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    What is the Restructured Energy Market?

    The REM updates Alberta’s electricity market by enhancing the current energy-only design with new tools, pricing systems and reliability services. It preserves competitive market principles while improving flexibility, affordability and performance.

    • Enhance Grid Reliability

      As more renewables come online and power demand evolves, Alberta’s grid must become more responsive and flexible. The REM improves reliability through:

      • A new real-time ramping product that rewards flexible resources for balancing supply and demand
      • Better congestion management and real-time operational control enabled by a more sophisticated dispatch solution (security-constrained economic dispatch)
      • Higher offer and price caps to attract electricity from neighbouring jurisdictions and encourage Albertans who can adjust their usage to reduce demand when supply is limited
      • An enhanced reliability unit commitment process to ensure additional power is online if needed

      These changes help ensure Albertans have access to electricity even during peak demand, emergencies or rapid system changes.

    • Deliver Affordability

      The REM is designed to ensure electricity remains affordable while enabling necessary investments by:

      • Encouraging competition and innovation among market participants
      • Supporting greater opportunities for demand response and for consumers to take part in new market opportunities
      • Fairly sharing the cost of grid reliability between consumers and generators that contribute to system instability
      • Implementing strong market power mitigation measures, including:
        • A scarcity pricing curve that allows prices to rise beyond offer caps only when dispatchable supply is limited
        • A lower secondary offer cap of $400/MWh for companies with ≥5% market share which is triggered when market pricing has allowed fixed costs of a hypothetical unit to be recovered

      These measures increase market efficiency and balance consumer protection with long-term reliability.

    • Attract Investment

      The REM supports Alberta’s growing and changing grid by creating stronger investment signals and market opportunities. Key measures include:

      • Introducing a new ramping service product which increases revenue available to flexible resources
      • Implementing locational marginal pricing to show where new investment is most valuable
      • Adjusting market price caps and floors to better reflect the real-time value of electricity

      These enhancements align Alberta’s market design with other jurisdictions familiar to investors, helping attract investment in needed technologies.

    INDUSTRY PERSPECTIVES

    This represents a significant milestone in the restructuring of Alberta’s electricity market. We’ve valued the opportunity to work alongside the AESO and other industry stakeholders through this collaborative process. Access to affordable, reliable power underpins Alberta’s ability to attract investment, create jobs, and keep our industries competitive in a global market.

    As a leading voice for industrial consumers, we remain committed to working toward a sustainable market design that prioritizes affordability, drives competitiveness, and delivers long-term benefits for all Albertans.

    Megan Gill, Executive Director
    Alberta Direct Connect Consumer Association

    REM Key Features

    • Locational Marginal Pricing

      Locational Marginal Pricing (LMP) ensures electricity prices vary by location based on real-time grid conditions, including system line losses. This helps guide investment, reduce congestion and make better use of existing infrastructure. Most consumers will continue to pay a single Alberta-wide price. Eligible large customers will have a one-time option to choose to pay their local price instead.

    • Pricing Framework
      • Energy market offer cap: $1,500/MWh, increasing to $2,000/MWh in 2032
      • Overall price cap: $3,000/MWh, governed by scarcity pricing curve
      • Price floor: remains $0/MWh, dropping to –$100/MWh in 2032
    • New Real-Time Ramping Product

      This is a new reliability service to compensate generators that can quickly ramp up their output, improving grid stability during real-time changes. The cost of this new reliability service will be shared between consumers and generators, based on the extent to which each causes the need for this service.

    • Market Power Mitigation

      Market power mitigation ensures that when there is limited competition, generators cannot use market power to maintain prices above fair levels. These rules protect consumers while allowing cost recovery to attract investment.

    • Enhanced Day-Ahead Market for Operating Reserves

      Expanding participation eligibility to more facilities, along with hourly and simplified procurement, will increase competition in Alberta’s existing day-ahead market for operating reserves.

    • Reliability Unit Commitment

      If forecast supply is insufficient, the AESO can trigger the reliability unit commitment process to turn on slow-to-start power plants in advance—ensuring reliability with minimal market disruption.

    • Enhanced Dispatch and Settlement

      More advanced IT solutions, including security-constrained economic dispatch, will help ensure reliable grid operations and dispatch as conditions become more complex. Starting in 2032, the system will settle payments more often to align with dispatch instructions which will make price signals clearer and more attractive to flexible generators and demand response.

    • Support for Existing Investors

      To ease the transition, temporary financial transmission rights will offset congestion pricing impacts for generators that made investments under the current market framework. These will be phased out over eight years. Long-term financial transmission rights will be discussed through engagement in fall 2025.

    INDUSTRY PERSPECTIVES

    The REM is modernizing Alberta’s electricity market by unlocking signals for energy storage resources. By bringing in best practices from other electricity markets such as LMP, ramping reserves, and stronger price fidelity for flexible supply and demand, the qualities of energy storage will be more efficiently leveraged to help Alberta produce affordable and reliable electricity.

    Justin Rangooni, President and CEO
    Energy Storage Canada

    What is the REM?