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Tax revenue at risk in Central Alberta with new renewable rules

The Business Renewables Centre-Canada is sounding the alarm about potential risks to rural municipal revenue due to changes in renewable power project approvals. (AP Photo/Charlie Riedel)

According to Jorden Dye, the director of the Edmonton-based Business Renewables Centre Canada, a lot of potential tax revenue for small municipalities is at risk due to the province’s handling of the renewables portfolio.

Dye says that the biggest impact at the moment is the “continued uncertainty” surrounding the industry.

“Companies can’t sign 15-year contracts while the rules are being rewritten,” said Dye.

According to information provided by Dye, the tax revenue being discussed is not a small amount.

In Stettler County, revenue at risk from the renewable energy projects that have been proposed to date would add around $11 million per year to the county’s operating revenues.

A little further east, in Paintearth County, the tax revenue at risk from proposed projects is $27 million.

In Lacombe County, tax revenue at risk is nearly $10 million; in Red Deer County the potential tax revenue for proposed projects is $8.2 million.

“Municipalities really want this revenue,” said Dye.

“The rules are prohibitive, singling out renewable energy.”

Dye was referring to the new rules for renewable projects, which have made a large portion of southern Alberta unavailable for wind and solar developers.

“These projects could be a lifeline for rural municipalities,” said Dye.

Dye noted that in recent years, oil and gas companies have seen an increase in default, and costs have been coming down for wind and solar projects.

On a per-unit basis, Dye believes that renewable power is more cost-effective because the “wind blows and the sun shines more than in a lot of other places.”

“The profit margins are quite high,” said Dye, contrasting that to oil and gas, where every unit produced costs quite a bit more than wind or solar due to how it is removed from the earth.

Dye also noted that at the end of the project, unlike oil and gas development, the resource is not depleted.

Renewable projects today are being developed and placed based on modelling and expected generation. However, when a project reaches its end of life, the site will have 50 years of hard data to support replacing or rebuilding it with what is going to be significantly updated technology at the time.

Opponents of renewable energy are always quick to point out when wind and solar projects are not generating. According to Dye, Alberta’s Energy System Operator (AESO) is able to forecast renewable contributions to the grid a day out and a week out, and budget the system’s power accordingly.

When asked about the potential of renewables leading to grid instability, the grid alert in January was used as an example, Dye said that the alert was caused by a natural gas plant being offline, and had little to do with renewables; further, Dye is a proponent of building battery electrical storage plants.

“That’s how we get a stable grid,” said Dye.

When asked about the risks posed by electrical storage — social media is full of memes about a certain type of electrical vehicle catching fire — Dye says that battery storage is “well established”. However, there are “risks to all technology.”

“It’s about managing risks,” said Dye.

Dye noted that there is a battery storage plant located in South Australia and others in the United States which have been used effectively.

Ultimately, Dye says there are other benefits with renewables outside of the municipal revenues.

Renewables can help ensure energy security and generate revenues for farmers who lease their land to the projects.

Whether the proposed projects end up getting built is going to depend on what happens as the province continues to roll out its new rules for renewables; if they don’t, it will be to the detriment of the municipalities.

Kevin Sabo

About the Author: Kevin Sabo

I’m Kevin Sabo. I’ve been a resident of the Castor area for the last 12 years and counting, first coming out here in my previous career as an EMT.
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