At a time when renewable energy is increasingly being used to stimulate economic development and increase investment, governments of all political stripes around the world are eager to encourage the develop of new renewable energy projects. However, in Alberta this is not the case. The Province of Alberta with its enviable wind and solar resources and deregulated electricity market was the leader in renewable energy project development in Canada. That was until the Government of Alberta announced a seven-month moratorium on approvals of renewable energy projects in August 2023. This sudden freeze on project development, with no advance warning, caused an industry that was soaring to come to a screeching halt. Just over one year later, the devasting effect is becoming clear.
Investment in renewable energy in Alberta has crashed. In a statement from Stephen Legault, Senior Manager for Alberta energy transmission at the Environmental Defence Canada, he discusses a review of investments into wind and solar projects, showing that new deals for renewable energy dropped from 1000 MW in 2023 to a meager 50 MW as of August 2024. Since the moratorium was announced by Premier Smith in August 2023 no new wind or solar projects have been approved in Alberta, according to the Business Renewable Centre (BRC). An article by the BRC includes a figure that shows over $54 million CAD will be collected by Alberta municipalities through tax revenues this year on wind and solar projects. The same article also points out the potential loss in annual municipal tax revenue due to the staggering amount of cancelled projects this year, and how it far surpasses that number at roughly $91 million CAD, based on conservative calculations. The moratorium has created great uncertainty for developers, investors, and other stakeholders involved in projects which are now stranded at various stages of development.
According to a report from Pembina Institute, as of August 2023, there were 118 projects that had been affected by the moratorium on renewable energy development. These projects were expected to generate 12.7 GW of solar, 5.3 GW of wind, and 1.5 GW of battery energy storage (as part of solar projects) and were proposed by 64 different developers.
According to Jorden Dye, the executive director of BCR, a rough average of 3-10 projects would be cancelled in a quarter before the moratorium. There are currently 22 cancelled projects listed since the moratorium was implemented.
On February 28, 2024, the day before the moratorium expired, the Alberta Utilities Commission (AUC) announced a list of proposed policies and changes to the regulatory framework for renewable energy development within the province. These changes make it considerably more difficult for developers to get approval for new energy projects. The AUC will now be taking an "agriculture first" approach when evaluating the best use of land proposed for renewable energy developments. Projects on lands that are categorized as Class 1 or Class 2 will no longer be accepted unless the proponent can prove that crops and/or livestock can coexist with the renewable energy project. In the event of reclamation, developers will be responsible for reclamation costs via bond or security and the costs will be provided either directly to the Government of Alberta or negotiated with landowners. Municipalities will now also automatically be granted the right to participate in AUC hearings and be eligible to request cost recovery for participation. This is aimed at allowing municipalities to review the rules for submission requirements and clarify consultation requirements.
One major change that is going to be at the root of headaches for years to come is the new "viewscapes" policy. Buffer zones of a minimum of 35 kilometers are now being established around protected areas and other spaces that are considered "pristine viewscapes" as designated by the current Government of Alberta. New wind projects will be banned from these buffer zones and other renewable developments will have to undergo a visual impact assessment before approval. Jordan Dye has stated that about 76% of southern Alberta will be eliminated by these buffer zones and would essentially create a backdoor land ban.
Other changes are underway as well, but details have not been shared as to what these will look like. These include how approvals of projects proposed on Crown land will be assessed – seemingly on a case-by-case basis. It is expected that more changes will be coming in the next few months to how transmission costs are allocated. At times, the current Government of Alberta has mused about abandoning the deregulated market entirely and moving to a fully regulated market with a single vertically-integrated Crown utility as in BC and Saskatchewan. Even whispers of such significant changes make developers queasy. The current Government of Alberta will also begin work on setting up a province-wide program for recycling solar panels, wind turbines and batteries, which costs are likely to be passed on to developers in the future.
During this time of uncertainty, developers have three obvious options: 1) sell the projects; 2) wait and do nothing; or 3) wind up projects. When the moratorium was first introduced, many developers proceeded with option 1 and sold their projects. However, after a few months, much of the demand to purchase projects was filled and transactions slowed. Most developers are now at option 2 and waiting to see what will happen with the regulatory framework in Alberta. Other developers have had enough and are winding up their solar and wind projects in Alberta and taking a loss. Unfortunately, the exit from Alberta is, in some cases, leading to an exit from Canada entirely.
So, the dumpster fire rages on, putting wind and solar developers in Alberta in an increasingly difficult position. We can only hope that the economic benefits and increased financial investment of renewable energy will result in a de-escalation of the politicization of energy and a stable regulatory framework soon, in order to douse the flames.
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