Arising out of Alberta Utilities Commission (AUC) Module A Inquiry and the AUC's resulting report, the Government of Alberta (Alberta) announced plans to implement policy and regulatory changes for future renewable power generation projects.These changes were announced by Alberta's Minister of Affordability and Utilities (Minister) on the eve of the expiration of the seven-month moratorium on approving wind and solar projects imposed under the Generation Approvals Pause Regulation.
Confirming the expiration of the pause on AUC approvals of new renewable generation projects, the announced policy and regulatory changes can be summarized as:
- taking an “agriculture-first” approach to project approval;
- standardizing developer responsibility for reclamation costs;
- establishing 35-kilometer buffer zones around protected areas;
- considering renewable project development on Crown land with meaningful consultation; and
- developing changes to Alberta's transmission regulation.
These updates come into force on March 1, 2024, and will be applied to AUC approvals issued after such date.
Agriculture-First
Alberta aims to protect agricultural production by prohibiting development on Class 1 and 2 lands unless it is demonstrated that the project can co-exist with crops and/or livestock. Land classification is determined under the Land Suitability Rating System. The AUC proposal will require proponents to provide soil field verification earlier than the current framework requires. In addition, Alberta intends to establish tools to protect the availability of native grasslands, irrigable lands and productive lands.
Reclamation Security
Renewable developers must now demonstrate sufficient capital for reclamation costs through bonds or other security. Subject to AUC approval, the security for these costs will be either provided directly to the government or negotiated with landowners. The amount of the required security will be determined by the Ministryof Environment and Protected Areas, in consultation with the Ministry and should be announced by the end of 2024.
Protected Areas
Alberta intends to designate certain areas as “pristine viewscapes” or otherwise protected lands and implement a 35-kilometer buffer zone around them. No wind projects will be permitted within the buffer zones, and other proposed developments may be subject to a visual impact assessment. Furthermore, the AUC has proposed enhancing the existing visual impact assessment requirements to provide a more structured methodology.
Crown Land Development
Development of renewable energy projects on Crown land could become possible on a case-by-case basis. Alberta intends to engage with stakeholders, including any impacted Indigenous parties, in a meaningful consultation process, to develop a policy framework for Crown land. Any resulting legislative changes are expected in late 2025.
Transmission Regulation
Engagement is underway for proposed changes to the Transmission Regulation. Alberta intends to release changes impacting transmission cost allocation for renewable projects, but it underscored the claim that changes will not be applied retroactively.
Ancillary Updates
Municipal concerns are addressed in the new framework such that municipalities will have an automatic right to participate in AUC hearings and to request cost recovery for their participation. They will also be allowed to review AUC rules on municipal submission requirements and clarify related consultation requirements.
As part of protecting residential landowners and Alberta's viewscapes, the AUC will be required to enhance the existing visual impact assessment requirements (including the potential for site visit) before granting renewable project approvals. The AUC will also be required to conduct hearings on appropriate setback requirements between renewable infrastructure and neighbouring residences.
What's Next
The Minister reinforced the goal of ensuring affordable and reliable power. Therefore, as we wait for the details of the resulting rules and regulations from these announced changes, it is important to remember that this announcement is only one piece of the policy and regulatory change puzzle.
However, based on the pipeline of renewable generation projects renewables will remain an important part of Alberta's generation mix. As noted in the Minister's letter to the AUC, even with the pause on AUC approvals, there are 3,300 megawatts (MW) of wind and solar projects under construction, 2,760 MW with AUC approvals and approximately 22,900 MW of additional announced wind and solar projects in Alberta.
Our team at McCarthy Tétrault continues to closely follow Alberta's power market and the anticipated regulatory changes. For further information, please contact your McCarthy Tétrault trusted advisor or one of the authors.
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