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The winds of change (part 2): Crown Land

By: John Samms, Sadira Jan, Paul Kiley, Dave Randell, Alanna Waberski,  and Jayna Green

Now that the Government of Newfoundland and Labrador (“GNL”) has amended the Order in Council that had banned Crown titles and environmental assessment in respect of commercial wind generation projects, industry players are now looking forward to GNL’s policy in how it will decide who gets access or rights to Crown land that might be necessary or desirable for the construction of wind energy projects.

GNL has indicated that the policy is coming very soon – the exact date, however, is unknown. There are, in Canada, generally two ways in which the award of access to Crown lands for wind energy projects is accomplished – through a non-competitive process or through competitive bidding.

Where a jurisdiction indicates that it will use a non-competitive process to award access to Crown lands for wind energy projects, applications are submitted for a wind power lease and assessed on a first-come-first-served basis.

Where competitive bidding is used, the Crown Corporation or other entity in charge of energy/electricity distribution issues a Request for Qualifications (“RFQ”) and/or a Request for Proposals (“RFP”), and successful proponents then apply for a Crown land lease for their project, if necessary.

This article provides a review of such schemes across the other Provinces that make up Atlantic Canada, which we hope provides some insight on what may come.

Nova Scotia

Overview of Policy

Nova Scotia’s 2013 policy for leasing Crown lands explains that leasing generally is initiated through an application or in response to a public tendering process.[1] Applications for a Crown lands lease must align with the best interests of the Province, and are assessed on a first-come-first-served basis.

For wind projects specifically, the Department of Natural Resources (“DNR”) may identify public lands for development and make them available to interested proponents through a public tendering process. The DNR may issue an RFP for specific uses of public lands, such as wind energy conversion. If an area is in particularly high demand (e.g. multiple applications for leases are received by the DNR), a public tendering process may also be initiated.

Overview of Process

In the private land context as it relates to renewable energy projects, we would often see a fee simple owner of land grant an option to lease to a developer or applicant. During the option period, the lands are subject to exclusivity and the applicant can run its testing, investigations, etc. as may be required in connection with the proposed project. If all is in order, the applicant would then exercise its option to lease and move forward on a timeline of its own choosing, which can co-align with the financing and construction of the project in question. Typically, there would be certain outs drafted into the lease, allowing the applicant to terminate if it ultimately decides not to complete the project. With the lands locked up either by option or a full lease, the applicant can then focus on the other pieces of the project.

In the Crown land context, there are certain steps in the Crown leasing guidelines which fundamentally change the path to lease. The Crown process may be considered more cumbersome; the applicant is expected to do more of the work on the front end and absorb more risk without any guarantee that the lands will ultimately be leased to the applicant. In this process, perhaps not surprisingly, the decision to lease is more in the hands of the Crown than the applicant.

The applicant initiates the process by making an application to lease. Once the application is received and the initial Crown review is complete, the applicant requests a Letter of Authority from the Crown which will provide the applicant with interim rights to do its investigations, etc. The applicant then has to prepare a Development Plan (“DP”) in accordance with the Crown Lease guidelines. In the Crown’s review of the DP, they’ll consider land use optimization and assess whether any Indigenous interests are engaged that would require consultation. When they’re satisfied with the DP, the Crown will issue a Letter of Offer which will include any additional conditions to be met prior to approving the lease (which may require an environmental assessment or an Indigenous consultation process). For wind farm leases specifically, the following are additional requirements:

  1. When describing production method processes, applicants must specify the types of towers to be installed and how many megawatts of energy they will produce.
  2. Applicants must adhere to municipal by‐laws for specific setbacks and management of sound
  3. Wind‐energy development will not be considered within 10 rotor diameters of any existing wind turbines owned by third parties. The rotor diameter used to calculate this distance will be the larger of the diameter(s) of the existing turbine(s) and any turbines proposed for the requested
  4. Applicants must show how their projects will connect to the power grid.
  5. When summarizing the physical and biological components in the area likely to be affected by the project, include expected effects on migratory birds and bats.

Perhaps most importantly, the Crown will not issue an approval of a lease until they have proof that both a Power Purchase Agreement (“PPA”) and a Generator Interconnection Agreement (“GIA”) with Nova Scotia Power Inc. have been executed. This may cause concern to the applicant who will not have assurance on the lease until they’ve already obliged themselves to sell power via these agreements. While it would be unusual for the Crown to deny a lease once a project has advanced to this stage, it certainly has the right to do so. In order to hedge this risk, the Crown has indicated that an applicant may request a Comfort Letter from DNR confirming that their application is currently under review. A Comfort Letter can also be requested for security of tenure during a period when wind testing activities are being conducted under a Letter of Authority.

New Brunswick

Overview of Policy

New Brunswick’s “Allocation of Crown Lands for Wind Power Projects Policy” initially published in 2012 outlines the approach for the utilization of Crown lands for wind exploration and wind farm development and recognizes the economic and environmental benefits of generating electricity from wind energy.[2]  The Policy was developed to establish a fair, balanced and consistent approach for allocating Crown lands for wind power.

Overview of Process

Since 2012, the Province of New Brunswick established a “single-entry point” for all wind generation projects on Crown lands.[3] Pursuant to the Policy, grants for wind power projects over Crown lands are typically issued through a two-staged, integrated process facilitated by the Department of Natural Resources and Energy Development (“DNRED”).

