The Alberta Electric System Operator put the cap in place last year over concerns that sporadic supplies of electricity produced by wind-powered turbines could damage the grid.

The AESO, which operates the grid, and Canadian Wind Energy Association (CanWEA) launched the country's first sophisticated wind forecasting study early this year and the industry now believes it has addressed reliability issues, AESO Chief Executive Dale McMaster said.

In addition, the industry has developed a market and operational framework to replace the cap and eliminated the need for limits.

Lifting the restriction will let producers add 500 megawatts of wind-generated electricity by the end of the year, the provincial government said.

Wind farms in Alberta now produce 497 megawatts of power, well below the limit. However, producers have announced plans to add another 5,500 megawatts of capacity over the next several years and 3,000 MW of that is considered to be in advanced planning stages, officials said.

The industry currently estimates that it costs about C$2.2 billion to add 1 MW, said Robert Hornung, president of CanWEA.

The next step will be completing a 240 kilovolt power line in southwestern Alberta by 2009 and another line in the southeast, allowing 1,200 MW of wind power to be integrated into the grid, officials said.