The longer it takes for clean energy developers to receive a tax refund, the longer they must carry interest on loans used to finance renewable projects, raising the costs of further construction. Photo by Walter Bibikow/Getty Images

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A key federal program designed to reduce carbon emissions and spur investment in clean electricity has been beset by delays, with only a fraction of applications processed, government figures show.

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The Clean Technology Investment Tax Credit is expected to cost tens of billions of dollars over the next decade and spur far more in investment, by giving developers that build solar, wind and other types of low-emission projects between 20 to 30 per cent of their costs back as a cash refund.

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But a backlog of unprocessed claims is building up, threatening to dampen the investment environment that the policy is intended to bolster.

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In the first 20 months since the tax credits were unveiled, between June 2024 and March 2026, the Canada Revenue Agency processed only 31 per cent or 396 of the 1,261 total claims valued at $1.2 billion that it received during that time, CRA figures show.

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Andrew Kennedy, chief financial officer at Toronto-based Capstone Infrastructure Corp., expressed concern that it has taken more than a year for the CRA to process a claim on what he described as a relatively small project for his company — the roughly 60 megawatt Buffalo Atlee wind turbine farm in Jenner, Alta.

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“That claim was just us getting up to speed and making sure we really understood how they were going to audit and review it,” said Kennedy.

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Now, he said he is more anxious as Capstone moves ahead on the single-largest project it has ever undertaken — the 192-megawatt Wild Rose Two wind project in Cypress County, Alta., southwest of Medicine Hat, which was commissioned last September.

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Kennedy said he filed a claim with the CRA in the spring, but is still waiting for an audit to begin.
The length of time it takes the CRA to process a tax credit is important because the longer it takes for a project developer such as Capstone to receive a cash refund, the longer they must carry the interest on loans used to finance their projects. That in turn raises the costs of building projects.

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“My request (to CRA) has been, as you get more familiar with this, please start changing this so that you’re not waiting to audit everything until the last invoice is reviewed,” he said. “You’re just adding costs to projects, and if this is how you keep progressing, this will get priced in and ratepayers potentially pay more.”

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This spring, KPMG released a memo to clients that was viewed by the Financial Post and described the CRA as “severely backlogged” on processing clean economy tax credit claims —which also include carbon capture, EV battery manufacturing and other types of projects.

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The memo further advised that all clean economy tax credits claims are being audited by the CRA, and that for clean technology ITCs, roughly 30 per cent are being adjusted downwards and another 30 per cent are being rejected outright.