At stage one, the DNRED grants a License of Occupation for Wind Exploration and an Option Agreement providing the first right to apply for a wind farm lease over the same exploration area.[4]  In the Province, wind exploration activities are comparable to mineral, oil and natural gas exploration where developers may stake “wind claims” onto large areas of Crown land for possible future development, and thereafter, based on the data collected during exploration, proponents may move to the second stage and apply to develop a wind farm within the exploration area.

At stage two, proponents typically apply for an exclusive wind farm lease (for the wind turbine and substation footprints) and an associated non-exclusive license of occupation for access and distribution (for associated access and distribution corridors) for the area of the proposed project. In certain circumstances, a wind farm lease can be for a larger footprint on the Crown lands which would encompass all elements of the proposed wind farm, but that approach would be atypical.

A wind farm lease application and associated license of occupation for access and distribution must be submitted with a number of supporting documents, approvals and registrations.  One such prerequisite for the grant of such a lease is the confirmation that the applicant has been either awarded an RFP for the purchase of the power, or has submitted an approved business plan which provides for the proposed utilization of the power in the absence of an RFP award.

In New Brunswick, pursuant to the Electricity Act[5] only New Brunswick Power Corporation is permitted to sell or supply electricity to a consumer or a municipal distribution utility within the Province and thus, is responsible for the majority of all RFPs issued for the purchase of power in the Province.  Notwithstanding the foregoing, municipal distribution utilities can also generate or purchase power, and can sell power to a consumer provided it does so within its own territorial limits.  There are three municipal distribution utilities in the Province[6] and accordingly, each could issue an RFP for the production of wind power within its territorial limits, including the possibility that Crown lands could be used in such projects.[7]

Upon submission of a completed application, the DNRED will conduct a comprehensive review and send an offer letter to the proponent informing of any additional requirements that may be required following approval.

Prince Edward Island

Overview of Process

The majority of wind farm development in Prince Edward Island is on private lands and there is no provincial policy regarding the use of Crown lands for wind farm development. The present wind capacity in Prince Edward Island is 104 MW, of which nearly 74 MW is owned and operated by the Prince Edward Island Energy Corporation (“PEIEC”), a provincial Crown corporation. Two wind farms located in western Prince Edward Island are operated by a private developer and supply the balance of wind capacity in the Province. PEI’s commitment to wind farm development has resulted in wind energy supplying approximately 24% of PEI’s electricity needs.[8]

In 2017, the PEIEC was assigned responsibility to construct two additional wind farms within the Province, with 30 MW of wind capacity to be operational by 2020 and an additional 40 MW by 2025.  In 2019, the PEIEC issued a request for proposals inviting prospective proponents to submit proposals for the supply of wind turbines for the proposed 30 MW wind project.  A site near the PEIEC’s existing wind farm in East Point has since been identified as the preferred location for the development of first 30 MW wind project.  It is expected that both projects will be located on privately held lands subject to land-owner lease agreements.[9]

Conclusion

Like many parties in the renewable energy space we eagerly wait for an announcement from GNL with respect to access or rights to Crown land that might be necessary or desirable for the construction of wind energy projects. How GNL proceeds will have a direct impact on proponents looking to develop such projects, in the context of creating green hydrogen for export or otherwise.


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.

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[1] “Guidelines for the Preparation of Crown Land Lease Applications” Nova Scotia Department of Natural Resources, (21 September 2015) online (PDF): <https://novascotia.ca/natr/land/pdf/Guidelines_Applicants_Crown_Land_Leasing.pdf>
[2] Government of New Brunswick, “Allocation of Crown Lands for Wind Power Projects,” (7 February 2012), online (PDF) at 3: https://www2.gnb.ca/content/dam/gnb/Departments/nr-rn/pdf/en/Publications/CLM0172005.pdf
[3] Ibid.
[4] Government of New Brunswick, “Crown Lands – Wind Farm Lease: Natural Resources and Energy Department,” online:  https://www2.gnb.ca/content/gnb/en/services/services_renderer.200867.Crown_Lands_-_Wind_Farm_Lease.html.  Further, Applicants who can provide wind exploration data in the proposed area may be exempt from the two-stage process and could proceed directly to the application for a Wind Farm Lease.
[5] Electricity Act, SNB 2013, c 7, s 72.
[6] These include: The Power Commission of The City of Saint John; the City of Edmundston, and the Perth-Andover Electric Light Commission.
[7] Burchill Wind Farm, which is currently under construction is located on Crown lands and consists of 10 turbines with an installed capacity of 45MW and was in response to the award of an RFP by The Power Commission of The City of Saint John.
[8] PEI Energy Corporation, “Island Wind Energy Securing Our Future: The 10 Point Plan,” PEI Environment and Energy Policy Series (2009), online (PDF): http://www.gov.pe.ca/photos/original/wind_energy.pdf
[9] PEI Energy Corporation, ”Request for Proposals for Wind Turbine Procurement for a Proposed 30 Megawatt Wind Project for the PEI Energy Corporation,” (12 December 2018), online (PDF) at 24:  <https://www.princeedwardisland.ca/en/tender/peiec-5172>

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