Alberta hits "Go" again: Understanding recent announcements affecting renewables projects

The Alberta Government's pause on approving renewable energy projects in the province^[1] ended on February 29, 2024 when the Generation Approvals Pause Regulation expired.

On February 28, 2024, Premier Danielle Smith and Utilities Minister Nathan Neudorf announced details of proposed policy changes that are intended to support the ongoing economic, orderly and efficient development of electricity generation in Alberta.^[2]

Shortly after the pause began, the Alberta Utilities Commission ("AUC") established two modules to consider issues relating to renewable energy project development in the province.

Module A focused on land use issues identified by the Government's order-in-council, including in particular:^[3]

1. The development of power plants on specific types or classes of agricultural or environmental land.
2. The impact of power plant development on Alberta's pristine viewscapes.
3. The implementation of mandatory reclamation security requirements for power plants.
4. Considerations for development of power plants on lands held by the Crown in Right of Alberta.

Module B is ongoing. It will assess the impact that the increasing growth of renewable projects has on the generation supply mix and the reliability of the electricity system in the province.^[4]

Key policy changes

While no formal policies have been released, the February 28, 2024 announcement noted significant key changes:

1. Agricultural lands: The AUC will take an "agriculture first" approach when evaluating the best use of agricultural lands proposed for renewables development. Starting March 1, 2024, Alberta will no longer permit renewable generation developments on Class 1 and 2 lands unless the proponent can demonstrate the ability for both crops and/or livestock to coexist with the renewable generation project. This prohibition does not apply to projects that have already received AUC approval.
2. Viewscapes: Buffer zones of a minimum of 35 kilometers will be established around protected areas and other "pristine viewscapes" as designated by the province. The Minister clarified that the term "pristine viewscapes" has no universal definition, but that it refers to "unobstructed natural landscapes." New wind power projects will not be permitted in these "pristine viewscape" areas due to their vertical footprint, and other new energy projects may be subject to visual impact assessments before an approval is issued by the AUC. The Government of Alberta also stated that the 35-kilometer buffer zone is not arbitrary and follows policies in British Columbia, the United States and the United Kingdom^[5].
3. Reclamation costs and security: Project proponents will be required to provide bonds or other forms of security in an amount sufficient to cover such project's future reclamation costs. The security will be provided directly to the Government of Alberta or may be negotiated with landowners if sufficient evidence is provided to the AUC that sufficient money to cover reclamation costs have been set aside by the project proponents. It is unclear as yet when the bonds or other security will need to be provided or what factors will be utilized to set the amounts required.
4. Duty to consult: Meaningful public engagement for projects on Crown land must take place before any changes can be implemented. As such, any changes to policy requirements in this area will not come into effect until late 2025.
5. Transmission regulation: Changes to transmission regulation are "expected in the coming months as engagement continues" and renewable energy projects should expect changes in how transmission costs are allocated.
6. Municipalities: Municipalities will now be granted the right to participate in AUC hearings and will be able to request cost recovery for participation.  

What to expect in the coming months

Before the end of 2024, the Government of Alberta intends to bring forward policy, legislative and regulatory changes to set a clear and responsible path forward for renewable power project development.

The Government of Alberta will be working with multiple ministries, including those responsible for environmentally protected areas, forestry and parks, and tourism, to develop a definition of "pristine viewscapes". The Government identified that, currently, the Foothills and Rockies are "fairly significant" and that the provincial park boundaries will be the starting point of the 35-kilometer buffer zone.

Security for reclamation costs

One of the most anticipated components of these policy changes are the requirements to post security for reclamation costs. The Government identified that it has additional work to do with the AUC and key stakeholders in determining how the security bonds for reclamation are to be paid and held. "These are the nuanced questions we are seeking to determine… there have been recommendations by municipalities that the funds be held with the Government" because there have been issues where a landowner or company holds the fund, and the ownership changes or dissolution of such company occurs. The Government's goal is to have the funds accessible in these situations.

The Government noted that it is aware of the financial barriers of up-front security and clarified that its objective is to ensure project proponents are making annual financial contributions to their reclamation funds. When combined with compounding interest on posted security funds, this approach is intended to ensure that at the end of a project's life there will be enough money to reclaim the land, regardless of any ownership changes. The Government noted that the overall goal of the security structure for reclamation funds will be to ensure any liabilities follow the respective asset for the duration of its life.

Whether security for reclamation must be posted at the outset of the project's construction is yet to be determined. The Government noted that it is considering a number of possibilities but "is first seeking to find the best evaluation and extent" of the financial needs of current reclamation for existing or in-progress renewable energy projects. The Government will be working with the industry to determine the best way to approach reclamation costs in order to provide more specificity as quickly as possible on this component of the new policies.

Key takeaways

Further to the Government's commitment to enhance the visual impact assessment requirements, the AUC is required as of March 1, 2024 to conduct site visits for proposed renewable power projects. The 35km buffer applies to wind turbines, as they have a sizable vertical footprint. However, the Minister noted that other energy projects may trigger a visual assessment if they are within these buffer-zones.

For example, projects on a ridge are far more visible than those in a valley or bluff, and this is what the AUC has been asked to look at with site visits in order to more accurately determine the visual impact. These visual impact assessments will be ordered by the AUC on a case-by-case basis.

The Government has stated that the application of the 35-kilometer buffer zone to other natural resource projects, including mining, coal, logging, oil and natural gas, will be left in the hands of the respective regulators in those industries to determine whether similar zoning requirements will be applied to those projects.

Ultimately, the new policies are intended to be "a new lens to look at projects pending approvals." These policies will be applied on a go-forward basis and projects currently pending approval from the AUC are "expected to proceed on pace." These policies are meant to ensure that the expectations of the AUC with respect to siting of renewable energy projects are clear and accessible to everyone.

The Minister stated that "providing investors with certainty and clarity is non-negotiable for our government." These changes are noted to "only continue to strengthen investor certainty in Alberta and provide clear expectations for agriculture and energy stakeholders" so that investors can confidently commit to investing in Alberta.

Further updates

Our team is monitoring this situation and will provide updates relating to the upcoming policy changes as they are released. If you have questions or inquiries with respect to the renewable energy project landscape in Alberta, please contact any of our team members or the authors of this article.