Setting a course: Governments signal possible commercial terms and frameworks for Nova Scotia’s first offshore wind Call for Bids
David Randell and James Gamblin
On September 18th, the federal and Nova Scotia governments issued a joint Strategic Direction Letter (the “Direction“) to the Canada-Nova Scotia Offshore Energy Regulator (the “Regulator“) in connection with Nova Scotia’s anticipated first offshore wind Call for Bids. The initial offering will likely target the issuance of submerged land licenses for up to 3 GW of generating capacity, with the intention for a subsequent Call for Bids to increase total generating capacity to 5 GW through the issuance of additional licenses.[1]
The Direction requires the Regulator to initiate a Call for Information seeking input from ocean users, including the Mi’kmaq, the offshore wind industry, and the fishing industry, to inform the Regulator’s recommendation for the initial Call for Bids. The Call for Information must be released by the Regulator by October 18th, 2025, and must be open for a minimum of 30 days. The Direction also provides that the Regulator must, prior to the initial Call for Bids, undertake a prequalification process for a minimum of 90 days to ensure that only qualified proponents (based on financial and technical capabilities) participate in the Call for Bids.
The Direction sets out certain information to be included and sought for the Call for Information as well as categories to be considered for the prequalification process. These are among the first indications of possible payment and commercial terms for offshore seabed licences to be identified in the initial Call for Bids. Below, a selection of possible terms identified in the Direction are set out and compared to approaches in other jurisdictions with more mature offshore wind industries, such as the United Kingdom, the Netherlands and the United States.
Term length
The Direction states that the federal and provincial governments are supportive of the issuance of submerged land licences with a duration of at least 35 years. In the United Kingdom, the recent Celtic Sea Floating Offshore Wind, Leasing Round 5, and Offshore Wind Leasing Round 4 contemplate that each Wind Farm Lease (entered into following the exercise of a lease option under a Wind Farm Agreement for Lease) would be for a term of up to 60 years, to potentially allow for the lifecycle of up to two wind farm projects within an area under lease.[2]
In the United States, offshore wind leases have four different term periods, the last of which is the operations period with a duration of 35 years.[3] The Netherlands provides an example of a state increasing offshore licence terms, recently extending the terms of its offshore wind licences from 30 years to 40 years.[4] It is also common for offshore wind licences or leases to contain break options and break fees which allow successful bidders to terminate prior to the expiry of the full term or prior to certain interim periods or milestones. It is not clear if such break terms will be included or how they would be structured in the terms and conditions of Nova Scotia’s submerged land licences.
Pre-construction payment terms
In the Direction, the federal and provincial governments have indicated that bidders will be required to pay $250,000 upon submission of their bid, with successful bidders paying an additional $750,000 upon the issuance of the submerged land licence. This will be coupled with a fixed annual rental fee that is based on the use of the submerged land licence, paid until the project starts producing electricity, at a suggested approximate rate of $1,500 per square kilometer per year. The particulars of the rental fees will be set out in the terms and conditions of the submerged land licences.
Pre-construction payments in other jurisdictions typically include “option fees” often tied to the geographic size of the leased area or the amount of energy generated. In the United Kingdom, recent option fees have been determined through competitive bids and are payable until a lease option is exercised and a Wind Farm Lease has been entered into. Option fees are paid annually and are determined based on the total option fee bid, multiplied by the maximum energy capacity that can be developed in the leased area in question.[5] Additionally, rent is paid prior to any operations term, based on the lesser of the option fee payment and the base rent (the minimum output of 80 per cent multiplied by £1.15).
For competitive processes in the United States, bidders are required to pay competitive bid deposits with bid submissions, followed by the payment of the balance of a bid before entering into a lease. For non-competitively issued leases, an acquisition fee of $0.25 per acre is typically required. Additionally, annual rent of $3.00 per acre is payable for the term of the seabed lease, as well as additional amounts per acre required for cable easements.[6]
Post-construction payment terms
In other jurisdictions, payments during operating terms can be based on a variety of measures, including the capacity of the wind project, actual energy generated, gross revenue, or some combination of each.
