Introduction and Market Update

Last year was one of continued growth and activity for the Atlantic power sector. The region continued to pursue its transition towards renewable and new energy sources. All four provinces — Nova Scotia, Newfoundland & Labrador, New Brunswick and Prince Edward Island — took initiatives to make good on their ongoing climate change action commitments and to address Canadian federal energy regulations which now require that coal-fired electricity be phased-out by 2030 by putting forward, to varying degrees, plans of shifting the structure of their energy markets and moving towards a greener economy.

The movement towards renewable energy sources has led to opportunities for public and private projects aimed at increasing the regional supply of wind, solar and potentially even tidal energy. Recent provincial elections have not changed trends in this direction.

Key 2021 developments occurred at the Atlantic interprovincial level as well, with the completion of regional projects and the emergence of regional strategic initiatives on renewable energy being put forward by regional groups such as the Offshore Energy Research Association, the Atlantic Hydrogen Alliance and the Maritimes Energy Association. Three areas of regional activity — the Atlantic Loop project, small modular nuclear reactors, and hydrogen fuel production — present particular opportunities for growth given their novelty and potential for further innovation.

Atlantic Provinces Governmental Updates

While each province’s renewable energy commitments vary in terms of ambition and scope, 2021 revealed the pressure felt by the governments of the Atlantic provinces to reach their short and long-term climate change goals and they are responding by putting forward or supporting new renewable energy projects and strategies.

Attracting and obtaining funding for such initiatives remain a regional challenge. Ensuring that the renewable energy transition does not lead to significant increases in energy costs for consumers is also a concern. In November 2021, the Council of Atlantic Premiers sent the Federal Government a letter requesting C$5 billion in assistance to support the regional renewable energy transition (including mainly the Atlantic Loop project) and to minimize the financial burden on ratepayers.

NOVA SCOTIA GOVERNMENTAL UPDATES

In Nova Scotia, the Nova Scotia Progressive Conservatives Party, led by Tim Houston, was elected to majority government as of August 2021, defeating the previous Liberal Party government. Despite the change, the new provincial government maintained the ambitious plan announced in February 2021 to reduce the province’s greenhouse gas emissions to 40% below 2007 levels by 2030 and to source 80% of the province’s energy from renewable energy sources by 2030. According to Nova Scotia Power forecasts, this plan will have to result in 60% of Nova Scotia’s energy use being sourced from renewable energy by the end of 2022. On October 27, 2021, the Environmental Goals and Climate Change Reduction Act was introduced, setting out 28 new goals, including a commitment to entirely phase out coal energy by 2030.

With current provincial supply of renewable energy being insufficient to meet legislated targets, the Nova Scotia government has been creating opportunities for independent power producers to develop renewable energy projects. A new renewable energy procurement round (discussed in further detail below), and special funding programs such as the Nova Scotia Green Fund have been announced.

It should also be noted that activity in Nova Scotia’s offshore oil and gas reserves continues to dwindle. For the fourth year in a row, no new licences were issued to explore the offshore region, leaving Nova Scotia’s petroleum future uncertain.

NEWFOUNDLAND & LABRADOR GOVERNMENTAL UPDATES

On January 15, 2021, Newfoundland & Labrador Premier Andrew Furey called a provincial election that resulted in his Liberal Party winning a House of Assembly majority on March 27, 2021. As in Nova Scotia, the newly elected government announced its new renewable energy strategy in late 2021.

The government’s plan provides little in terms of financial information, but highlighted an interest in maximizing renewable energy opportunities, prioritizing hydro, wind, biomass, solar and tidal power. Industry development is at the centre of the plan. Preliminary initiatives such as legislative and regulatory reviews, assembling an inventory of the province’s potential energy assets and reviewing the current moratorium on wind development are steps in this direction.

This could lead to renewed activity for existing, but on hold, renewable energy projects such as the experimental Ramea wind turbine and hydrogen-diesel project (under development by Nalcor Energy since 2011) which would provide electricity to communities not connected to the larger provincial grid.

