We are amidst a global shift toward renewable energy which, for Saskatchewan and other jurisdictions rich with renewable resources, is creating a new frontier of resource development and supply opportunity. Saskatchewan Power Corporation (SaskPower) recently announced a target of 50% power generation from renewable sources by 2030. As a result, it is expected that approximately 2,400 megawatts (MWs) of renewable energy will be developed in Saskatchewan in the next 13 years. Fortunately with Saskatchewan’s abundance of renewable sources – wind, solar, hydro, geothermal and biomass – SaskPower’s announced targets are achievable and there is plenty opportunity for Saskatchewan developers, municipalities, First Nations, landowners, contractors and suppliers to benefit from this new Saskatchewan frontier.
The New Frontier and Private Sector Participation
Private sector engagement will be required for SaskPower to achieve its target of 50% power generation from renewable sources by 2030. The level of private sector engagement in Saskatchewan power generation varies significantly. To date, SaskPower has managed its electrical supply, transmission, distribution and sale on a spectrum that ranges from SaskPower wholly owning and operating a facility (without any private sector engagement) to an independent power producer wholly owning and operating a facility and selling electricity to SaskPower pursuant to a power purchase agreement. For new renewable energy development, however, it is expected that the vast majority of generation and supply will be obtained and supplied to SaskPower through competitive procurement and wholly owned and operated by the private sector.
While price remains the most significant scoring factor in SaskPower’s requests for qualifications (RFQ) and requests for proposals (RFPs), SaskPower’s competitive procurements are structured to promote community engagement and Aboriginal participation by encouraging (scoring) the use of strategic partnerships and ownership structures. As a result renewable energy developers are presently and will continue to undertake effective and meaningful engagement with local communities in proximity to a potential development site. Additionally, in line with SaskPower’s commitments to work with Aboriginal persons and communities, renewable energy developments are generally structured with Aboriginal ownership participation and/or Aboriginal employment opportunities.
In addition to these direct community and Aboriginal benefits, there exists many opportunities through the renewable energy development supply chain. Like other significant resource developments, renewable energy developers engage either engineering, procurement and construction (EPC) or engineering, procurement and construction management (EPCM) firms, who in turn, contract or subcontract with other suppliers, contractors and subcontractors. As it applies to renewable energy, supply-chain opportunities are primarily in the areas of road construction and maintenance, concrete and steel supply, component manufacturing, transportation and electrical technician supply.
Summary of Regulatory and Legal Considerations
Renewable energy developments give rise to a multitude of regulatory and legal considerations which vary broadly depending on the particularly parties role in industry and supply-chain. A detailed overview is beyond this article, but interested parties should consult McKercher LLP’s Overview of Renewable Energy Development in Saskatchewan available online at www.mckercher.ca/resources.
For renewable energy developers, regulatory and legal considerations are significant and evolve during the pre-development, development, operation and decommission phases of a project. In general terms, renewable energy developers will encounter land (access, use and ownership) and environmental regulatory considerations, as well as contractual issues and negotiated risk-allocation with many counterparties, including:
- options to lease and leases with multiple landowners,
- strategic partnership agreements with Saskatchewan Fist Nations and municipalities,
- pre-development service contracts with engineering firms, environmental consultants, government and community relation firms and law firms;
- RFQs and RFPs,
- power purchase agreements with SaskPower,
- supply-chain contracts with EPC or EPCM firms,
- operation and maintenance (O&M) contracts
among the many other possible contractual relationships.
Additionally, renewable energy projects require several permits from all levels of government – municipal, provincial and federal – relating to municipal development and building permits, provincial land use, highways and water related permits, and federal aeronautics, aviation and radio-communication permits. Most significantly, however, renewable energy developers will need to conduct in-depth environmental screening in accordance with The Environmental Assessment Act, which outlines the processes and guidelines for obtaining ministerial approval of a “development”. The Saskatchewan Ministry of Environment has established Technical Proposal Guidelines and recently the Wildlife Siting Guidelines for Saskatchewan Wind Energy Projects to assist developers in making a determination whether there is a legal obligation to seek ministerial approval under The Environmental Assessment Act.
New frontiers provide opportunities but give rise to new issues and challenges. Developers, municipalities, First Nations, landowners, contractors and suppliers are encouraged to engage experienced legal, environmental and engineering professionals to consider project-specific issues and the application of Saskatchewan’s legal and regulatory framework.