A new release by the Business Renewables Centre-Canada in Edmonton shows that renewable generation in Alberta significantly increased the bottom line of rural municipalities.
According to Jorden Dye, the organization's director, in 2023 tax revenues for municipalities increased from $54 million from $28 million the year prior.
"It's coming out that there is a 92 per cent increase from last year's municipal taxes," said Dye, in a recent interview.
In Paintearth County, documents released by the Business Renewables Centre show that renewable energy will fund approximately 23 per cent of the municipality's operating costs with around $4.1 million of the total tax revenue in 2024.
Dye notes that the significant increase was not from many projects coming online across the province; the 92 per cent increase in tax revenue comes from 18 approved, under construction, or completed projects before the Alberta Government's moratorium on renewable energy started last summer.
Since the moratorium came off in February of 2024, the industry has been left in disarray with no clear direction.
"Based on trends we're seeing, we're not seeing another significant jump (next year)," said Dye.
Dye says that with the Alberta Utilities Commission changing its processes, leaving things less than clear, and the government looking into all areas of the power sector, including renewables, with no clear forward direction as of yet, projects continue to be postponed or cancelled.
Pre-moratorium, Dye says it was average for one renewable project in the queue to be cancelled in three months; now, says Dye, the Business Renewable Centre is seeing an average of 18.
Another area driving the cancellations is power purchase agreements (PPA); companies generally don't build power-generating projects unless they know they can sell the power produced.
According to Dye, 2024 is shaping up to be the worst year in the last five for PPAs, with only one signed in the first half of the year when, on average, around 13 are signed per year.
"It's not that we have rules stopping projects," said Dye. "You just can't make investments when you don't know what the rules of the game are."
Still, every project that does come online will be a benefit, says Dye.
The County of Paintearth notes that the information coming from the Business Renewables Centre is "hard to verify," but the chief administrative officer (CAO) for the county, Michael Simpson, notes that 2024 is the third straight year for renewable project development in the county.
"This year’s revenue in terms of municipal tax revenue based on assessable cost will not be taxable and realized until the 2025 levy, however, we have seen an increase in our linear assessment revenue over the past two years, which has buffered the County in terms of the impact of other declining industries, inflation in commodity pricing such as steel and diesel, and gravel," said Simpson, via an email inquiry.
"Recently, the question was asked how much a wind farm delivers in terms of cash-in-hand revenue for a municipality, and so we contacted our linear assessors to help us paint a better picture for the public."
Simpson notes that the early years of projects are assessed more heavily than later years, but a general rule is that for every $750,000 worth of assessment a project has, a municipality with industrial mill rates similar to Paintearth's will bring in around $11,300.
As the project ages, that number will decrease.
"By year 24 of the project, arguably the end of the planned lifespan, that million in assessable cost, now fully amortized in the assessor books, is worth $199,969 in assessment, as opposed to the $749,884 we started with back in year zero," said Simpson.
"Again, assuming the mill rate is the same, 15.09608, that’s a tax revenue of $3,018 in municipal tax revenue. These projects definitely have a peak earning time for tax dollars in the first several years, and then drop off over time after that. "
In Paintearth, renewable energy projects form a portion of "non-residential/linear" assessments, the class used to calculate industrial projects in the county. The total assessment in the county for this class comes in at around $729 million, will all assessment categories, including residential amounting to just under $1.1 billion.
"I think it’s also worth noting that, while people focus largely on the municipality as the beneficiary, it is the landowners who can negotiate a deal with a renewable energy developer who benefits first and foremost," said Simpson.
"In some cases, the revenues from these renewable projects are going to mean the difference between a retirement and passing the farm to the children, or a new farmer with land that generates revenue even in times of drought or poor crop prices. It’s becoming vitally important for farmers to earn money on their land in any way they can, as farmers are a rare type of business that buys their inputs at retail prices and then sells their products at wholesale prices… they work at a disadvantage compared to traditional business models and that presents challenges that require creative solutions."
Simpson does note that any landowners contemplating a deal with a renewable project should give "careful consideration" to terms and conditions and even consult a lawyer signing anything.