While fossil-fuel sourced energy plant projects, such as a proposed diesel plant in Port Hope-Simpson, have been put on hold or set for decommissioning, the province is still committed to the oil and gas industry, hoping to double production by 2030 and supporting the province’s fossil fuel sales abroad.

The absence of budgetary commitments for renewable energy projects in the newly released plan is not surprising given Newfoundland and Labrador’s current level of debt and budget deficit problems. The plan’s announcement coincided with efforts by the government to review and evaluate the province’s assets in response to the May 6, 2021 Greene report on economic recovery.

It is unclear how the Greene report’s recommendations will affect the province’s new energy plan. One recommendation proposed the wind up of Nalcor, a key provincial energy corporation involved in the Muskrat Falls hydroelectric plant project, which led to a June 2021 announcement that Nalcor would be integrated into NL Hydro.

The combined effect of government interest in creating a more favourable economic environment for renewable energy projects, the end of the Muskrat Falls project’s construction, and the government’s limited financial resources could potentially result in greater room for independent private producer initiatives.

NEW BRUNSWICK GOVERNMENTAL UPDATES

New Brunswick’s government has yet to provide a clear framework on how it plans to reach its commitments to source 100% of its power from non-greenhouse-gas-emitting sources by 2050. The province was under an obligation, stemming from the New Brunswick Climate Change Act, to provide an update to its Climate Change Action Plan by the end of 2021. The government’s plan was initially to publish new power supply targets by fall 2021, but it seems more likely that such targets will be made public early in 2022.

Lack of guidance on this front may be tied to the New Brunswick government’s financial concerns regarding the energy transition. The federal plan to end the activities of Belledune Coal Plant by 2030 is creating challenges for NB Power, the provincial power utility, which is currently struggling with debt issues. Given the unsuccessful attempts to delay the closure timeline, it is possible that the New Brunswick government is working on plans to build new power generation projects while trying to avoid significant energy rate increases.

PEI GOVERNMENTAL UPDATES

The PEI government continued over the past year to move forward on a pledge to reduce provincial carbon emissions and reach net-zero energy consumption, with specific goals for 2030 and 2040, but this pledge has yet to materialize into a clearly defined plan or steps. The province nevertheless remains a favourable environment for potential renewable energy initiatives.

Muskrat Falls

The construction in Labrador of the 824 megawatt Muskrat Falls energy plant, a portion of the Lower Churchill Project which began in 2013, was set to be completed in November 2021. Energy produced at the combined Muskrat Falls and at the Gull Island (still to be completed) sites would eventually provide an energy capacity of 3,000 megawatts or higher, with part of the electricity generated being transmitted through the Maritime Link Project to Nova Scotia.

The Muskrat Falls project’s financing issues have been significant and a source of public concern in the past. Despite increases in capital costs, the four Muskrat Falls power generating stations were completed and active by fall 2021. The project’s overall completion date, however, was pushed back to spring 2022, in part due to issues with the software designed to operate the Labrador- Island Link, a 1,100 km-long high-voltage and direct-current transmission line from the project’s location in Labrador to Newfoundland across the Strait of Belle Isle.

Maritime Link

The Maritime Link project connects Granite Canal, Newfoundland and Labrador to Woodbine, Cape Breton (Nova Scotia) via a 170 km undersea cable across the Cabot Strait, and enables Nova Scotia to access part of the hydroelectric energy supply generated by the Muskrat Falls Project, in addition to providing the provinces with more stable prices.

Construction (led by Emera) was completed in 2018. Investments for the estimated C$1.7 billion project costs are spread out over 35 years, and also involve Nalcor (now Hydro NL), and Nova Scotia Power. The Maritime Link will allow the island of Newfoundland to connect to the North American grid for the first time. This alternative electrical-transmission route makes the abundance of energy in Newfoundland and Labrador available for export to Nova Scotia and beyond, and improves the feasibility and profitability of future energy projects in the region.

The Maritime Link has a planned capacity to transport 500 megawatts HVdc between provinces, with Emera being responsible for the operation of the transmission line. Agreements between Emera and proponents of the Muskrat Falls project have led to a 35-year guarantee that Nova Scotia will benefit from 20% of the energy generated at the Muskrat Falls generating station in exchange for investments of 20% of the total cost of Phase I of the Lower Churchill Project, among others. Nova Scotia could purchase further electricity at market rates.

