Nova Scotia plans to ask offshore wind developers to pay the province at least $7,000 per megawatt of their turbines’ capacity each year, which the government laid out in new legislation tabled Tuesday.

The province is expected to issue a call for bids within months for offshore wind licences for up to five gigawatts. Should all five gigawatts be built, that would amount to $35 million for provincial coffers each year.

“The opportunity is tremendous,” said Marco MacLeod, ministerial assistant to Premier Tim Houston in his capacity as energy minister.

The opportunity is not only in the annual levy, he said, but also economic spinoffs from the fledgling industry including the creation of new jobs and supply chains.

Energy Department officials said economic modelling is underway to better understand the potential value of all aspects of the offshore wind industry but they could not provide details.

The $7,000-per-megawatt levy would apply for the first 10 years of a project’s operation. After that, the fee could shift to a percentage of gross revenue, whichever is greater. 

The gross revenue royalty would be set later in regulations, but the province is considering four per cent. Under current energy prices, a four per cent annual royalty on five megawatts would be equivalent to $100 million.

The Houston government started floating the idea of charging a four per cent royalty last year as part of its broader offshore wind plan. Energy Department officials said they got “lots of feedback” from industry about that financial framework.

Ensuring industry’s success

David Miller, executive director of energy planning, said the levy that’s proposed in the new bill is about giving developers “commercial stability.”

“Any costs or fees will be passed on to the ultimate customers, so ensuring that this energy that is generated is attractive to other markets is really critical to having the industry succeed,” Miller told reporters at a bill briefing.

The bill lays the groundwork for other fees to be finalized through regulation, including a refundable $250,000 charge for making a bid for a licence and a non-refundable charge of $750,000 for successful bidders.

The new offshore wind legislation is one piece of an omnibus bill that addresses other aspects of the province’s energy system and the ongoing push for increased natural resource development.

The province intends to repeal the Petroleum Resources Act and replace it with the Subsurface Energy Resource Extraction Act. The new act will continue to regulate oil and natural gas extraction, and it will fill a void for regulating four other areas: geothermal, natural hydrogen, helium and carbon storage.

There are several companies exploring for natural hydrogen, also known as white or geologic  hydrogen, in Cumberland County.

Kim Doane, executive director of energy resource development, said there are existing geothermal energy projects, but nothing in the works for helium and carbon storage.

“This is anticipating those and making a regulatory framework for them for that emerging opportunity in the future,” said Doane. 

The bill extends the timeline for transitioning management of the power grid from Nova Scotia Power to the Independent Energy System Operator (IESO) from October 2026 to May 1, 2028.

Miller said the extension was partly to ensure the transition didn’t happen “under unfavourable conditions such as a winter period or during particularly challenging storm seasons.” He said it also gives more time to meet compliance requirements with its international regulator, the North American Electric Reliability Corporation.

It also shifts responsibility for hitting 80 per cent renewable energy by 2030 from Nova Scotia Power to the IESO.

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