Heat from the city's river valley power station distorts the CPKC train line and the industrial plants north of the city in this January file photo.--NEWS FILE PHOTO
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Medicine Hat’s “clean energy strategy” is not a “to-do” list because of ongoing regulatory and technological flux as well as changing power markets, city energy administrators said Thursday.
However, they told a council committee they have identified the challenges as well as potential options for when the picture becomes clear, but falling power prices also mean income will fall just as major capital spending is required.
“It’s a really ugly picture,” said energy division managing director Rochelle Pancoast, describing a jumble of scenarios during the 90-minute presentation. “But we have some runway to prepare and we are focused on a big challenge.”
It hinges, she said, on five factors that are all unsettled: carbon requirements now being developed, a provincial review of the power market, evolving technology, the city’s own energy business review (due this fall) and the city’s financial capacity.
The city’s philosophy is to find solutions that are affordable, reliable and meet regulatory requirement, she said, but right now, no potential solution provides all three.
Therefore, the division is advocating for longer use of existing gas plants, watching the energy market review, evaluating options and, in the case of Saamis Solar, moving ahead with “proven technology” that will provide income and carbon-free power regardless of how factors play out.
“We are facing an unprecedented amount of change on a number of fronts, and we need to be prepared,” said committee chair Coun. Darren Hirsch, endorsing the presentation. “To sit and not do anything is a poor decision.”
The 63-page presentation is scheduled to move to council where a further run through for the public is expected.
Committee member Coun. Alison Van Dyke suggested a full special meeting of council may be required.
“It’s an enormous issue in a very changeable environment,” she said. “I think we need to clear the agenda to have this discussed properly.”
The effect on the city budget could be immense, Pancoast stated, and power pricing is excepted to fall until the early 2030s, when higher standards could be implemented.
Considering the importance of utility dividends to the municipal budget, the city could be “cash negative” and drawing from reserves over that time, said Pancoast,
The province and Ottawa are currently in court over target dates for net-zero policy in the electrical sector. Alberta is also undertaking a large review of a power market that could substantially lower profits when it’s implemented in two years.
In 2026, the province is also reviewing its own industrial carbon levy program, which captures power production, while the federal Conservative Party also puts the status of current carbon levies into question.
Both however, target 2050 as a potential net-zero date, and globally, “momentum is building for lower carbon generation over carbon (intensive) sources,” said Pancoast, which the city will not be able to avoid.
That’s set against the likelihood of higher power demand in a more electrified economy.
The presentation touched only briefly on the potential purchase by the city of the 325-megawatt Saamis Solar Park, announced last week.
Applications to regulators say the city would add incremental power in blocks as needed and as is economic to do so.
The city is also developing early plans for carbon storage to abate emissions from the existing gas-fired generation fleet, as well as hydrogen blending into natural gas to scale back CO2 produced.
Carbon capture could be the most costly, the presentation states, but so too would fully backing up the gas-fired plants with renewables.
Saamis, at full scale, would do that, but at a cost of $450 million or more to build, while only producing one-quarter to half the amount as existing plants.
Solar arrays produce a relatively reliable amount of power over time, but not in an on-demand fashion.
Such “flick a switch” delivery is a key condition of the city’s power charter, meaning Medicine Hat would need gas generation to meet demand.
It could also import more power from the provincial grid, thereby triggering substantial transition tariffs Hatters don’t pay now.
