Alberta's Renewable Energy Sector Navigates New Regulations Amidst Project Cancellations

Alberta's once-booming renewable energy sector is facing significant headwinds, with a substantial number of wind and solar projects being cancelled. New regulations, including a recently enacted Code of Practice for Renewable Energy Operations, aim to address concerns about land use and reclamation, but industry watchers suggest these changes, coupled with a previous moratorium, have created uncertainty and deterred investment. This shift is impacting the province's clean energy goals and potentially its electricity prices.

Key Takeaways

• A significant portion of proposed renewable energy projects in Alberta have been cancelled.

• New regulations, including a Code of Practice, impose stricter requirements for project registration, reclamation security, and site management.

• Industry experts attribute project cancellations to regulatory uncertainty, a previous moratorium, and increased costs.

• The downturn in renewables contrasts with a reported increase in natural gas project proposals.

New Regulations Introduced

The Alberta government has implemented a new Code of Practice for Solar and Wind Renewable Energy Operations, effective May 31. This code, along with accompanying guidelines from the Alberta Utilities Commission (AUC), introduces new requirements for project proponents. These include mandatory registration with Alberta Environment and Protected Areas (AEPA), providing security for reclamation costs, conserving and reclaiming project sites, and adhering to reporting and record-keeping standards. The regulations aim to ensure better management of land, particularly agricultural farmland, and to secure funds for site restoration at the end of a project's life.

Reclamation Security and Registration Requirements

Under the new Code, project proponents must register their proposed and existing projects with AEPA. A key component of this registration is providing reclamation security. Proponents have the option to post this security with either the government or the landowners. The amount required varies, with initial deposits ranging from 30% to 40% of the estimated reclamation cost, increasing to 60% or 70% after 15 years. The AUC will evaluate the adequacy of landowner-held security. Existing projects must comply with these new registration requirements by January 1, 2027.

Project Cancellations and Industry Impact

A report by the Pembina Institute indicates that nearly half of proposed renewable energy projects in Alberta have been cancelled since the lifting of a seven-month moratorium in February. These cancellations represent an estimated 11 gigawatts of potential power generation. Industry experts suggest that the moratorium, coupled with the subsequent rollout of new, more restrictive regulations, has created investor uncertainty and killed momentum in the sector. This decline in renewable projects is concerning, as they typically help lower power prices and provide tax revenue to rural communities. In contrast, fewer natural gas projects have been cancelled, and proposals for such projects have reportedly increased.

Future Outlook

While the Alberta government maintains that the province still leads in renewable investment and aims for a balanced approach, the current trend of project cancellations raises questions about the future growth of the renewable energy sector in the province. The long-term effects of the new regulations and the market restructuring on investment and energy prices remain to be seen.

Sources

• Alberta releases new code of practice for solar and wind renewable energy operations | Canada | Global lawfirm, Norton Rose Fulbright.

• Industry watchers raise alarm on Alberta renewable-energy project cancellations, CBC.

• Alberta seeing 'wave' of renewable project cancellations, report says, Calgary Herald.