Renewables Update: Alberta issues policy guidance as renewable approvals suspension expires

On February 28, 2024, the Minister of Affordability and Utilities (Minister) issued a policy guidance letter to the Alberta Utilities Commission (AUC) advising of proposed policy, legislative and regulatory changes for assessing renewable project applications (Guidance Letter). The Guidance Letter was released the day before the suspension on renewable project approvals expired. The Government of Alberta (the Province) plans to further develop and implement the new policies described in the Guidance Letter by the end of 2024 (with the exception of policies related to renewables development on Crown lands, which will come into effect in late 2025).

Background

Alberta has emerged as the national leader for renewable electricity development. According to the Canadian Renewable Energy Association, Alberta accounted for over 90% of the country's overall growth in new renewable generation and storage capacity in 2023.[1] In response to this accelerated growth, the Province enacted the Generation Approvals Pause Regulation that suspended AUC approvals for renewable projects producing greater than one megawatt from August 3, 2023 until February 29, 2024, citing the need to develop additional policies governing renewables.

Concurrent with the suspension, the Province directed the AUC to conduct an inquiry into the ongoing development of renewable energy generation. The AUC's inquiry was bifurcated into two modules: Module A (matters relating to project siting, land use and reclamation security requirements) and Module B (impact of renewables on the energy supply mix and grid reliability). The Guidance Letter addresses the Module A Report submitted by the AUC to the Province on January 31, 2024.

On February 28, concurrently with the Minister's release of the Guidance Letter, the AUC released Bulletin 2024-03, which confirms that it will recommence issuing decisions on power plant applications and that the interim requirements for additional information to renewable project applications set forth in Bulletin 2023-05 (the Interim Rules) will remain in effect. The AUC will initiate stakeholder consultation for the Interim Rules, including topics considered in Module A of the inquiry and the associated policy, legislative and regulatory changes proposed by the Province in its Guidance Letter.

Applying Buffer Zones to Protected Areas and "Pristine Viewscapes"

The Province will implement buffer zones of at least 35 kilometers to protected areas and other "pristine viewscapes" (a term that the Province uses but has yet to define). New development of wind projects will be prohibited within the buffer zones, while other renewable developments may trigger a visual impact assessment. Due to the size and layout of infrastructure required for wind projects, this change may have significant outcomes to future development of wind projects in southern Alberta. Since the Guidance Letter refers to a minimum required buffer zone radius, larger buffer zones may potentially be implemented based on various criteria such as project type.

There are 464 protected areas throughout Alberta that comprise just over 11.2 million acres with shared responsibility by Alberta's Ministry of Environment and Protected Areas, and Ministry of Forestry and Parks.[2] Protected areas are those lands designated by Order-in-Council under the authority of several types of Alberta legislation and include wilderness areas, ecological reserves, provincial parks and heritage rangelands. Although the Province is still in the process of defining "pristine viewscapes", the Minister has referenced protecting the sightlines of the mountains and foothills. Accordingly, "pristine viewscapes" may include areas of cultural significance and importance to tourism.

Restricting Development on Class 1 and Class 2 Lands

The Province will implement an "agriculture first" approach for the AUC to assess the use of lands proposed for renewable project development. In support of this approach, Alberta is prohibiting renewable development on Class 1 and Class 2 lands (described below), as categorized under the Land Suitability Rating System (LSRS), unless the project proponent can demonstrate that crops or livestock can coexist with the proposed project. Class 1 lands are considered "excellent" and have no significant limitations on agricultural production. Class 2 lands are considered "good" and have slight limitations that may restrict crop grow or require modified management practices. An interactive map of the current LSRS classifications for the surveyed portions of Alberta may be viewed here.

This approach is not expected to have a significant impact for renewable project development, as the Interim Rules already require project proponents to consider the soil type within the project area, mitigation of impacts to the soils, and the potential for co-locating agricultural activities into the project design. Infrastructure spacing of wind projects is generally suitable for livestock grazing and crop farming. Co-location of solar projects and agriculture (also referred as "agri-voltaics" or "dual-use solar"), where production of certain crops or livestock occurs beneath or adjacent to solar panel arrays, shows potential to develop as a common industry practice.

Imposing Mandatory Standardized Reclamation Security Requirements

Project developers will have to provide reclamation costs through bonds or other security. The appropriate security amounts and timing will be developed by Alberta's Ministry of Environment and Protected Parks in consultation with Alberta's Ministry of Affordability and Utilities. The security for reclamation costs may be posted directly to the Government of Alberta or negotiated with private landowners provided sufficient evidence of such agreement between the developer and landowner is delivered to the AUC.

While the implementation of reclamation security requirements is expected by the end of 2024, such requirements will apply retroactively to all approvals issued by the AUC on or after March 1, 2024. These requirements may impose similar criteria to those in the Interim Rules, which already requires the project proponent to submit its reclamation security program for its proposed renewable project. The information required under the Interim Rules includes details on the standard of reclamation, amount of security calculated and the frequency of reassessment of the security amount.

Allocation of Transmission Costs

The Province intends to implement changes to the transmission cost allocation with reference to the Province's "Transmission Policy Review" published in October 2023 (the Green Paper).[3] This suggests that Alberta may depart from its traditional "load-pays policy" of transmission cost allocation.  The load-pays policy generally allocates most transmission expansion costs to power consumers and not to generators. The Green Paper considers changes such as setting larger contributions by generators and changes to calculations of electricity lost during transmission.  

Future Renewable Development on Crown Lands  

The Province will create a new framework for renewables development on Crown lands which will assess projects on a case-by-case basis. Unlike the other policy announcements that are expected to take effect by the end of 2024, the policy changes for renewables development on Crown lands will not come into force until at least late 2025, after a public engagement process is carried out.

Municipal Participation

The AUC has committed to automatically granting participation rights to municipalities in hearings for renewable power plant applications, including enhancing eligibility for cost recovery when participating in AUC proceedings. The AUC will also develop rules for appropriate setbacks of infrastructure near neighbouring residences.

Conclusion

The Guidance Letter offers helpful insight into the Province's intended policy, legislative and regulatory direction with further specifics still forthcoming by end of 2024. While uncertainty remains until these changes are developed and implemented, the Guidance Letter and the additional requirements previously established by the Interim Rules should be considered to strategically plan future renewable projects. The Minister is expected to release additional policy guidance following the Module B Report, which is expected to be released by March 29, 2024.

If you would like any additional information, please contact any member of our Energy Group.

[1] Canadian Renewable Energy Association, "New 2023 data shows 11.2% growth for wind, solar & energy storage"
[2] Alberta Parks, "Land Reference Manual"
[3] Government of Alberta, 2003, "Transmission Policy Review: Delivering the Electricity of Tomorrow"