With delays in the completion of the Muskrat Falls project, no date has been set as to when the full expected volume of electricity would start to consistently flow through the Link towards Nova Scotia. Between the months of August and November 2021, only 19% of the promised electricity was flowing towards the province. Emera representatives have indicated, however, that this amount had risen to between 70 to 100% by mid-January 2022.

Nova Scotia energy regulators were assessing in December 2021 a request by Nova Scotia Power’s Maritime Link affiliate to recover part of its expenses by collecting C$169 million from ratepayers in 2022, by rolling the amounts into rates. A decision should be published in 2022.

Atlantic Loop

The Atlantic Loop is a project to provide significant transmission upgrades to the Atlantic provinces’ power grids, connecting their grids with Québec’s grid. It is part of the Clean Power Roadmap for Atlantic Canada, whose interim report was released in 2020, and was due to be released in 2021. The project is in its early stages and its estimated project costs are of at least C$5 billion.

Plans are for the Atlantic Loop to increase overall transmission capacity, which would enable the region to source renewable energy from Québec and Labrador, and ease the transition away from coal energy production in the region. The project would also enable the provinces to be in a position to supply electricity to the US on a long-term basis.

The Federal Government indicated back in 2020 that the Atlantic Loop was a top priority project for the region. Despite strong ongoing support from the Atlantic provinces’ premiers, consensus around the project, and involvement from Hydro-Québec, the Atlantic Loop idea is still on the drawing board, despite the need for the region to achieve its renewable energy goals before 2030.

No definitive financial commitment has yet been made, but C$25 million has previously been set aside to help proponents complete engineering assessments, community engagement, and environmental and regulatory studies for the Atlantic Loop.

Pressure to move the project forward was increasing by the end of 2021. Following the announcement that the request to run the Belledune coal plant past 2030 was denied, New Brunswick indicated that it needed the Atlantic Loop to materialize soon for it to be able to realistically meet its renewable energy goals. Nova Scotia Premier Tim Houston has raised the project in late-fall talks with Prime Minister Justin Trudeau.

General Developments in 2021

Despite heavy financial investments in the Muskrat Falls project and the Maritime Link, renewable energy procurement initiatives were also on the rise across the Atlantic region. The last year saw growing room in the energy market for independent power producers and other industry participants to contribute.

NOVA SCOTIA POWER ANNOUNCES PLANS TO SHARPLY REDUCE CARBON FOOTPRINT

Nova Scotia Power (an affiliate of Halifax-based Emera) announced in February 2021 its plans to reduce its carbon footprint and its goal of achieving net-zero greenhouse gas emissions by 2050 across its North American operations. Details of the utility’s plans included targets of an 80% reduction in coal energy within 2 years, and closure of all coal-fired plants by 2040. The ability of the utility to meet is objectives will depend on the creation of the interconnected Atlantic Canadian electric grid, the Atlantic Loop.

Plans indicated that only one of Nova Scotia’s currently active coal power plants would be slated to close this decade, but this could change with the impact of federal coal legislation.

By the end of 2021, the utility appeared to be in a good position to make good on its plans. News releases were issued by Emera when 25% of the province’s electricity was officially being generated from wind power. Nova Scotia Power will also receive part of the hydroelectric energy from Muskrat Falls.

RIDING THE WAVES: CONTINUED INTEREST IN MARINE AND TIDAL POWER

Interest in marine and tidal power continues to grow in the Atlantic region, particularly in Nova Scotia. The past year notably saw floating tidal energy turbines trialled near Digby Neck, Nova Scotia by Sustainable Marine Energy, a UK company. Trials in the Bay of Fundy were promising and plans are for the recently installed PLAT-I tidal turbine platform to connect to the Nova Scotia grid in 2022.

Japanese firms — Chubu Electric Power and Kawasaki Kisen Kaisha—have joined this past year with DP Energy, a private Irish developer, to support new tidal energy projects, which are to be located at the Fundy Ocean Research Centre for Energy. This is a first for Japanese investment in tidal power outside of Japan.

