🇨🇦 Government of Newfoundland and Labrador Releases Wind-Hydrogen Fiscal Framework

March 1, 2023
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Press release from the Government of Newfoundland and Labrador

Government of Newfoundland and Labrador

The Honourable Andrew Parsons, Minister of Industry, Energy and Technology, today released a new wind-hydrogen fiscal framework for Newfoundland and Labrador. The fiscal framework will be applicable to wind-hydrogen projects in the province. The framework ensures Newfoundlanders and Labradorians will be the primary beneficiaries of the province’s resources.

The fiscal framework provides a predictable and transparent fiscal system to inform investment decisions and resource development for wind-hydrogen projects. The plan provides for a sharing of financial returns between investors and the Provincial Government to achieve a balance between benefits to the province for use of its resources (land, wind and water) while recognizing project investment and risk. For more information on the fiscal framework, see the backgrounder below.

On December 14, 2022, the Provincial Government announced a call for bids for Crown land for wind energy development. The department has extended the deadline for bids to be submitted, and bids will be accepted until noon on March 23, 2023.

A Phase One review will be conducted on all bids on criteria such as ensuring the companies have experience, financing, etc. Those companies passing Phase One review will proceed to the next phase beginning May 2023. To ensure a fair, transparent, and competitive approval process, the document, “Guidelines: Crown Land Calls for Bids for Wind Energy Projects” was developed to outline the information that would be required of bidders, and how bids would be evaluated.

Successful bidders from the awarding of Crown land for wind energy development will be issued a wind application recommendation letter from the Department of Industry, Energy and Technology. This letter will grant a bidder the exclusive right to pursue the development of their project through the Government of Newfoundland and Labrador Crown land application and approval process.

Environmental Assessment registration is not required during the call for land bids phase; however, prior to final award of Crown land, an environmental assessment will be required for wind projects over one megawatt.

The Provincial Government launched the Renewable Energy Plan in December 2021. One of the short-term commitments in the plan was to review the wind moratorium policy on the Island Interconnected Electricity System. Lifting this moratorium was the initial step in this multi-stage process to enable wind energy development in Newfoundland and Labrador.

Quotes
“The new fiscal regime strives to provide the maximum economic returns to the people of Newfoundland and Labrador while encouraging investment in this emerging industry. We are following a progressive approach to attract investment by allowing proponents to recoup their investment before the fiscal framework results in higher payments to the province.”
Honourable Andrew Parsons
Minister of Industry, Energy and Technology

“The Department of Environment and Climate Change has rigorous environmental assessment and water permitting processes that will require detailed information on all environmental aspects of these projects. The department is committed to the wise management of all the province’s resources for the benefit of current residents and generations to come.”
Honourable Bernard Davis
Minister of Environment and Climate Change

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Learn more
Guidelines: Crown Land Calls for Bids for Wind Energy Projects

News Release: Minister Parsons Launches Renewable Energy Plan for Newfoundland and Labrador

Renewable Energy Plan: Maximizing Our Renewable Future

Follow us on Twitter @GovNL and @IET_GovNL

BACKGROUNDER

Wind-Hydrogen Fiscal Framework

  • Crown Land Fees:
    • Annual charge of 3.5 per cent of the market value of reserved lands.
    • Annual charge of 7 per cent of the market value of leased lands.
    • Applicable to Crown lands.
  • Wind Electricity Tax:
    • $4,000 per megawatt on installed capacity.
    • Annual charge, payable at in-service.
    • Applicable to all wind projects (≥ 5 megawatts) producing electricity for the purposes of producing hydrogen.
  • Water Use Fee:
    • Fee of $500 per 1000m3 of water licensed and used.
    • Fee of $50 per 1000m3 for water licensed and not used.
    • Applicable to all hydrogen facilities.
    • Payable with permit issuance as an annual charge.  Fees adjusted annually by the Canadian consumer price index as per current Environment and Climate Change regulatory practice.
  • Water Royalty:
    • Payments begin with cost recovery.
    • Payable based on the calculated residual value of the water.
    • Rates linked to revenue over cost index calculation (10 per cent to 25 per cent):

Tier 1: R-factor = 1; Rate = 10 per cent (applied after 1x cost recovery)
Tier 2: R-factor = 2; Rate = 20 per cent (applied after 2x cost recovery)
Tier 3: R-factor = 3; Rate = 25 per cent (applied after 3x cost recovery)

  • The Provincial Government will have the ability to enter into agreements to modify terms in the same manner as offshore oil projects.

Originally published on 23 February.

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