March 11

Alberta risks billions in renewable investments with new development rules

0  comments

Alberta is at risk of losing its standing as Canada’s go-to destination for renewable energy investment, as continuing uncertainty after its seven-month project moratorium collides with other provinces’ growing embrace of technologies like solar, wind, and battery storage.

Before the provincial government sprung a sudden moratorium last August on renewable energy projects over a megawatt in size, Alberta accounted for 92% of Canada’s new solar and wind capacity. By the time the seven-month pause ended with a provincial announcement Wednesday, multiple investors had shifted their gaze to jurisdictions with more predictable rules and regulations, with at least one developer writing the province off as a “banana republic”.

With this week’s news, one analyst said Alberta has become “one of the only jurisdictions in the world trying to frustrate the deployment of cheap, clean, renewable electricity.”

On Wednesday, Premier Danielle Smith and Utilities Minister Nathan Neudorf closed off the moratorium with a set of new development rules, due to take effect March 1, that ban renewable energy projects on prime agricultural land, require developers to post bonds to pay for eventual cleanup costs, and set 35-kilometre buffer zones for wind farms around “protected areas and pristine viewscapes”, a term the government did not define. “New wind power projects will not be permitted within those zones, and other forms of renewable energy may be subject to so-called ‘visual impact statements’ before approval,” the Globe and Mail reports.

The new rules give renewable energy developers the option to negotiate reclamation costs directly with landowners, a common practice that already gives farmers and other rural landholders much more say in renewable energy projects than they’ve had in their past encounters with the province’s gravel, coal, or oil and gas industries. The Globe says Smith and Neudorf “gave no indication” that fossil fuel or other natural resource projects would be barred from prime farmland, or that fossil producers would now be required to post security to cover the massive cleanup costs associated with their toxic tailings ponds and abandoned oil and gas wells.

“The renewables sector was not consulted before the pause, and some industry executives worried that unprecedented government intervention into the multi-billion-dollar business would stoke uncertainty and stifle investment,” the Globe and Mail writes. “Wednesday’s announcement did little to quell those concerns.”

“What the announcement brought was the awareness that it’s probably time and money that can be better spent elsewhere, so that we can do something that’s competitive,” said Grant Arnold, CEO of Calgary-based BluEarth Renewables, a company that has invested more than C$600 million to develop 333 megawatts of wind and solar in Alberta over the last three years.“We are struggling to find a way to keep investing in Alberta for future projects,” he told the Globe.

“While the pause has lifted, there remains significant uncertainty and risk for investors wishing to participate in Canada’s hottest market for renewables,” Vittoria Bellissimo, president and CEO of the Canadian Renewable Energy Association (CanREA), said in a release. “It is critical to get these policy changes right, and to do so quickly.”

“Renewable energy has been an Alberta success story,” said Pembina Institute Senior Analyst Jason Wang. But “the Government of Alberta has firmly chosen more expensive energy for Albertans with today’s announcement and takes Alberta in the opposite direction of global energy trends, which include a commitment to triple renewable energy [capacity] by 2030.”

DEVELOPERS HAVE OPTIONS

Arnold’s and Bellissimo’s remarks brought home a reality the Alberta government may learn at its peril: that with competition for investment turning into a global clean energy arms race, developers have no need and likely no time to dwell on jurisdictions that put up unnecessary obstacles to new projects.

“One thing that is different from two or three years ago is that there are procurements gearing up or that we’re in the middle of in virtually every other province in the country,” CanREA’s vice president of policy—western Canada, Evan Wilson, said last week. “So Alberta is in competition with other provinces where there are long-term contracts up for grabs. People will be motivated to get projects built in other jurisdictions, and the [Inflation Reduction Act] provisions in the United States make U.S. jurisdictions very competitive, as well.”

That means “it is incumbent on the government of Alberta to ensure that there is clarity on viewscapes, and perhaps a reconsideration of viewscapes might be in order, to ensure that Alberta can continue to be the leader in Canadian renewable deployment.”

Within hours, renewable energy professionals outside Alberta had spotted the opportunity to tap the renewable energy expertise their provinces need.

“My heart truly breaks for Albertans today. A backward-looking government, irrevocably captured by special interests, is truly cutting off its nose to spite its face—and it is everyday people who will lose (and have already,” economic transformation specialist George Patrick Richard Benson wrote on LinkedIn.

“It is the smallest possible recompense, but to the renewable energy developers and the tradespeople hurt by this, all I can say is: British Columbia needs your help,” Benson added. “We have billions of dollars of renewable energy projects, not only led by BC Hydro but by innumerable Indigenous nations, throughout this province. We cannot build these alone and we will need your expertise and insights to help do this.”

“As a born and raised Albertan this is maddening,” agreed veteran climate and energy analyst Dan Woynillowicz. “As a British Columbian today, there’s a silver lining given the need to build out new renewables as fast as we can. To Alberta’s renewable energy entrepreneurs, engineers and builders: ‘BC is calling.’”

Wilson said the provincial moratorium and the inquiry that followed were a mistake from the start, covering concerns that were already on the way to being settled. “The issues that were being discussed with the inquiry were all worth having discussions about,” he said. But “we could have continued working in Alberta and discussing policy potions without stopping project approvals.” In the wake of the seven-month pause, key aspects of the new rules are still ambiguous, “so we’re still in the middle of this process to figure out what policy in Alberta should look like.”

The decisions on prime farmland and security deposits “reflect the practices our members are already employing in Alberta,” Wilson said. Wind energy “is already easily co-located with agricultural use,” and solar developers “have come a long way in the development of agrivoltaics” to ensure that food and clean electricity production complement each other.

