BTF (Load served

by On-site
Generation)
System Load at
AIL Peak
10,599
2,026
8,574
2012*
2013*
11,139
2,176
8,963
2014
11,323
3,677
2,257
9,066
2015
11,811
3,339
2,310
9,501
2016
12,531
4,031
2,479
10,052
2017
13,192
4,744
2,552
10,640
2018
13,783
4,940
2,735
11,048
2019
14,274
4,950
2,906
11,368
2020
14,722
4,966
3,041
11,681
2021
15,033
5,262
3,114
11,920
2022
15,376
5,195
3,000
12,376
2023
15,672
5,579
3,212
12,460
2024
16,014
5,459
3,437
12,578
2025
16,318
3,463
12,854
2026
16,643
3,490
13,153
2027
16,869
3,517
13,352
2028
17,137
3,545
13,592
2029
17,403
3,572
13,831
2030
17,647
3,600
14,048
2031
17,870
3,628
14,243
2032
18,102
3,656
14,446
2033
18,308
3,684
14,624
2034
18,519
3,713
14,807
* Denotes actuals
** Table data corrected June 2014
PAGE 69
Table E-3:
Demand Transmission Service (DTS) Energy (GWh)
Year
2014 LTO
2012*
55,736
2013*
56,959
2014
58,162
2015
60,328
2016
62,949
2017
66,665
2018
70,389
2019
73,779
2020
76,399
2021
78,496
2022
79,838
2023
81,755
2024
83,865
2025
85,601
2026
87,498
2027
89,154
2028
90,744
2029
92,179
2030
93,683
2031
95,031
2032
96,369
2033
97,358
2034
98,321
* Denotes actuals
PAGE 70
Appendix F Industry Engagement

As part of developing the 2014 Long-term Outlook, the AESO held individual meetings
with a large number of market participants and other interested parties from May to
October 2013. These meetings focused on gathering information for the forecast, such as
project details, corporate forecasts, market outlooks and general expectations for future
load and generation in Alberta.
In preparing the 2014 LTO, the AESO met with many organizations including those listed
below. The AESO is grateful for the guidance, input and comments from the individuals
representing these companies. Their guidance is not in any way an endorsement of the
accuracy or validity of the 2014 LTO.
Alberta-Pacific Forest Industries
Kinder Morgan
ATCO Power
Maxim Power Corp.
BluEarth Renewables
MEG Energy
Bull Frog Power
NaturEner Energy Canada Inc.
Canadian Association of Petroleum
Nexen Inc.
Producers
Canadian Natural Resources Limited

Capital Power Corporation
Canadian Wind Energy Association
Cenovus Energy Inc.
ConocoPhillips
Enbridge Inc.
Enbridge Pipelines
ENMAX Corporation
Energy Resources Conservation Board
Husky Energy
Howell-Mayhew Engineering
Imperial Oil
Pembina Institute
PIRA Energy Group
SkyFire Energy
Statoil Canada Ltd.
Shell Canada Energy
Suncor Energy
Syncrude Canada Ltd.
TAMA Power
TransAlta Corporation
TransCanada
Total E&P Canada
West Fraser Pulp
In co-operation with the AESO, the TFOs and DFOs have provided updated forecasts for
each of their facilities and these have been incorporated into the 2014 LTO.
ATCO Electric
EPCOR Utilities Inc.
City of Lethbridge
ENMAX Power Corporation
City of Medicine Hat
FortisAlberta Inc.
City of Red Deer
Appendix F: Industry Engagement
PAGE 71
Appendix G
Alberta Reliability Standard Requirements
The AESO has undertaken an initiative to adopt the applicable North American Electric
Reliability Council (NERC) reliability standards as Alberta Reliability Standards.
In January 2010, four standards were approved relating to Modeling, Data and Analysis
(MOD) and load forecasting. The four standards relating to documentation and reporting
requirements are listed in Table G-1.
Table G-1: Reliability Requirements: Documentation and Reporting Standards
Standard
Description
MOD-016-AB-1.1
Documentation of Data Reporting Requirements for Actual and Forecast