It is not clear how Nova Scotia’s revenue regime will be structured for the operation period of offshore wind projects; however, the Direction provides some guidance. It states that the operating levy will likely be based on the nameplate capacity of the project in megawatts, and/or a percentage of gross revenue once the project starts producing electricity. The levy may be based on a fixed price per megawatt annually for the first 10 years of production, followed by the greater of the fixed price or a percentage of gross revenue annually thereafter.
The proposed Nova Scotia framework is similar to recent leasing rounds in the United Kingdom, where rent during operations was structured based on the greater of 2% of gross revenue and the estimated minimum output multiplied by a fee based on 2% of the average revenue over the previous two years.
In the United States, during operating terms, rent as described above remains payable in addition to a commercial operating fee. The fee is calculated based on the nameplate capacity of the project in megawatts, the number of hours in the year, a capacity factor representing the anticipated efficiency of the farm, the wholesale annual electric power price in the state where cables make landfall, and an operating fee factor of 2%.[7]
A note on offtake
The structure and financial terms of transmission and offtake arrangements will also be of critical importance to prospective developers in Nova Scotia’s offshore industry. The Direction notes that the federal and provincial governments are taking a “phased approach”, anticipating that work on offtake will proceed through a different process beginning 12-18 months after the first submerged land licences are issued. It is beyond the scope of this article to engage in a comparison of offtake regimes in other jurisdictions in light of the unknowns regarding the intended Nova Scotian approach as this juncture.
Conclusion
The impending Call for Information and prequalification process, as well as the initial Call for Bids, will mark a significant step in establishing a framework for a competitive offshore wind industry in Nova Scotia. While many of the details remain to be finalized, the initial framework suggests that there will be some commonalities with established international regimes, particularly the United Kingdom. It does not appear that Nova Scotia is contemplating a competitive option fee approach, common in more mature markets; however, the proposed combination of fixed and revenue-based levies, along with staged pre-construction payments and annual seabed fees, should be familiar to prospective proponents with knowledge of frameworks abroad. The terms and conditions of the submerged land licences that are expected to be disclosed as part of the initial Call for Bids (now expected in 2026) will be critical for evaluating the commercial realities of offshore wind development in Nova Scotia.
In Nova Scotia, now more than ever, it is critical for prospective offshore wind developers and their partners to be up to date on rapidly changing regulatory and economic landscapes. Stewart McKelvey has networks and partners across the Atlantic region and is an active member of the Canadian Renewable Energy Association (CanREA). We understand the regulatory landscape and the potential for regional economic growth in the renewable energy sector. Our dedicated Energy Practice Group is ready to assist in navigating and adapting to evolving regulatory schemes in the energy sector.
You can learn more about developments in offshore wind in Nova Scotia in our recent article, “Seabed stakes – What to know as Nova Scotia prepares to launch offshore wind”.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Energy Group.
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[1] Natural Resources Canada & Nova Scotia Energy, “Offshore Wind Strategic Direction Letter” (18 September, 2025), online: <https://cdn.cnsoer.ca/sites/default/files/2025-09/Offshore%20Wind%20Strategic%20Direction%20Letter%20-%20Sept%2018%202025.pdf>.
[2] The Crown Estate, “Information Memorandum: Celtic Sea Floating Offshore Wind Leasing Round 5” (December, 2023), online: https://downloads.ctfassets.net/nv65su7t80y5/5zR4gHuqxjMG9NOK1LI2Av/643bfa91696be32408e5e2646c16bbba/Information_Memorandum.pdf; The Crown Estate, ” Information Memorandum: Introducing Offshore Wind Leasing Round 4 (September, 2019), online: <https://www.datocms-assets.com/136653/1720790444-tce-r4-information-memorandum.pdf >.
[3] 30 C.F.R. § 585 (Subchapter B, Title 30, Code of Federal Regulations, “Renewable Energy on the Outer Continental Shelf”).
[4] Netherlands Enterprise Agency, Dutch Offshore Wind Guide, Issue 2022, online: <https://www.rvo.nl/sites/default/files/2021/10/Dutch%20Offshore%20Wind%20Guide%202022.pdf>
[5] Supra, note 2.
[6] Supra, note 3.
[7] Supra, note 3; See § 585.506 for the applicable formula.