Winds of change: Alberta provides policy guidance for renewable generation projects

On February 28, the Alberta government provided a long-awaited update about how renewable generation project proposals will be evaluated by the Alberta Utilities Commission. Key details remain outstanding, but this announcement provides significant insight into the changes renewable projects will face.

In a nutshell, Alberta’s much commented upon pause on approving new wind and solar farms ends and, going forward, prime agricultural land will be mostly off limits, Crown land will open up somewhat, and some development costs will likely increase. Final details will depend on a flurry of interrelated processes scheduled over the next 24 months – but the contours of the changes align with the concerns initially voiced in August and hold few surprises.

Background

Alberta is Canada’s only deregulated electricity market, and in 2023 attracted >90% of the country’s investment into renewable generation. In response to a growing queue of wind and solar farm proposals, and vocal concern from some stakeholders, in August 2023 the Alberta government directed the Alberta Utilities Commission (AUC) to pause issuing new approvals for renewable generation projects. The government also directed the AUC to inquire into and report on the impacts of such projects on agricultural and environmentally sensitive lands, viewscapes, reclamation security and the development of renewable projects on Alberta Crown lands. The legal effect of the government directive expired on February 29, 2024.

In the meantime, the AUC continued to process existing applications, and commenced two proceedings: one to consider the impacts of renewable generation “on the ground” (Module A), and the other to consider issues related to renewable generation and the reliability of the electricity transmission grid (Module B).  The AUC delivered a report to government about Module A matters on January 31, 2024. A Module B report is due by March 29, 2024. 

On February 28 the government responded to the Module A report with a news conference and letter providing policy guidance to the AUC. The letter informs the AUC about the directional changes that yet-to-be released legislation and regulations will make before the end of 2024. In turn, also on February 28, the AUC issued a formal bulletin to stakeholders about how it would process outstanding wind and solar farm applications, and steps it would take in response to government’s letter. 

Agriculture first

The government has announced that it will bring forward policy and legislative changes to direct the AUC – and by implication other entities too – to take an “Agriculture first” approach to renewable generation project applications and, when making decisions, evaluate the best use of agricultural lands. 

To this end, renewable projects will be prohibited on Class 1 and 2 irrigable lands, unless shared use with crops or livestock can be demonstrated (done in some other jurisdictions). Exemption details have not been developed yet. Class 1 lands are lands that have excellent characteristics for irrigation, and Class 2 lands are rated as good for irrigation. Most of Alberta’s Class 1 lands are in the Lower Peace River and North Saskatchewan regions, but are also found in southern Alberta.

Reclamation security

As expected, as of March 1, 2024, reclamation security for new renewable energy projects on private land will be mandatory (excluding approved projects and those under review), with the security either posted with the province or provided to the landowners (so long as sufficient evidence is provided to the AUC of the provision of the security to the landowner). The amount and timing of meeting the security obligations will be determined by Alberta Environment and Protected Areas in consultation with the Ministry of Affordability and Utilities.

Viewscapes and wind projects

The province also announced that it will develop legislation establishing a minimum 35-km buffer (prohibition area) around both protected areas and other “pristine viewscapes” for wind projects. Other types of renewable development within the buffer may trigger the need for a visual impact assessment. 

Buffer locations are arguably the most impactful element of the new policy changes, but other than the general end-of-2024 timeline, details about the designation process have not been released. 

Crown lands

The development of renewable energy projects on Alberta Crown lands will be allowed on a case-by-case basis, provided there is meaningful engagement with other disposition holders. Unlike the other changes (where further details are expected by end of 2024), legislation to enable renewable generation on Crown land is only forecast to take effect in late 2025. 

Municipal involvement

The government has expressed strong support for the AUC’s commitments to automatically grant participation rights to municipalities in AUC proceedings considering renewable energy projects, as well as enable municipalities to make cost recovery requests for their participation.

Interim Rule 007 continues

AUC Bulletin 2024-03 confirms the AUC will resume issuing dispositions for renewable generation projects in accordance with its typical “service standard” timelines, and that the interim information requirements it announced in September 2023 will continue. These interim information requirements deal with soil characterization and handling, municipal planning and reclamation security. The AUC will also start a consultation process with stakeholders in the normal course about permanently moving some or all of the interim requirements into Rule 007, plus the other new government policy details as they are finalized.

Transmission costs

Government released a “Green Paper” in October 2023 about potential directional changes to the Transmission Regulation (TReg). The letter to the AUC references the document and flags that renewable generators should expect “changes” to the TReg’s transmission cost allocation, arguably implying that renewables will pay more – currently electricity customers generally pay for the costs of the transmission system, as opposed to thermal and renewable generators.

Next steps

Significant work remains to be done in a short time. Government has promised new legislation as well as new regulations, further consultation with key stakeholders, and new administrative processes for multiple departments (most notably, designating “pristine viewscapes” and other locations subject to the 35-km setback). In parallel, the AUC has committed to consultation about importing this guidance and other changes from these government processes as they emerge.