Demands, and Net Energy for Load
MOD-017-AB-0.1
Aggregated Actual and Forecast Demands and Net Energy for Load
MOD-018-AB-0
Reports of Actual and Forecast Demand Data
MOD-019-AB-0
Forecasts of Interruptible Demands Data
More information regarding Alberta Reliability Standards can be found on the AESO website.61
Under MOD-016-AB-1.1,62 the AESO must have documentation identifying the scope
and details of the actual and forecast demand data and net energy for load data to be
reported for system modeling and reliability analyses. This 2014 LTO publication is that
documentation. In accordance with MOD-016-AB-1.1, the 2014 LTO is published and
distributed within 30 calendar days of a revision being approved by the AESO.
Under MOD-017-AB-0.1, the AESO is required to report to WECC monthly and annual hourly
peak demand and energy for the prior year as well as forecast for the next 10 years. Under
MOD-019-AB-0, the AESO must also provide to WECC its forecast of interruptible demand
data. This data is included in the 2014 LTO data file.
Under MOD-018-AB-0, the AESO must indicate whether the demand data of other
balancing authorities is included. For the purposes of this document, the load of other
balancing authorities is not included in any of the values or figures shown. That MOD also
requires that the AESO address how it treats uncertainties in the forecast. The AESO uses
scenarios to deal with uncertainties as described in Section 7.
61
http://www.aeso.ca/rulesandprocedures/17004.html
62
http://www.aeso.ca/downloads/MOD-016-AB-1.1.pdf
PAGE 72
Appendix G: Alberta Reliability Standard Requirements
Load Forecast Reporting to Western Electricity

Coordinating Council (WECC)
For compliance to the related standards as described above as well as reporting

requirements to the Western Electricity Coordinating Council (WECC), AESO load forecasts
are described in the following terms:
Alberta Internal Load (AIL)
B.
Behind-the-Fence (BTF) is classified as Non-reserved Demand
C.
Demand Opportunity Service and Load Shed Service Imports (LSSi) are classified

