Fair and Inclusive Rates

A well-designed independent power producer policy with a fair and equitable power purchase agreement rate promotes the adoption of locally led renewable energy projects in remote communities. A fair and equitable energy price must capture the full costs of building and operating a diesel-based energy system within an accurate PPA rate structure for renewable-energy projects. As well, energy developers in remote communities must include community- and Indigenous-led electricity developers.

This backgrounder breaks down some common fuel cost terms that are important for conversations around transitioning remote communities away from diesel.

Delivery of the IPP policy in Nunavut has been slow, resulting in the delay of several renewable energy projects across the territory. The situation has created uncertainty for Inuit businesses, communities and developers who are ready to advance projects. This forthcoming policy must create clarity and certainty in addition to prioritizing Inuit-led projects.

This briefing note provides context and recommendations for climate and energy related reports that are anticipated to be discussed at the Fall Sitting of the Legislative Assembly of the Northwest Territories from October 13 to November 3, 2022. We hope that the Government of NWT will commit to supporting Indigenous-led clean energy systems and consider the following recommendations while developing policies and programs.

Meeting the future energy needs of Nunavut’s growing population while also tackling climate change and the decarbonization of Nunavut’s energy systems will require a well-designed Independent Power Producer (IPP) Policy. The forthcoming IPP policy must match the speed and scale needed for the low-carbon energy transition, reduce the barriers to market entry for Inuit organizations, and prioritize Inuit ownership on renewable energy projects.

Indigenous-owned clean energy projects in remote areas face chronic barriers to accessing private capital to help fund the development of renewable energy. In this report we summarize the key barriers facing renewable energy deployment in remote communities as they relate to accessing capital and recommend government policies, programs, and tools that could be used to attract market capital and improve the business case for renewables in remote areas.

Nunavut is almost entirely dependent on diesel power for meeting its electricity and heating needs and has the highest diesel dependency of all territories and provinces. Policies that regulate the terms and conditions, as well as the rates paid to power producers, can be significantly improved so that producers are incentivized to develop clean energy projects that are sustainable, profitable, and contribute to reducing reliance on diesel power.

Subsidies for diesel fuel use in remote communities have kept prices artificially low, disincentivizing efforts to find efficiencies or alternative, renewable, energy sources. Diesel Subsidies Simplified Part I explains the critical role of subsidies as an obstacle to transitioning to clean energy systems, how subsidies work, and how financing can be redirected to open up opportunities for energy alternatives that lower emissions and improve social, environmental and health outcomes.

This briefing note was submitted by WWF-Canada, Nunavut Nukkiksautiit Corporation and the Pembina Institute in response to QEC's Commercial Institutional Power Production policy proposal (May 2020). While we appreciate QEC’s effort to develop this CIPP policy, the policy as laid out will do little to encourage the adoption of renewable energy systems in Nunavut and therefore contribute little to put Nunavut on a path of transition away from diesel.

The Pembina Institute reviews the Qulliq Energy Corporation’s (QEC) commercial institutional power production (CIPP) application. Although it is encouraging to see this application, it is the Pembina Institute’s opinion that the proposed policy will do little to encourage renewable energy uptake for commercial and institutional customers in Nunavut. Several statements do not appear to meet the stated mandate of QEC to support renewable energy.

 

A well-designed IPP policy in Nunavut would create valuable opportunities for Indigenous communities and project proponents in developing renewable energy projects.

This report examines strategies for enhancing collaboration and partnership between Indigenous power proponents and utilities and territorial / federal governments.