NOVA SCOTIA RFP AND POWER PURCHASE AGREEMENT MADE PUBLIC

Last year saw an increase in regional RFP opportunities, particularly in Nova Scotia. During the summer, Nova Scotia publicly announced plans for further RFPs in the coming years, starting with a 350-megawatt project RFP, in order to reach its goal of using 80% renewable energy by 2030.

This RFP, administered by CustomerFirst Renewables, is for a low-impact renewable electricity project which would supply 10% of the province’s electricity. Proposals must either be for solar or wind energy, with details still to come. The procedure and administration of this new RFP may also serve as a blueprint for further RFPs in Nova Scotia.

The RFP is still in its preliminary regulatory phase, despite plans to open submissions by December 2021. In fall 2021, interested parties were invited to provide comments on the draft RFP, to prepare interconnection requests, and file notices with Nova Scotia regulators for increased capacity, while the procurement administrator made available important information concerning environmental and First Nations consultation expectations. Interested proponents should expect to submit their notices of intent to bid by March 2022, with the proposal submission deadline currently scheduled for June 2022, and the related power purchase agreements to be executed in October 2022.

In parallel, the RFP’s draft Power Purchase Agreement was submitted in December to the Utility and Review Board of Nova Scotia, opening a hearing and consultation process. Interested parties are invited to comment on the application until January 7, 2022, with the RFP Administrator’s reply expected by January 21, 2022.

NEW BRUNSWICK LOOKS TO NUCLEAR SOLUTIONS

In New Brunswick, nuclear power was the main energy development of the year. A C$50.5 million Federal Government investment was announced to assist Moltex Energy in developing small modular nuclear reactors for the province. Other federal funds were allocated for improvements to the Point Lepreau Nuclear Generating Station and to set up a nuclear power research center. In parallel, New Brunswick agreed to provide ARC Clean Energy with C$20 million in funds to support its small modular nuclear reactors venture.

Another significant development is an energy storage benefits agreement between NB Power and Malta Inc. The project is to build a long-term energy storage facility by 2024 with capacity for 1,000 MWh. Smaller scale developments include solar panel farms in Shediac, and upgrades to the hydroelectric power Nepisiguit Galls Generating Station.

SUN OF PLENTY FOR PEI?

PEI’s renewable energy transition has been progressing. As of 2021, wind energy provides 24% of the province’s electricity. PEI is also ranked second in Canada for solar power installations. This past year highlighted, however, limitations caused by existing PEI laws and regulation for renewable energy projects. Despite sizeable interest and incentives for solar based energy projects in the province, Maritime Electric — PEI’s private utility — announced it had to limit access to its grid to solar power generated by individuals, likely affecting planned projects for installations of up to 100 kilowatts.

In September 2021, it was announced that the town of Summerside’s Sunbank project’s C$55 million contract was awarded to Aspin Kemp & Associates. This contract concerns the second part of a three-phase agreement between Summerside and Samsung Renewable Energy, for a new 10-megawatt lithium-ion battery storage system to be installed, allowing renewable power sources in Summerside’s grid to reach 62%, and a new 21-megawatt solar power plant. The project involves a consortium of different PEI companies, and construction is expected to last from October 2021 until December 2022.

Meanwhile, PEI Energy Corporation’s proposal for more wind turbines in Eastern Kings, near Souris, was denied during fall 2021. The decision is being appealed. Plans were to add another 30 megawatts to the existing 10 turbines’ 30-megawatt capacity.

WIND POWER PROJECT PROPOSED FOR NAIN, LABRADOR

A large-scale wind power project was proposed in Nain, Labrador, with expectations that this project could likely displace anywhere between 35 and 50% of annual diesel consumption in the area. The project contemplates the installation of wind turbines, which could produce 1.8 to 2.3 megawatts of wind energy capacity. The project is a partnership between the Nunatsiavut Government and Natural Forces, an independent power producer based in Nova Scotia. The plan is for the project to be running by the summer of 2022.