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


 
 

ESG and dispute resolution: fighting for greener ways

July 5, 2023

By Daniela Bassan, K.C. All stakeholders in the legal profession, including litigators, have a shared interest in promoting environmental, social, and governance (ESG) pathways towards building a greener society. It is crucial for litigators to…

Read More

Amendments to the Canada Business Corporations Act affecting registers of individuals with significant control

June 30, 2023

By Kimberly Bungay and Colton Smith Since June of 2019, corporations formed under the Canada Business Corporations Act have been required to prepare and maintain a register of individuals with significant control (an “ISC Register”).…

Read More

Navigating the waters: Compliance with multiple regimes

June 22, 2023

By Kim Walsh and Olivia Bungay Compliance with Russian sanctions goes beyond complying with Canada’s Russia Regulations. Canadian individuals and businesses may be unaware of several other sanctions regimes that apply to them. In conjunction…

Read More

Nova Scotia releases offshore wind roadmap

June 21, 2023

By David Randell, Robert Grant, K.C., Sadira Jan, and James Gamblin On June 14, 2023, the Province of Nova Scotia released the first of three modules (the “Module”) which will comprise the Nova Scotia Offshore…

Read More

Board, Bye!: Changes to the Municipal Appeal Process under the Urban and Rural Planning Act, 2000

June 19, 2023

By: Joe Thorne, Giles Ayers, and Jayna Green Introduction Prior to June 1, 2023, decisions made by municipal town councils in Newfoundland and Labrador could be appealed to one of four Regional Appeal Boards pursuant…

Read More

Navigating Canada’s sanctions against Russia: New guidance on ownership and control of an entity

June 16, 2023

By Kim Walsh and Olivia Bungay Canadian sanctions targeting Russia in relation to Russia’s ongoing invasion of Ukraine were significantly expanded over the past year. Critical to compliance with Canada’s sanctions targeting Russia, individuals and…

Read More

Navigating Canada’s economic sanctions against Russia

June 6, 2023

By Kim Walsh and Olivia Bungay Canadian sanctions targeting Russia in relation to Russia’s ongoing invasion of Ukraine were significantly expanded over the past year. The Special Economic Measures (Russia) Regulations impose sanctions on individuals…

Read More

Federal Government introduces amendments to expand the mandates of the two historic Atlantic Accord Acts to include offshore wind energy

June 1, 2023

David Randell, Sadira Jan, Robert Grant, K.C., Greg Moores, G. John Samms, and James Gamblin The recent tabling of federal legislation is an important step for offshore wind development in the offshore areas of Nova…

Read More

Newfoundland and Labrador adopts virtual Alternate Witnessing of Documents Act – for good this time!

June 1, 2023

By Joe Thorne and Megan Kieley Background During the COVID-19 public health emergency order in Newfoundland and Labrador, the government passed the Temporary Alternate Witnessing of Documents Act, which (as the name implies) temporarily permitted…

Read More

The great IP debate in Canada

May 31, 2023

By Daniela Bassan, K.C. Daniela Bassan, K.C. is a Partner and Practice Group Chair at the law firm of Stewart McKelvey (Canada) where she focuses on intellectual property and complex, multi-jurisdictional dispute resolution. The premise…

Read More

Search Archive


Scroll To Top