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


 
 

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

New Brunswick introduces prompt payment and adjudication legislation

May 24, 2023

By Conor O’Neil and Maria Cummings On May 9, 2023, two bills were introduced in the New Brunswick Legislature that could have material affects on the construction industry. Bills 41 and 42, of the current…

Read More

10 LMIA recruitment and advertising tips for employers looking to hire foreign workers

May 24, 2023

Author Sara Espinal Henao, an Immigration Lawyer in our Halifax office, will be speaking on a related panel, Labour Market Impact Assessments Overview and Current Trends, at the upcoming CBA Immigration Law Conference in Ottawa,…

Read More

Hiring internationally in the film & television industry: 5 things you should know

May 23, 2023

Author Brendan Sheridan, an Immigration Lawyer in our Halifax Office, will be running a related webinar on May 30, 2023, Avoiding immigration bloopers: A webinar for the film & television industry, in partnership with Screen…

Read More

Whose information is it anyway? Implications of the York University decision on public and private sector privacy and confidentiality

May 19, 2023

Included in Discovery: Atlantic Education & the Law – Issue 12 By Charlotte Henderson Privacy and confidentiality requirements are some of the most important responsibilities of organizations today. An organization’s ability to properly manage information,…

Read More

Are Non-Disclosure Agreements on their way out?

May 15, 2023

Included in Discovery: Atlantic Education & the Law – Issue 12 By Hilary Newman & Jacob Zelman A non-disclosure agreement, or “NDA”, is a legal contract in which two or more persons agree to keep the…

Read More

The General Anti-Avoidance Rule: more changes coming in 2023

May 12, 2023

By Graham Haynes & Isaac McLellan  Introduction The Canadian federal budget was unveiled on Tuesday, March 28, 2023 (“Budget 2023”)1 , and proposes significant changes to the General Anti-Avoidance Rule (the “GAAR”) in Canadian tax…

Read More

When closed doors make sense: Court dismisses challenge to university board’s procedure for in camera discussions

May 11, 2023

Included in Discovery: Atlantic Education & the Law – Issue 12 By Scott Campbell, Jennifer Taylor, Folu Adesanya A long-standing dispute over governance practices at the Cape Breton University Board of Governors was recently resolved…

Read More

When Facebook goes faceless: unmasking anonymous online defamation

May 9, 2023

Included in Discovery: Atlantic Education & the Law – Issue 12 By Jon O’Kane & Emma Douglas These days it seems no one is immune from the threat of anonymous keyboard warriors posting untrue and…

Read More

Search Archive


Scroll To Top