SPOTLIGHT | Where will winds of change blowing through Atlantic Canada lead the emerging offshore play?

December 8, 2023
6 min read
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BAYWATCH': 16 inland bays off Newfoundland will now be regulated for offshore wind development exclusively by the province without federal oversight. (MAP: Government of Canada)

There is no disputing the rich resource streaming over the country’s maritime provinces, but as recent news is revealing, harnessing it could continue to be far from plain sailing for the sector, writes Signe Sørensen

For observers of the Atlantic Canada offshore wind play, news lately has sent mixed messages. For months excitement dominated, as the federal and provincial governments begun a regional assessment of the opportunities in the Atlantic provinces of Nova Scotia and Newfoundland and Labrador, and the former published a roadmap planning as 5GW offshore wind build-out, set to kick off with a seabed auction in 2025.

But in the past weeks a degree of confusion has set in, caused by news that Halifax would not pursue development in its provincial waters, followed shortly after by news that Newfoundland and Labrador would – or at least, that the federal government has granted Newfoundland and Labrador full control of offshore wind in its provincial waters, potentially enabling the province to move forward with development.

Until now, Nova Scotia has been the leading the offshore wind charge in Atlantic Canada, but now Newfoundland and Labrador has stepped into the limelight.

Why are we suddenly seeing Newfoundland and Labrador taking the reins after years of radio silence on offshore wind development? And why won’t Nova Scotia do the same for its own provincial waters?

Hurdles to clear

Atlantic Canada has long been on Aegir Insights’ radar as a promising offshore wind market due to its world-class wind speeds, which fly at up to 13 meters per second, but the market remains in a very early phase.

Despite the sky-high technical potential of the winds streaming over the country’s easternmost provinces, few developers are investing in the market – in part due to the lack of a regulatory framework that could enable project build-out, but also due to the limited offtake options in the region.

Headshot Signe round

'Placentia Bay and St. George’s Bay stand out in Aegir Insights’ analyses as top locations for offshore wind power in the province, and both are on the list of inland bays that will now be entirely under the jurisdiction of Newfoundland and Labrador’s provincial government, according to the MOU'

Signe Sørensen
Senior Research Analyst - Americas
Aegir Insights

The Maritimes are sparsely populated – only 2.5m Canadians reside in the region, one fifth of whom live in Nova Scotia’s capital, Halifax – and has low power consumption. On top of that, existing hydro and onshore wind power are major sources of electricity supply, with land-based wind in particular set to grow in importance as a source of clean power in the coming years.

Even if offshore wind can help wean Nova Scotia and New Brunswick off coal, this would only require construction of a few, smaller projects. Gigawatt-scale development will hinge on either monetizable export options – for instance via the planned increased transmission capacity between Nova Scotia and New Brunswick and potentially onwards to the US or via green hydrogen production that ratchets up demand for renewable energy.

On top of offtake uncertainties, offshore wind development in Atlantic Canada faces environmental and climatic challenges: near-shore bedrock would make piling in foundations difficult and expensive work, and at surface levels the question of sea ice impact looms large as it has for the offshore oil and gas industry in Atlantic Canada during operations over recent decades.

These concerns may explain why the two provinces in focus, Nova Scotia and Newfoundland and Labrador, have taken such different approaches to offshore wind development.

New play Newfoundland

Development of future offshore wind projects off Newfoundland and Labrador is most likely to take place closer to shore. Open waters off the northern and eastern shores of the province have significant exposure to sea ice, including in ‘Iceberg Alley’, making construction off the southern half of Newfoundland most likely.

The southern coastline features many large inland bays, so by taking charge of development in these, the province will oversee most of the attractive areas for offshore wind farms.

Placentia Bay and St. George’s Bay stand out in Aegir Insights’ analyses as top locations for offshore wind power in the province, and both are on the list of inland bays that will now be entirely under the jurisdiction of Newfoundland and Labrador’s provincial government, according to the MOU.

Construction of offshore wind plant in these two areas also offers the advantage of being close to the maritime transmission link to Nova Scotia, with potential for export of power, and to sites in the region with announced interest in green hydrogen projects – e.g., Stephenville, Burin Peninsula and Port of Argentia.

Nova Scotia's best bet

On the other hand, based on Aegir Insights’ analyses, Nova Scotia’s most promising areas for offshore wind power are the sizeable sandbanks found around 100-150 km from the provincial shores, Middle Bank and Sable Island Bank. These sandbanks, where water depths tend to be around 30-40 meters, would be well-suited to piling in lower-cost fixed-bottom foundations, such as monopiles or jackets. Both Middle Bank and Sable Island Bank are located firmly outside provincial waters.

Whale in front of a tanker - Atlantic Canada offshore wind
HEAVY TRAFFIC: Shipping lanes and whale migratory paths have to be factored in to marine spatial planning off Novas Scotia ahead of offshore wind development (FOTO: New England Aquarium)

Similarly, Nova Scotia’s recently announced Nova East Wind project is eyeing an area off Goldboro for a 400MW floating array – also in waters that are in shared jurisdiction with the federal government.

In other words, incentive to manage provincial waters may have been limited. Nova Scotia’s best potential lies in waters where it must collaborate with the federal government.

This does not mean that Nova Scotia will be left behind. The ongoing federal-provincial dialogue is expected to wrap up in late 2024, enabling Nova Scotia to stay on track and hold its first seabed tender the year after.

Different paths, same main hurdle

Notwithstanding the different paths Newfoundland and Labrador and Nova Scotia have taken on offshore wind development, it will be some time before it becomes apparent whether there is a bona fide need for large sea-based projects off either of the two eastern Canadian provinces.

Export of power to New Brunswick and/or the US will depend on transmission system upgrades that are not yet or only partially planned, and that will take years to build. Green hydrogen production remains a wildcard, and even if it does come into play, offshore wind is not guaranteed a role.

But, as Canadian energy minister Jonathan Wilkinson and Newfoundland and Labrador premier Andrew Furey agreed, speaking after announcing the federal-provincial MOU in Ottawa this past week, developing offshore wind is an “unmissable" opportunity for Atlantic Canada with its first-class wind resource, and Canada now needs to “find the pathways to work together to help it to happen".

Interested in diving deeper into the recent developments in offshore wind in Atlantic Canada? Aegir Insights is soon releasing an update to our Atlantic Canada Market Report as part of our ongoing Americas coverage. Reach out to us learn about our global market intelligence service.

This article was first published in Aegir Insights' offshore energy intelligence newsletter, Beaufort.

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CVR no.: 39104792

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