Calgary — Alberta municipalities will collect almost twice as much in tax revenues from wind and solar projects in their jurisdictions this year compared to last year, according to new analysis by the Business Renewables Centre-Canada (BRC-Canada).
“Municipal tax revenues amounted to $54 million this year, up from $28 million last year,” said Jorden Dye, director of BRC-Canada. “This revenue is reliable, stable income that communities can plan around for decades to come.”
Fourteen Alberta communities are collecting over $1 million annually now in revenues, with seven of them hitting over $4 million. For five communities, this revenue makes up 20 to 30 percent of their total operating revenues for the year, while one community hit 51 percent.
The Business Renewables Centre-Canada (BRC-Canada), an initiative of the Pembina Institute, enables businesses and institutions to access renewable energy for their emissions reduction needs across Canada. This involves working closely with buyers and developers of renewables, helping them navigate the process of establishing power purchase agreements. BRC-Canada’s organization includes approximately 60 participants from various sectors of the Canadian economy.
The 2024 municipal tax revenue of each project was calculated using the tax assessment value of that project and the mill rate from the county or municipality the project is under.
All of these projects were initiated, approved, and constructed before the Alberta government announced its moratorium on renewable energy project approvals on August 3, 2023. The moratorium, initially presented under the headline “Creating certainty for renewable projects,” has resulted in a decline in the Alberta clean energy market.
Since the moratorium announcement, 53 projects have been canceled. This represents $91 million in lost annual tax revenues for municipalities. This loss is almost double what Alberta communities are earning this year. The uncertainty has drained confidence and energy from Alberta’s market, affecting the number of power purchase agreements (PPAs) by corporations seeking to buy clean energy to fulfill their sustainability goals.
“The first half of 2024 has been the slowest for the Alberta PPA market since 2020, with only one deal announced so far,” noted Dye. From January 1, 2019, to December 31, 2023, 34 percent of new installed generation in Alberta was enabled by corporate renewable energy procurement. During this period, 3.26 gigawatts (GW) of renewable energy were purchased through corporate power purchase agreements, enabling a total of 4.1 GW of project capacity. This capacity equates to 12,400 gigawatt-hours per year of energy, creating 6,214 jobs, $6.3 billion in capital investment, and enough energy to power 1.7 million homes.
The rate of project cancellations has increased five-fold, with the Alberta Electric System Operator noting 53 cancellations since the moratorium was announced. The calculation of lost tax revenue for canceled projects involved deriving an assessment proxy using the latest 2023 project assessment values separately for wind and solar projects and using 2022 mill rates or very conservative mill rate estimates when needed. A detailed explanation for lost tax revenue calculations is available upon request.
The cancellation rate change is expected to negatively impact the financial future of rural municipalities and limit corporate Canada’s ability to meet sustainability goals. Without government action, the corporate procurement market is unlikely to recover, especially as other provinces are actively pursuing increased clean energy capacity and corporate procurement.
The Business Renewables Centre-Canada (BRC-Canada), an initiative of the Pembina Institute, urges the government to address the new risks associated with red tape, regulatory charges, and market complexity introduced by the prolonged policy deliberations, which have now lasted 12 months. Until resolved, these challenges will continue to stifle economic development in rural Alberta and reduce benefits to landowners and municipalities.
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