as Non-firm Demand
D.
Load that is not classified as either non-reserved or non-firm is classified as:
Firm Peak Demand such that [A] = [B] + [C] + [D]
A.
A
ALBERTA INTERNAL LOAD
(AIL)
NON-RESERVE DEMAND
(e.g. BTF DEMAND)
NON-FIRM DEMAND
(e.g. DOS, LSSi)
FIRM PEAK DEMAND
Appendix G: Alberta Reliability Standard Requirements
PAGE 73
Appendix H
Glossary of Terms
Alberta Interconnected Electric System (AIES): the system of interconnected transmission
power lines and generators.
Alberta internal load (AIL): total provincial electricity consumption including behind-the-fence,
the City of Medicine Hat, and losses (transmission and distribution).
Alberta Utilities Commission (AUC): regulates the utilities sector as well as natural gas and
electricity markets to protect the social, economic and environmental interests of Alberta.
Annual Energy Outlook (AEO): the annual forecast by the U.S. Energy Information
Administration, a sub-department of the U.S. Department of Energy.
Baseload: the minimum amount of electric power delivered or required over a given period of
time at a constant rate.
Bulk transmission system: the integrated system of transmission lines and substations that
delivers electric power from major generating stations to load centers. The bulk system, which
generally includes the 240 kV and 500 kV transmission lines and substations, also delivers/
receives power to and from adjacent power systems.
Behind-the-fence load (BTF): industrial load characterized by being served in whole, or in part,
by on-site generation.
Bitumen: sand and rock that contain a heavy, viscous form of crude oil, particularly in relation to
the Alberta oilsands.
Carbon capture and storage (CCS): technology employed to prevent the release of large
quantities of carbon dioxide (CO2) into the atmosphere from fossil fuel use in power generation
and other industries by capturing CO2, transporting it and ultimately, pumping it into
underground geologic formations to securely store it.
Cogeneration: the simultaneous production of electricity and another form of useful thermal
energy used for industrial, commercial, heating or cooling purposes.
Combined-cycle generation: a system in which a gas turbine generates electricity and the
waste heat is utilized to create steam that generates additional electricity using a steam turbine.
Comprehensive Regional Infrastructure Sustainability Plan (CRISP): the Government
of Albertas long-term approach to planning infrastructure in Albertas three oilsands
geographic areas.
Customer sectors: used to classify types of load. For the purposes of the 2014 LTO, five
sectors were used: Industrial (without Oilsands), Oilsands, Commercial, Residential, and Farm.
Demand side management (DSM): generally refers to activities occurring on the demand side
of the meter that are implemented by the customer directly or by load serving entities.
Distribution facility owner (DFO): term used to describe an electric distribution system
wire owner.
PAGE 74
Appendix H: Glossary of Terms
Effective generation capacity: generation capacity available to serve peak demand, taking into
consideration a reduction in capacity from variable supply sources such as wind and hydro.
Energy Information Administration (EIA): a sub-department of the U.S. Department of Energy.
This agency collects, analyzes, and disseminates independent and impartial energy information
to promote sound policymaking, efficient markets, and public understanding of energy and its
interaction with the economy and the environment.
Energy: electricity consumption over a given period of time for a defined geographic area
expressed in units kWh (kilowatt hour), MWh (megawatt hour) or GWh (gigawatt hour).
Capacity: amount of electric power installed or required from a generator, turbine, transformer,
transmission circuit, substation or system, as rated by the manufacturer.
Gigajoules: a unit of energy equal to one billion joules. As a point of reference, Alberta Energy
estimates that a typical Canadian home uses about 120 gigajoules worth of natural gas each year.
Gigawatt hour (GWh): one billion watt hours.
Greenhouse gas (GHG): gases in the earths atmosphere that absorb and emit radiation within
the thermal infrared range (the greenhouse effect). Greenhouse gases include water vapour,
carbon dioxide, methane, nitrous oxide, and ozone.
Gross domestic product (GDP): one of the measures of income and output for a given
economy. GDP is defined as the total market value of all final goods and services produced
within the economy in a given period of time (usually a calendar year).
Independent System Operator (ISO): an organization established to plan, coordinate, control
and monitor the operation of a bulk transmission system. The ISO in Alberta is defined by
Section 7 of the Electric Utilities Act.
In situ: various methods, including steam injection, solvent injection, and firefloods, used to
recover deeply buried bitumen deposits.
Levelized Unit Electricity Cost (LUEC): the constant electricity price required to cover all
costs, including a specified rate of return, over the entire life of the generation project.
Load (or demand): the rate at which electric energy is delivered to or by a system or part of a
system, generally expressed in kilowatts or megawatts, at a given instant or averaged over any
designated interval of time. It can also be the rate at which electric energy is being used by a
demand customer.
Load factor: ratio of average power demand (load) to peak load during a specified period
of time, often expressed as a per cent.
Megawatt (MW): one million watts.
Micro-generation: In Alberta, under the Micro-generation Regulation, generators that are
connected to the grid who produce one megawatt or less and are powered by renewable
energywith greenhouse gas emissions that cannot exceed 418 KG per megawatt hour.
PAGE 75
Needs Identification Document: a document filed by the AESO with the Alberta Utilities
Commission to define the need to reinforce the transmission system to meet load growth and/or
provide non-discriminatory access to interconnect new loads and generators to the system.
Peak load/demand: the maximum amount of power demand (load) registered in a defined
period of time. The value may be the maximum instantaneous load or, more usually, the average
load over a designated interval of time such as one hour, normally stated in kilowatts
or megawatts.
Point-of-delivery (Pod): the point at which electricity is transferred from transmission facilities
to facilities owned by a market participant receiving system access service under the ISO tariff,
including an electric distribution system.
Price-responsive load: large commercial and industrial customers with flexible operations that
enable them to reduce load or demand in response to market price signals.
Provincial Energy Strategy (PES): the Government of Albertas long-term action plan for Alberta to
achieve its goals of clean energy production, wise energy use and sustained economic prosperity.
Simple-cycle generation: where a gas turbine is the prime mover in a plant. Liquid or gaseous
fuel is burned and passed to a turbine where the hot gasses expand, driving the turbine that, in
turn, drives a generator.
Steam assisted gravity drainage (SAGD): an oil extraction method used in an oilsand deposit
utilizing horizontal well bores in the oil-bearing layer together with pairs of parallel bores drilled to
form a grid. Steam is forced into the oil-bearing layer through the upper well bore which lowers
the viscosity of the oil, enabling it to flow into the lower well bore to be pumped to the surface.
Substation/switching station: a facility where equipment is used to tie together two or more
electric circuits through switches (circuit breakers). The switches are selectively arranged to
permit a circuit to be disconnected or to change the electric connection between the circuits.
Supercritical Pulverized coal (SCPC): a pulverized coal power plant which operates above the
critical point of water (647.096 K and 22.064 MPa). As the operating pressures and temperatures
increase for a coal plant, so does the operating efficiency.
System Load: the total, in an hour, of all metered demands under Rate DTS, Rate FTS and Rate
DOS of the ISO tariff plus transmission system losses.
Transmission losses: energy that is lost to the atmosphere in the form of heat through the
process of transmitting electrical energy.
Transmission system (electric): an interconnected group of electric transmission lines and
associated equipment for moving or transferring electric energy in bulk between points of supply
and points at which it is delivered over the distribution system lines to consumers, or is delivered
to other electric systems.
Unconventional natural gas: unlike conventional or free natural gas that is typically
trapped within multiple, relatively small, porous zones in naturally occurring rock formations,
unconventional natural gas comes from unconventional formations and is more difficult to
recover. Reservoirs include tight gas, coal bed methane, gas hydrates, and shale gas. Recent
technological breakthroughs have made this type of gas easier to recover than it once was.
Upgrading: the process of converting heavy oil or bitumen into synthetic crude oil.
PAGE 76
This document complements the AESOs existing publications and supports our
commitment to sharing information with market participants, other stakeholders and
all Albertans in a timely, open and transparent manner. Readers are invited to provide
comments or suggestions for future reports.
For more information or to give us your feedback, contact forecast@aeso.ca
Alberta Electric System Operator

