A member of the Henvey Inlet First Nation stands overlooking Key Inlet. The band is developing a wind power project on the reserve.Fred Lum
Incentives are helping create jobs for aboriginal groups and provide new sources of renewable energy
A new era dawned for Henvey Inlet First Nation on the day in 2008 when Wayne McQuabbie, chief of the Northern Ontario community, attended a presentation on renewable energy in Sault Ste. Marie, Ont.
Chief McQuabbie returned home with the idea of building a wind farm on the reserve. Planning for the 300-megawatt project is now at an advanced stage, and construction is due to start next year. The 900-member band expects to earn $12-million a year from its 50-per-cent equity stake once the turbines start generating power, probably in early 2018.
Henvey Inlet is one of dozens of First Nations across Canada that sees wind and solar farms and hydroelectric stations as the key to a brighter future.
"It's going to look after the First Nation for generations," Chief McQuabbie says. "We basically have no economic development here, apart from some tourism in the summer months. This is going to open a lot of doors for us."
The Ontario Power Authority's (OPA) Aboriginal Renewable Energy Fund has provided $8-million in grants to help finance 470 projects in 44 communities since 2010.
More than 90 per cent of the Ontario projects are relatively small solar plants. But they also include the Henvey Inlet wind farm, 20 hydroelectric schemes and a handful of biomass operations.
Barbara Ellard, the OPA's director of policy and analysis, says that "dozens and dozens" of private-sector renewable energy developers have shown interest in joining forces with aboriginal groups.
They range from publicly traded companies like Vancouver-based Alterra Power Corp. and Toronto-based Northland Power to private-equity funds and environmental non-profit groups.
TimberWest, the largest private forest owner in Western Canada, announced plans last fall for a $600-million to $750-million wind farm to be built in partnership with the Canadian subsidiary of Portugal's EDP Renewables and Vancouver Island's T'Sou-ke First Nation, who produce solar energy from a battery of 440 panels on their reserve.
TimberWest says the wind project will create more than 350 jobs during construction, including 30 to 40 permanent positions. It will supply enough power to light and heat 30,000 homes.
"You can see that renewable energy developers would want to have aboriginal participation or, at least, aboriginal support," says Paul Manning, principal at Toronto-based Manning Environmental Law, who has worked with aboriginal groups on clean-energy projects and policy. "For a developer in a hurry, that is part of gaining social licence."
Clean energy could be a boon for communities in remote locations - like Henvey Inlet - with few other options for economic development. It also offers a potentially lucrative opportunity for long-established but commercially volatile businesses, such as fishing and forestry.
"Aboriginal communities are often situated in areas that have historically been disadvantaged, but now those places have renewable energy resources that the province needs," Manning says. "They may be relatively remote, but that is where the wind blows, the sun shines and the water flows."
How incentives work
Government incentives, especially in Ontario, have played a big role in attracting outside developers.
Quebec's new Liberal government recently reinstated a program under which Hydro Québec buys power from privately-owned hydroelectric projects with a capacity under 50 megawatts. Under Ontario's Feed-in Tariff (FIT) Program, a cornerstone of the Liberal government's ambitious 2009 green energy plan, renewable energy plants qualify for a far-higher rate for their power than coal, nuclear and other traditional generating plants.
"The Feed-in Tariff is particularly advantageous," Manning says, "because not only did it allow people to pay off their investment, but it also had a substantial profit element built into it."
The FIT Program was curtailed for large projects in mid-2013 amid a major announcement and a wave of complaints from consumers about fast-rising power costs. Even so, some powerful incentives remain for project developers to seek out aboriginal involvement.
One is a price incentive - known as an "adder" - for aboriginal participation of at least 15 per cent in a project. The adder doubles for participation of more than 50 per cent. The second incentive - projects with aboriginal involvement receive priority for regulatory approval.
"These projects take a long time to come together," says Sandy Wong, general manager of the $5-million First Nation Regeneration Fund, based in Vancouver, which has provided short-term financing for two small hydro projects and expects to sign up a third one soon.
The relationship between developers and aboriginal communities is complex. "There's a broad range among independent power producers about how they perceive aboriginal involvement," Wong notes. "It's been proven in court that they have to accommodate aboriginal interests, but that accommodation can range from jobs and royalties to equity participation."
Ellard, at the Ontario Power Authority, says that one of the biggest challenges is the dearth of expertise and financial resources in many aboriginal communities, putting them at a disadvantage in negotiations.
The OPA hopes to address this handicap through a program, now in the planning stages, to provide education and capacity building for aboriginal groups interested in pursuing energy projects.
The benefits of a favourable deal can be enormous, as Henvey Inlet First Nation expects to attest in the coming years.
Chief McQuabbie is confident that the wind farm will give a new lease on life not only to his reserve, but also to neighbouring communities: "There's going to be funds earmarked for health, education and construction, such as housing, and business opportunities." He says a referendum will be held among Henvey Inlet members to decide precisely how the profits from the wind farm will be spent.
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