Whitehorse taxes stifle green energy, say three companies

Three companies who deal in renewable energy say the City of Whitehorse should cut them a break on taxes. Yukon Energy estimates that city taxes on a new battery storage project could reach $297,000 a year.

Yukon Energy CEO describes "punitive" taxes, says bill for one project could reach $279,000 a year

Yukon Energy uses diesel and liquefied natural gas in addition to hydroelectric power. It's developing a $30 million battery storage project and takes issue with the level of taxation for the project in Whitehorse. (Mike Rudyk/CBC)

Three companies who deal in renewable energy say the City of Whitehorse should cut them a break on taxes.

Yukon Energy, Solvest and Chu Niikwan Development say "energy projects require an enabling and supportive structure [which] currently does not exist in Whitehorse," according to a delegate submission read to city council on Jan. 25.

The three will make their case to Whitehorse's city council and senior management in February.

Taxing energy projects like buildings is 'punitive' says Yukon Energy

Andrew Hall, President and CEO of Yukon Energy says the issue is how the city assesses value for taxation. 

The company says it wants the city to reconsider how it assesses and taxes green energy projects, especially given the fact that Whitehorse declared a climate change emergency in September 2019.

Yukon Energy is developing a battery storage project in Whitehorse which would cost about $30 million dollars. 

Hall says the total value of the project would be used in tax assessment. The result, by Yukon Energy's estimate, would be a city tax bill of $297,000 per year.

"For that project, the city taxes at the current rate are quite punitive, in terms of driving the operating costs of that project," Hall said.

'Comparing a battery to a commercial or residential building isn't really a fair comparison. One of the ideas we propose to the city is that they consider a different tax rate,' says Andrew Hall, president and CEO of Yukon Energy. (Philippe Morin/CBC)

Yukon Energy's battery project is set to use large lithium batteries to store power to reduce diesel use during peak demand.

The project is now requesting proposals to buy the batteries with a tentative date of November 2022 for completion.

Yukon Energy says it is considering two sites within Whitehorse city limits for its battery project, which are on either Kwanlin Dün First Nation or Ta'an Kwäch'än Council settlement land, near Robert Service Way.

Solar company agrees city taxes 'a big barrier' to considering projects in Whitehorse

Ben Power, vice-president and co-founder of Solvest, agrees that taxes are "a big barrier to potentially considering renewable energy within city limits."

He argues that renewable energy projects are uniquely disadvantaged because all their costs are construction itself. 

Comparatively, a site with a generator for a non-renewable fuel like diesel would be taxed less, because less cost is spent on construction and more is spent on fuel and operations down the line.

"So much more of the project costs are shifted from operating to capital costs. It significantly increases the amount of property taxes," says Power.

City of Whitehorse council and senior management are set to hear from Yukon Energy, Solvest and Chu Niikwan Development in February. (Claudiane Samson/Radio-Canada)

He says that many subsidies exist for green energy companies and projects. 

However, "generally subsidies and supports are more focused on projects in remote off grid communities and they're almost exclusively targeted to the capital costs of these projects, not the operating costs. The problem with the taxes is that it becomes a constant drain on your operating budget for those 25 or 30 years of the project."

Building within city would have advantages, companies say

Solvest is currently preparing to build a $2.1 million solar energy project, which is just outside Whitehorse's city limits.

Power says there would be advantages to building future projects within the city.

"You need to be able to generate energy close to your population base, so you avoid transmission and distribution losses. It also leads to generally lower construction costs and you have better access to transmission lines. When you're out in rural areas, often the transmission lines weren't designed to connect large-scale energy projects," he said.

Hall agrees, and says building the battery storage facility outside Whitehorse would cause problems and increase costs.

"The further you put them out, the more losses you might have to bring the power back to Whitehorse where most of it's needed," he said.

Whitehorse's new operations building has 1,050 solar panels on the roof.

That method of building on an existing structure can save on taxes, Power said.

However "there are only a certain number of roofs of that size. Not all those roofs were built to support solar, and certainly not large-scale developments," Power said. 

"It's not as simple as building on top of buildings."

Wind power on track for Haeckel Hill

The third party seeking to argue their point to the city is Chu Niikwan Development.

The group is involved with a new project to install wind turbines on Haeckel Hill, replacing and expanding upon older turbines which have been removed.

The project could generate between two and four megawatts of electricity.