Federal tax credits open new doors for municipal and Indigenous clean energy projects

With the federal budget now officially passed, Canada has taken a step toward the shift to clean energy by passing the highly-anticipated Clean Electricity Investment Tax Credit (CEITC). It means municipalities, Indigenous corporations, crown corporations, utilities, and pension funds can now take advantage of a powerful, refundable incentive designed to lower capital costs and support the build‑out of a net‑zero grid by 2035. 

Although the federal government noted that detailed guidance is still to be published, the fundamentals are clear enough for cities and other eligible groups to get started. 

Why the CEITC adds unique value

Electrifying Canada requires massive investment in clean generation, storage, and interprovincial transmission — as well as the refurbishment of existing assets. The CEITC directly targets these needs by offering a 15% refundable tax credit on eligible capital investments. 

This credit is available to both taxable and non‑taxable entities, including municipalities, utilities, and Indigenous‑owned corporations. That makes it fundamentally different from most federal tax credits and opens new opportunities for public‑sector leadership in clean‑energy development. 

Eligible assets include: 

• New or significantly refurbished clean electricity generation (solar, wind, hydro, geothermal, biomass) 
• Energy storage 
• Interprovincial transmission infrastructure 
• Major refurbishments of existing clean assets 

This distinguishes the CEITC from the Clean Technology Investment Tax Credit (CTITC), which focuses on specific technologies rather than system‑level electricity infrastructure. The CEITC is about building the backbone of a clean grid. 

A catalyst for municipal resilience and Community Energy Plans 

Municipalities across Ontario are working hard to implement their Community Energy Plans, strengthen resilience, and prepare for climate-related emergencies. Local clean electricity generation and storage infrastructure are essential to these efforts.  

The CEITC materially reduces the cost of these investments. It is also retroactive for construction that began after March 28, 2023, meaning projects already underway may qualify. 

The credit can also be used together with other funding sources that are available: 

• SaveONEnergy incentives can be combined with the CEITC, although they reduce the eligible capital base. 
• Canada Growth Fund investments do not reduce eligible capital, allowing full CEITC value. 

It’s still to be determined, but likely that utilities can incorporate the CEITC directly into benefit‑cost ratios, improving the economics of grid modernization and distributed energy projects. And for municipalities exploring local solar, the CEITC strengthens the financial case for community‑scale clean energy. 

Indigenous clean energy leadership 

Indigenous‑owned clean energy projects are central to Canada’s clean energy future. The CEITC supports new or refurbished generation and storage assets owned by First Nations, Inuit, and Métis corporations — including large‑scale storage projects like the Oneida Battery Project which provides long term revenue and supports Indigenous energy sovereignty. 

How to get started 

To receive the full credit, projects must meet federal apprenticeship and prevailing wage requirements, and it is prudent to consult tax and legal experts to assist municipalities navigate these requirements. 

With CEITC secured and implementation details on the way, these tax credits are poised to reshape how municipalities, Indigenous partners and utilities invest in clean electricity.  

Now is the time to prepare projects, partnerships, and investment strategies that will shape the grid for decades to come.