Courtesy of McCarthy Tetrault. View original article here.
A pioneering survey has found that Indigenous participation in Canada’s clean energy economy has grown rapidly over the past 20 years, in all regions of the country. Lumos Clean Energy Advisors (Lumos), an advisor to First Nations, Métis and Inuit communities, undertook a review of national research and drew on the company’s database of clean energy projects. In particular, Lumos looked at 152 medium to large-scale solar, wind, hydro and bio-energy clean energy projects now in operation (medium to large projects are categorized as renewable energy projects generating one (1) megawatt of electricity at full operating capacity). The resulting report, Powering Reconciliation: A Survey of Indigenous Participation in Canada’s Growing Clean Energy Economy, highlights the importance of federal and, particularly, provincial/territorial government policies in the areas of energy, climate change and economic development to the rise of Indigenous participation in the clean energy sector. The report also found the following:
- BC leads the way nationally, with 52% of Indigenous clean energy projects in operation, followed by 24% of projects in Ontario and 10% of projects in Québec. The remaining projects are spread across the Maritime provinces, the Prairies and the Territories. An interactive map of projects is available online. The report notes that Saskatchewan and Alberta are now moving into an Indigenous clean energy growth phase. In addition, major growth is anticipated over the next three to five years in over 175 off-grid, remote and northern Indigenous communities as they transition away from diesel-reliant energy.
- Hydroelectric is the most dominant resource for Indigenous renewable energy projects, comprising 63% of all Indigenous clean energy projects. Wind projects are growing and represent 24% of Indigenous clean projects; the remaining 13% of projects are split among three technologies – solar (eight projects in Ontario), biomass (seven projects in BC and one in Québec) and district heating (in Nunavut).
- The generating capacity of clean energy projects with Indigenous partnerships is substantive, totalling 19,516 megawatts, which represents nearly one fifth of Canada’s overall power production infrastructure and $56 billion in capital construction costs.
- Actual equity investment from Indigenous/developer/utility partners ranges from 10-15% of total capital requirements, meaning that the majority of project capital is financed through long-term debt.
- The norm is for Indigenous communities/partners to hold approximately 25% of ownership in clean energy projects. The report estimates that Indigenous communities have invested $1.8 billion in equity in clean energy projects. The source of Indigenous investment varies by project and includes community funds, funds from treaty settlements and land claims, community trusts, debt financing through the project developer, direct grants from the project developer, external borrowing on full commercial terms, and/or external borrowing backstopped by guarantees provided by governments, Indigenous financial institutions or project partners.
- Using project metrics, the report estimates that Return on Investment averaged 14% for projects constructed prior to 2014, 12% for projects constructed from 2014 to the present, and the trend going forward appears to be in the range of 10%.
- Over the next 15 years, Indigenous communities will generate at least $2.5 billion in profit from clean energy project investments.
- Using actual construction employment data from Indigenous clean energy projects surveyed, the report estimates that 15,300 person-years of direct Indigenous employment have been achieved.
- Ancillary benefits from projects include local infrastructure upgrades, community energy literacy and planning, community program support, housing improvements, and cultural features (such as the integration of Indigenous art into clean energy facilities).
- In addition to medium and large-scale projects, over 1,200 small-scale renewable energy projects have been constructed with Indigenous participation.
The report notes that first and foremost, Indigenous communities seek clean energy projects with low to minimal ecological impacts on land, water, fisheries and wildlife. Also, the report notes that clean energy projects with Indigenous participation embody the process of national reconciliation between Canada and Indigenous peoples. In response to the survey, many Indigenous leaders expressed that the most important benefit arising from participation in clean energy projects was a strengthening of community pride and an affirmation of Indigenous rights and territory. In addition, a significant number of Indigenous respondents spoke of the respectful relationships arising through solar, wind, hydro and bio-energy initiatives with project partners, government programs and energy authorities. With an additional 50 to 60 medium to large-scale renewable projects with Indigenous participation expected to come online over the next five to six years, Indigenous engagement in renewable energy projects looks set to continue driving the growth of Canada’s clean energy economy and supporting reconciliation efforts.