Indigenous Leadership: A Key Component to Meet Electricity Demand in Canada

The demand for electricity in Canada is rapidly growing in every jurisdiction. Provinces and utilities nationwide are predicted to increase demand by 2% to 3% per year over the coming decades. Therefore, the power generation infrastructure will need to at least double within the next 15 years, meaning that we are about to enter a period of significant investments in the energy sector.

Aside from Crown and private utilities, Indigenous communities and businesses are the largest clean energy asset holders, with an equity share or defined benefit agreements in approximately 20% of all clean energy generation infrastructure in Canada. Although the number of projects involving Indigenous partners or leaders is increasing, it may not keep pace with the rapid development needed to meet national generation targets. This could signal trouble for Canada, as Indigenous participation has become a key component in getting projects to market.

The increase of Indigenous partnerships in clean energy projects has been facilitated by policy frameworks that reveal regional variations. In many provinces, utilities have built Indigenous participation into their procurement processes to mitigate the risk of project review. Ontario’s Feed-in Tariff and Large Renewable Procurement programs created both minimum thresholds and rate adders, ensuring that many projects would have some level of Indigenous participation and rewarding greater Indigenous equity stakes. 

British Columbia has recently adopted a similar model, and Quebec and the Maritimes have employed various approaches to ensure Indigenous involvement in procurement processes. Meanwhile, the Prairie provinces have promoted a more deregulated framework that facilitates more private projects to serve commercial and industrial customers through power purchase agreements. The need for corporate customers to meet Environmental, Social and Governance (ESG) targets has increased the prevalence of Indigenous-partnered projects, especially in Alberta. Moreover, Indigenous-owned projects have also emerged, such as the Meadow Lake Tribal Council’s 8.3 MW Bioenergy Centre.

Indigenous Rights Leads to Indigenous Leadership

The driving force behind Indigenous partnerships in medium and large clean energy projects has been a series of Supreme Court decisions that have outlined an Indigenous rights framework in Canada. 

Two important cases are R. v. Marshall (1999), which established that courts should err on the side of the Indigenous party when there is ambiguity, and Haida Nation (2004), which established that the Crown (provinces and the federal government) must consult with Indigenous nations when there may be an impact to inherent or treaty rights, and that there is a duty to accommodate these rights. In practice, governments have typically required developers to carry out the obligations under the Duty to Consult and Accommodate established by the Haida Nation decision as a condition of the project review process.

The Duty to Consult and Accommodate led to the prevalence of Impact Benefit Agreements (IBAs). These are usually confidential contracts between the developer and the Indigenous rightsholder to offset real or perceived impacts to rights. IBAs usually include a commitment from the developer to restore ecology or to provide funds to invest in social, cultural, or educational programs. Mining projects, new hydroelectric projects, and other developments with major landscape impacts now usually involve the negotiation of an IBA, and they became common during the expansion of new wind and solar projects under Ontario’s Green Energy Act framework.

The Importance of Indigenous Partnerships

Since the Haida Nation decision, provinces have spent the past 20 years developing capacity-building programs so that Indigenous bodies can review projects and move towards signing IBAs. For more than a decade, the Ministry of Indigenous Affairs in Ontario has provided funds for First Nations to maintain a minimum amount of internal capacity to review projects. However, negotiating an IBA is typically a quasi-legal process that relies heavily on the Supreme Court-established framework and tends to leave both the developer and the Indigenous party feeling like they are giving up access, revenue, and rights.

Unlike IBAs, Indigenous partnerships provide an opportunity for the Indigenous communities to benefit from a project while leveraging the project review expertise developed over two decades of doing business under the Duty to Consult framework. Although that Duty remains even in an equity partnership, if done right, the Indigenous partner can leverage Traditional Ecological Knowledge and call upon an existing project review team to clear regulatory hurdles while mitigating the landscape impacts of clean energy projects. This represents an important piece of the puzzle, as clean energy projects can take seven or more years to move through the regulatory process in some jurisdictions in Canada. 

The long regulatory process poses a risk to investment and meeting growing energy demands. However, Indigenous partners who are highly engaged and hold leadership roles can utilize their existing capacity and move forward with a faster regulatory process. A prime example is the Oneida Energy Storage facility, a 1,000 MW-hour battery storage complex that is being led by the Six Nations of the Grand River Development Corporation in partnership with NRStor. Years of Indigenous partnership experience have given Six Nations and several other Indigenous communities the capacity to lead large clean energy projects now.

Why not leverage the existing project review capacity and ecological knowledge that exists within Indigenous communities? 

Bringing in the Procurement Piece

Successful models go back as far as 2008 with the Green Energy Act in Ontario, but a commitment to Indigenous participation through procurement thresholds and adders has been sporadic. Many current models require a minimum threshold of Indigenous equity, which can produce a race to the bottom in which developers view their Indigenous partner as a mere complication to their revenue model. British Columbia has boldly issued a Call for Power that includes both a minimum threshold and a rate adder with the hope of building capacity within Indigenous communities to foster participation in more projects as development ramps up. Even in Alberta, we have seen the backlash of the deregulated model through local groups crying foul over the landscape impacts of clean energy projects. Meaningful Indigenous participation must be part of the solution moving forward.

As clean energy generation technology moves into the mainstream national discourse, it is crucial to address the landscape impacts. We must acknowledge that local project review challenges the overly simplistic narrative that reducing carbon emissions with clean technology requires an ecological sacrifice. Indeed, Indigenous project review has produced solutions that have mitigated impacts on wildlife.

The federal government has produced several successful grant programs that have allowed Indigenous communities across Canada to build their own small clean energy projects to reduce diesel reliance and greenhouse gas emissions. Nevertheless, rate inflexibility and lack of investment in ongoing project maintenance have hampered projects in almost every jurisdiction where off-grid Indigenous communities seek to gain control over their own energy future. This has tainted the relationship between Indigenous communities and utilities in some jurisdictions and may become a barrier to Indigenous participation in large projects. 

It is imperative that provinces and utilities work together to find solutions that enhance community-based projects and make them viable over the long term. The community leaders who have built these projects could become leaders in the energy transition.

Lastly, the local backlash from streamlining approval processes under the Green Energy Act and similar programs has yet to be fully addressed. For over many years, there have already been investments in Indigenous communities to review projects; hence, it makes sense to harness this by opening partnership opportunities. However, capacity issues must also be addressed at the municipal level. Indigenous-municipal relations—largely ignored until the past decade due to municipalities falling outside of the Duty to Consult and Accommodate—have now become crucial to ensure that projects can get to market quickly without bypassing local project review.

We now stand at a critical juncture. The current level of Indigenous participation is significant and has led to important success stories. However, maintaining that level of participation may not be easy as we move into a period of rapid growth for the clean energy industry. Yet, facilitating fair partnerships and ensuring that Indigenous businesses and communities can sit side by side with developers is a tremendous opportunity for Canada as we race to attract investments in clean energy.