Risk

Make Legal A Breeze in Renewable Energy Projects

Renewable energy production in Saskatchewan has received much attention over the last few years. The Government of Saskatchewan and its Crown Corporation, SaskPower, have committed to procuring 50% of the Province’s energy production capacity from renewable energy sources by 2030. March 2018 marked the close of submissions for SaskPower’s first 200 megawatt wind power procurement under this commitment.  Proponents will be eager to learn if their bid was successful. Additionally, when this article went to print, SaskPower was on the verge of announcing the successful proponent of the 10 megawatt utility-scale solar project.

SaskPower indicated it will continue to increase its renewable energy procurement incrementally until 2030. As much as 1400 additional megawatts may come from wind generation. This anticipated source of energy procurement creates significant business opportunities in the Province for renewable energy producers, project developers and renewable energy service industries alike.

This short article highlights a few key legal relationships and obligations found in renewable energy projects in Saskatchewan.

SaskPower has a provincial monopoly on the supply and distribution of power (with a few legislative exceptions). This monopoly applies to all energy projects, from utility-scale to consumer-scale. In other words, in order to supply electricity, one may only do so in a contractual agreement with the applicable power authority. SaskPower has developed a couple of interesting programs, such as the net metering program, which permit and remunerate consumer or small-scale commercial generation of electricity. Contractual arrangements with SaskPower confer rights but they also impose obligations. It is important to understand the scope of such rights and obligations.

As utility-scale renewable energy projects are relatively novel in Saskatchewan, a project’s compliance with the existing Provincial legislative framework must be analyzed, case by case. For example, most utility-scale projects will be located in rural areas, and Saskatchewan has laws that limit who may hold interests in farm land. Exemptions to such limitations may be available to developers, but such exemptions may impose qualifications on a developer’s ability to hold interests in the land.  These limitations may affect the number of acres that may be held or used within a project.

Saskatchewan also has a robust system of planning and development legislation. Care should be taken to ensure that documents supporting real estate interests required for a particular project, such as leases or option agreements, comply with applicable planning and development legislation.

Developers of renewable energy projects must also consider the impact projects may have on the environment and comply with applicable environmental legislation. The Ministry of Environment has recently published Wind Siting Guidelines intended to assist wind energy producers to identify and avoid areas within the province where the environment is more sensitive to wind energy generation.

Also of note, the Federal Government is currently proposing revised environmental legislation to assess the impact of prescribed major projects. The extent to which this legislation will affect energy projects in Saskatchewan is yet to be determined. The new legislation is expected to add certainty for proponents, significantly increase First Nations and public consultation during the impact assessment, and include new impact assessment factors aimed at fostering sustainability, rather than limiting the assessment to environmental factors alone. Sustainability factors are expected to include consideration of social and economic issues over the long term, gender-based analysis, impacts on Indigenous peoples and their rights, and climate change considerations, among others.

Developers interested in renewable energy projects in Saskatchewan must also consider the advantages or disadvantages of greenfield or existing projects. For existing projects, parties will have to consider negotiating terms of project acquisition and sale, or arrangements such as partnerships and joint-ventures.  As SaskPower proposes to incrementally add more wind energy production through additional procurement phases, parties looking to sell or acquire projects may also wish to contemplate longer term possibilities such as multiple bids in acquisition and sale documents.

Conducting thorough due diligence on any business venture is an essential part of the project. This applies to diligence conducted on potential business partners as it does to project assets and the compliance of a project or potential project with applicable regulations.

For service industries, it is important to prepare robust service contracts which appropriately address risk and protect assets such as intellectual property.

McKercher LLP has a group of lawyers with significant experience working in the renewable energy context in Saskatchewan and in government procurement generally. More information about wind energy generation in Saskatchewan is available at http://www.mckercher.ca/resources/renewable-energy-development-in-saskatchewan-a-mckercher-llp-overview

Wm. Christopher Porter
McKercher LLP
374 Third Avenue South
Saskatoon, SK 
(306) 653-2000
info@mckercher.ca
mckercher.ca