Skip to content

The Winds of Change (Part 7): Paying the Piper: New Newfoundland and Labrador Fiscal Framework expects billions in revenues from wind to hydrogen projects

By Dave Randell, G. John Samms, and Stuart Wallace

With the deadline for bids on crown lands available for wind energy projects extended to noon on March 23rd, the latest development in our Winds of Change series looks at the recently announced fiscal framework of Wind-Hydrogen projects in Newfoundland & Labrador

On February 23, 2023, the Newfoundland and Labrador Department of Industry, Energy and Technology announced further information on the fiscal framework of Wind-Hydrogen projects. This article sets out to provide a basic outline the specifics of the framework.

Principles

Predictability and transparency are the intended principles on which the fiscal framework has been developed. This is intended allow investors to make informed decisions. The framework attempts to balance the risk of investment with the use of provincial resources.

Payment Components

For a singular project over a 30-year period, the government of Newfoundland and Labrador expects $3.5B in taxes, royalties and fees.[1]

Payments will occur early in the project, and throughout the operation phase. These payments can be broken into three components: Land, Wind, and Water.

Land

  • Crown Land Reserve Fee: Annual charge of 3.5% of the market value of reserved lands. Payments begin upon award of exclusive right to pursue projects on lands.
  • Crown Land Lease Fee: Annual charge of 7% of market value of land. Payments begin upon issuance of Crown Land lease.

Wind

  • Wind Electricity Tax: Annual charge of $4,000 per megawatt on installed capacity. Payments begin when the turbines are “in-service”, and applicable to all wind-hydrogen projects (≥ 5 megawatts) producing electricity for the purposes of producing hydrogen.

Water

  • Water Use Fee: Annual charge of $500 per 1000m3 of water licensed and used, and $50 per 1000m3 of water licensed but not used. Payments begin when permit is issued, and are applicable to all hydrogen facilities.
  • Water Royalty: Payable based on the calculated residual value of the water. Rates are tiered and linked to cost recovery. These terms can be modified via agreements with the Province. Further details about calculation in document.
    • Tier 1: Rate of 10% applied after 1x cost recovery.
    • Tier 2: Rate of 20% applied after 2x cost recovery.
    • Tier 3: Rate of 25% applied after 3x cost recovery.

Taxes

Taxes will be applicable to all wind projects producing electricity for the purposes of producing hydrogen. For more information on how Atlantic Canada is poised to benefit from clean energy tax credits, check out part 5 of this series.

Bids

Deadline for submitting bids has been extended to March 23, 2023.

Successful Bidders will be awarded the exclusive right to pursue their project through the Crown Lands and Environmental Assessment processes.


This update is intended for general information only. If you have any questions on the above we would invite you to contact the authors or any other member of our Energy Group.

Click here to subscribe to Stewart McKelvey Thought Leadership.


[1] Using a base case of a 1000 MW Windfarm and a 500 MW Hydrogen (Ammonia) Facility with capital costs of $3.5 billion with an annual production of 60k tonnes of hydrogen converted to 344k tonnes of ammonia.

SHARE

Archive

Search Archive


 
 

Forward focus: Canada’s ambitious immigration plan

December 14, 2023

By Brendan Sheridan The Government of Canada has continued their whirlwind year of immigration program announcements by revealing their plan to modernize and improve the country’s immigration system. This plan, known as “An Immigration System…

Read More

Preparing for Canada’s “Modern Slavery Act”: considerations and guidance for businesses

November 30, 2023

By Christine Pound, ICD.D, Rebecca Saturley, & Daniel Roth Canada’s anti-modern slavery legislation comes into force on January 1, 2024. To prepare for the first reporting deadline on May 31, 2024, organizations need to determine…

Read More

Replace-me-not: Bill C-58 proposes ban on replacement workers in federal strikes and lockouts

November 29, 2023

By Brian Johnston, K.C. and Richard Jordan On November 9, 2023, Minister of Labour, Seamus O’Regan, introduced Bill C-58 in the House of Commons to amend the Canada Labour Code to prohibit the use of…

Read More

Final retail payment activities regulations released

November 28, 2023

By Kevin Landry & Eryka Gregory The Retail Payment Activities Regulations (“Regulations”) under the Retail Payment Activities Act (“RPAA”) were finalized and published in the Canada Gazette Part II on November 23, 2023. The RPAA was…

Read More

Nova Scotia offers new pension option to private sector employers

November 24, 2023

By Level Chan When proclaimed in force, the Nova Scotia Private Sector Pension Plan Transfer Act (the “Transfer Act”) enacted by Bill 339, Financial Measures (Fall 2023) Act will allow the transfer of private sector…

Read More

Bill C-365 calls for plan for implementation of open banking in Canada

November 17, 2023

By Kevin Landry On November 9 2023, Bill C-365, An Act respecting the implementation of a consumer-led banking system for Canadians (“C-365”), short titled as the ‘Consumer-led Banking Act’ was read in the House of…

Read More

More limits: NSCA tightens the test for disallowing a limitations defence

November 15, 2023

By Jennifer Taylor The Nova Scotia Court of Appeal (“NSCA”) has issued an important decision clarifying the test to disallow a limitations defence. The decision, Halifax (Regional Municipality) v Carvery (“Carvery”), has real implications for personal…

Read More

Anticipating changes to the Competition Act: what businesses need to know

November 1, 2023

By Deanne MacLeod, K.C., Burtley Francis & David Slipp On September 21, 2023, the Federal Government introduced Bill C-56: An Act to amend the Excise Tax Act and the Competition Act (“Bill C-56”), with the…

Read More

Powering the future: Green choice program regulations

September 22, 2023

By Nancy Rubin, K.C. and Lauren Agnew The long-awaited Green Choice Program Regulations (N.S. Reg. 155/2023) were released by the provincial government on September 8, 2023, offering some clarity into the practical implementation of Nova…

Read More

Privilege protected: Court of Appeal rules NL’s Information and Privacy Commissioner barred from reviewing solicitor-client privileged information

September 20, 2023

By Koren Thomson, John Samms, and Matthew Raske The Newfoundland and Labrador Court of Appeal has held that the Information and Privacy Commissioner for this province (the “Commissioner”) does not have the authority to order…

Read More

Search Archive


Scroll To Top