Alberta risks losing billions in renewable energy investments with moratorium, companies say

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The renewable energy industry says it was blindsided by the Alberta government’s moratorium on new wind and solar projects, and some executives warned on Friday the move could cause billions of dollars in green investments to flow to the United States and Europe instead.

Senior officials at several companies affected by the freeze on project applications said they were given no warning that Premier Danielle Smith’s United Conservative Party government would take the drastic measure, which it announced Thursday. They said the move would suppress an industry that has delivered billions of dollars worth of green energy projects over the past four years, all in a free market.

Most troubling, some executives said, is that Alberta’s decision to pursue the pause will put it at a disadvantage in the competition for capital for emissions-reducing renewable energy, even as the effects of climate change worsen in Canada and globally.

“This sort of move obviously has a chilling effect on the investment climate for renewables in Alberta. Up until this surprise announcement, Alberta has been leading the nation in renewables growth. It’s been one of the leading jurisdictions in North America, in fact, for renewable energy,” said Dan Balaban, chief executive of Greengate Power Corp., which built Canada’s largest solar farm near the town of Vulcan, Alta., and has another large project in the east of the province in the queue for regulatory approval.

The provincial government has said the moratorium will remain in place until Feb. 29, and that it will use the time to evaluate a number of policy issues. Those will include rules surrounding what should be done with wind and solar projects when they reach the ends of their useful lifespans, and how the proliferation of renewables projects will affect the reliability of the power grid.

Mr. Balaban said these issues can be studied without shutting down the application process.

“Sure, the industry’s been growing quickly. It has been experiencing some growing pains, as with any fast-growing industry. But I think putting a moratorium on new project approvals is a very extreme measure. It’s like taking a jackhammer to a nail,” he said.

Alex Simakov: Alberta’s pause on solar and wind projects risks jobs, investment and reputation

The moratorium applies to wind and solar projects that would produce more than one megawatt of power. Aside from grid stability issues and reclamation, the government wants the Alberta Utilities Commission, which regulates the industry in the province and will lead the policy review, to examine the effects of projects on arable farmland.

Renewable energy advocates have expressed skepticism of the government’s stated aims, pointing out that the province’s oil and gas industry has been failing for years to deal with billions of dollars worth of spent wells and an expanding oil sands tailings problem, with no halt on applications for new projects.

Alberta Utilities Minister Nathan Neudorf said in an interview earlier this week that the government spoke with “somewhere in the neighbourhood of 200 individuals” before deciding to impose the pause, including stakeholder groups, consumer advocates, and power generators and distributors. That included large companies that rely on natural gas to generate power. Those companies have argued that it is not fiscally or practically feasible to convert Alberta’s grid to net-zero emissions by 2035, which is the federal government’s target.

But officials with companies that are affected by the moratorium said they had no inkling of the government’s plans before the announcement.

Developers have rushed to Alberta to take advantage of its ample solar and wind resources, and a market structure that lets electricity buyers sign long-term power-purchase agreements with generators. Those buyers include Microsoft Corp. MSFT-Q, Amazon.com Inc. AMZN-Q, Royal Bank of Canada RY-T, Telus Corp. T-T, Cenovus Energy Inc. CVE-T and others, all of which are looking to reduce their carbon footprints.

Such deals have backstopped nearly $4.7-billion in new projects in Alberta since 2019, and 2023 was on track to be a record year, according to the Business Renewables Centre-Canada, which acts as an information and networking organization for green energy buyers and sellers. The centre said in a statement that the industry has created 5,300 jobs, and contributed millions of dollars in property taxes and annual payments to landowners.

Jorden Dye, BRC-Canada’s acting director, said competition for clean-energy capital was already brisk, especially after the U.S. passed the Inflation Reduction Act, which includes US$369-billion in incentives for green power and other clean technologies. Alberta’s move could cause investors to look elsewhere, he said.

“Right away, it makes the U.S. jurisdictions more desirable. It calls into question whether Alberta really is an open-for-business province,” Mr. Dye said. “The other angle that’s important to consider is, right now there are major multinational corporations that do renewable development looking to enter the Canadian market, through Alberta. I’ve been meeting with a few companies over the last few months, and this calls into question the pace and decision to move to Alberta.”

The Rural Municipalities of Alberta association has come out in favour of the government’s moratorium, saying small communities do not want taxpayers to be left with the bill for eventual cleanup. But Mr. Dye noted that Alberta already has rules in place for reclamation, and that contracts signed between developers and landowners typically have such provisions written in.

Britain-based Aura Power has two Alberta projects now in a holding pattern because of the moratorium. Senior project manager Victor Beda said the resulting delays are more than just a financing and timeline headache. They close off avenues to equipment suppliers and procurement, and will shrink opportunities for construction companies that were traditionally in the oil and gas sector but have moved to building renewables, he said.

Mr. Beda warned that the government’s decision will likely add risk to the economics of renewable energy in the province, and draw investment attention elsewhere. Aura also has projects in Italy, Portugal, Ireland and Spain. “They see benefits of it, and they’re not blind to the fact that shutting down these kinds of developments is going to hurt their own economy.”

PACE Canada LP is also affected by the move. The permit process for its solar project in the Village of Caroline, in Western Alberta, is on hold. That means that the taxes the municipality would receive – between $250,000 and $300,000 – are also on ice, said PACE’s director of development, Claude Mindorff. “What the [Alberta Utilities Commission] is doing is stopping tens of millions of dollars of investment in small rural Alberta communities that are willing to host, and are completely happy with our development program,” he said.