On reclamation costs, “our members by and large are already paying reclamation security. So that’s going to have some transparency added and we’re going to have to talk more about it? I think we can support that,” he said.

CanREA and Rural Municipalities of Alberta (RMA) worked closely together on that issue in response to the provincial inquiry, Wilson added. So “when we see a decision by the government to enhance the role of municipalities in the process, that comes from a joint recommendation from both CanREA and the RMA,” with members of both organizations seeing it as a win-win.

LANDOWNERS HAVE LEVERAGE

When the moratorium was first announced, CanREA said landowners already had the level of control over renewable energy development that the province said it was trying to offer them.

“These are private arrangements between landowners and our members, and our members don’t get to build without their signoff. So the landowner holds a lot of leverage here,” Wilson explained. “Because of the history around reclamation and unfunded liabilities, landowners—who are shrewd businesspeople themselves—have been demanding some form of security. The sector has been responsive to that because it’s become a part of what’s expected, with landowners saying you can’t build here unless you provide us with security.”

Ironically, landowners may be applying experience with other forms of energy to technologies that will behave quite differently over their operating life.

With renewable energy, “the resource doesn’t run out,” Wilson said. “You’re not going to have a wind farm that suddenly runs out of wind and has to close. At end of life for a renewable energy project, the technology basically wears out, the maintenance costs get high, but the resource itself doesn’t run out.”

So “as the industry matures, the renewable infrastructure gets pulled down at the end of its technological life, then new projects get built on the same footprint. You keep the relationship with the landowner, and abandonment of a site is not a common practice.”

It’s in that context that renewable developers post security bonds “to ensure that landowners are comfortable with all aspects of the development.”

The Pembina Institute’s Jason Wang said the new rules actually take decision-making out of rural landowners’ hands.

“No other land use in Alberta is subject to a ban on certain classes of agricultural lands, or not allowed to develop if they are within a 35-kilometre radius of a protected area—a zone that could cover up to 76% of southern Alberta,” he said in a release. “Alberta’s conventional oil and gas industry has no requirement for mandatory reclamation security and the government has yet to commit to addressing the liabilities in that sector, which are 115 times greater than the renewables sector.”

SELECTIVE ‘VIEWSCAPING’

The 35-kilometre buffer zone for new wind projects is the most complicated part of the new system, with Neudorf himself admitting there is no “universal definition of pristine viewscape”.

“We don’t know what we’re talking about when we talk about pristine viewscapes,” Wilson said. The province has promised consultation on the issue, but the 35-kilometre setback means they’ll start out from a “pretty challenging standpoint.” Still, CanREA is “hoping we can get through to a more appropriate conversation that does not limit our members’ ability to build.”

The “pristine viewscapes” provision prompted a wave of criticism Wednesday, with Wang warning that the subjectivity in the new rules would only add to the uncertainty around renewable energy investment in the province. “It might just be like a backdoor ban—a soft moratorium,” he told the Globe and Mail.

The Smith government “has now essentially introduced a second ‘soft moratorium,’” agreed Jorden Dye, director of the Business Renewables Centre-Canada.

Evan Pivnick, clean energy program manager at Clean Energy Canada, said Alberta had dropped an “uncertainty bomb” on the industry. “Until last year, the province was the undisputed renewables capital of Canada,” he said in a statement. “Now Alberta is undermining its own success, making it one of the only jurisdictions in the world trying to frustrate the deployment of cheap, clean, renewable electricity.”

The provision came in for its share of online mockery, with Pembina posting a photo of a gas plant blocking a “pristine landscape” and LinkedIn comments carrying an aerial photo of an oil sands tailings pond and power lines sullying a rural highway.

“These ‘pristine’ sightlines in the foothills of Alberta are clearly being ‘spoiled’ by electricity infrastructure (aka poles),” wrote carbon management consultant Duncan Noble. “When can we expect the government of Alberta to protect Albertans from such ‘ugly’ sights?”

RURAL REVENUES AT RISK

Just ahead of Wednesday’s announcement, the Business Renewables Centre-Canada published a map that showed $277 million in tax revenues that 33 Alberta rural municipalities stood to gain from new solar and wind projects that had been expected to come online by 2028, many of them in the southern parts of the province where the “pristine viewscapes” provision could have the greatest impact. The revenues ranged from $857,813 in Bighorn Municipal District to nearly $27.4 million for Paintearth County northeast of Calgary. The totals were equal to as little as 0.9% of operating revenue in Greenview County to 171.5% in Paintearth.

For comparison, The Canadian Press reported last week that fossil fuel companies failed to pay $43 million in local taxes due to rural municipalities last year, bringing their total backlog to $252 million. “Year after year, the problem drags on due to a lack of industry regulation and accountability,” RMA President Paul McLauchlin said in a release.

In a release Wednesday, BRC-Canada warned that some of the renewable projects on its map “may no longer be possible and others may be delayed or cancelled,” meaning that a share of the revenue to rural municipalities is now at risk. “The Alberta government has raised more questions with their supposed answers. This is not the level of detail the industry needs to make investment decision,” Dye said.

“Corporations have invested $6.3 billion in power purchase agreements in the past five years in this province, but I expect the government has now essentially introduced a second ‘soft moratorium’,” he added. “By introducing three new regulatory frameworks without details, investors and developers are left wondering what this actually means for their projects. Investors required certainty, and the government offered confusion.”

Source: Corporateknights-com.cdn.ampproject.org

Take the Survey at https://survey.energynewsbeat.com/

1031 Exchange E-Book

ENB Top News ENBEnergy DashboardENB PodcastENB Substack

Energy News Beat 


Tags


You may also like

Biden administration considers scrapping its cutting-edge proposal to slash power plant pollution

Biden administration considers scrapping its cutting-edge proposal to slash power plant pollution