Insight
Taking the credit? Newfoundland and Labrador’s wind-hydrogen fiscal framework
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
The Canadian province’s fiscal system for wind-hydrogen includes various investment tax credits and, uniquely, a progressive royalty similar to its oil terms. We evaluate the overall impact of the fiscal package on a hypothetical wind-hydrogen project’s economics to establish how the project’s returns are affected and how the project’s value will be shared between stakeholders. Will this approach prove to be an anomaly or an example for other green energy projects to follow?
Table of contents
- Realising up-front ITCs is critical to project returns
- Fiscal synergies are required to achieve hurdle IRR at current ammonia price
- Sharing project value
- Methodology
- Project assumptions
- Economic assumptions
- Ammonia price sensitivities
- Taxpayer sensitivities
- Introduction
-
NL province fiscal terms
- Land fees
- Wind electricity tax
- Water use fees
- Water royalty
- NL investment tax credits (ITC)
-
Canada federal fiscal terms
- Federal corporate income tax (FIT)
- Federal investment tax credits (ITC)
Tables and charts
This report includes the following images and tables:
- Provincial and federal ITC and project capex (US$ billion)
- Project IRR under different ammonia price and taxpaying assumptions
- Breakeven ammonia price required for a 5% or 10% IRR under different taxpaying assumptions
- Share of project values (NPV0) under different prices
- NL project value and company IRR, with and without water royalty
- Hypothetical NL wind-hydrogen project schematic
- Hypothetical NL wind-hydrogen project assumptions
- Ammonia price 2020 – mid-2023 (US$ /tonne)
- Summary of ITC assumptions
- Provincial and federal ITC as % of project capex
What's included
This report contains:
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