2500, 330-5th Avenue SW
Calgary, Alberta T2P 0L4
Phone: 403-539-2450
Fax: 403-539-2949
www.aeso.ca
www.poweringalberta.com
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AESO 2014 Long-term Outlook

1.1 AESO Scenarios

1.2 Forecast Results

3.2 Economic Outlook

3.3 Energy Commodity Outlook

4.2 Coal-fired Generation of Electricity Regulations

4.3 Specified Gas Emitters Regulation

5.0 Provincial Outlook

5.2 Energy & Load

6.0 Regional Outlooks

6.2 Northeast Region

6.3 Northwest Region

6.4 Edmonton Region

6.5 Central Region

6.6 South Region

6.7 Outlook Summary and Risks

6.7.1 Load Risks

6.7.2 Generation Risks

7.2 Methodology and Drivers

7.2.1 Scenarios Drivers

7.2.2 Oilsands Production and Load

7.2.3 Environmental Policy

7.2.4 Technology Advances

7.2.5 Other Drivers

7.3 Low Growth Scenario

Appendix A Main Outlook Detailed Results

Appendix B Forecasting Process

Appendix C Forecast Considerations

Appendix D Forecast Comparison

Appendix E System Load

Appendix F Industry Engagement

Appendix G Alberta Reliability Standard Requirements

Appendix H Glossary of Terms