Medicine Hat's city hall is seen beyond the Finlay Bridge in this autumn file photo. The province will sit back for now as the city seeks federal dollars for its proposed Saamis Solar purchase.--NEWS FILE PHOTO
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Premier Danielle Smith isn’t yet taking a stand on a city plan to add renewable electricity production to its power plant, but could consider inserting the province into talks for capital grants and loan discussions with Ottawa.
That’s as the city seeks regulatory approval to buy the Saamis Solar Park and build an initial phase of the 325-megawatt array, potentially with a new federal grant that could refund 15 per cent of construction costs.
The UCP government has stated it wants a larger role when cities and Ottawa negotiate contracts or set conditions on grants.
On Thursday in Medicine Hat, Smith told the News she is aware of the local project, but the province may not get involved if the project or any agreement with the federal government is reasonable.
“We want municipalities to be able pursue the economic opportunities that make the most sense for them,” she said after a meeting with economic development agencies in the city.
“There’s only a couple of cases where we’ve stepped in and given direction to municipalities … and we want to be sparing in when we might (intervene).”
“We’re hopeful that Medicine Hat will be able to have some constructive conversations.”
That includes making overtures of legislative changes before Edmonton stepped back from renewing pandemic measures at the local level, and a change in how Calgary collects a utility fee.
But, the province now requires all cities, universities and other agencies that the province regulates to disclose agreements they have with the federal government.
In Medicine Hat that could include an application for millions in capital grants and a carbon-credit agreement with Ottawa to get Saamis built, as well as ultra low financing from the Canada Infrastructure Bank.
Local officials haven’t detailed construction costs, but have said an initial phase of the huge project, likely large enough to produce 75 megawatts, would cost “nowhere near” a general estimate of C$400 million to build the entire project.
Energy division head Rochelle Pancoast told the News on Friday that the purchase or construction plan has not yet been approved by regulators but, if so, they would likely seek any grant money that’s available.
“Assuming that we become the owner, as part of the financial analysis, we’ll certainly look to” access grants, she said.
“Renewables are typically commercially viable in their own right these days, but if there are opportunities … we are keen to better understand and would be likely to apply Saamis Solar if they fit.
“The Canada Infrastructure Bank is an area that we’ll look at as well.”
At one quarter the size, a $100-million initial phase could be eligible for $15 million in grants from the federal “Smart Renewables and Electrification Pathways Program.”
Recent Infrastructure Bank lending terms to Alberta irrigation projects were fixed at 1 per cent interest for a 30-year term.
“These are opportunities that we’re keeping in mind to assist the financials.”
The 2023 federal budget extended grant programs for private sector wind and solar projects to Crown-owned power producers and municipalities, providing as much as 15 per cent of construction costs.
A new $500-million tranche of funding opened up this week for applications.
Previously, two other projects of Saamis developer, DP Energy, received a total of $13.2 million. The Deerfoot and Barlow solar fields in Calgary (67-megawatt combined capacity) are now operating and owned by Atco.
That company also received an additional $62 million from the federal program to upgrade its gas distribution network and metering across Alberta.
Other wind projects in the region as well have received funds, like the Hilda Wind, Lanfine Wind, Buffalo Atlee and the Cypress Energy Centre.
As well, Ottawa is offering “contract for difference” agreements which would guarantee continued carbon-credit payment under terms, even if the carbon levy is cancelled or amended by a future government.
Observers in the sector say that is key to give risk certainty to investments, and several deals with the private sector have been enacted already.
One is with carbon capture firm Entropy for its work at a northwest Alberta gas plant. That firm is now separately working with Methanex on a CCUS plan for the methanol producer’s Medicine Hat plant.
City officials have said the estimated Alberta TIER carbon-credit revenue from a 75-megawatt first phase of Saamis would be worth about $7.2 million per year in 2027, then more in subsequent years if the levy continues to rise.
Those credits would be applied against carbon charges paid by the city’s gas-fired portion of generation, making a contract-for-difference deal with Ottawa less attractive for the city, said Pancoast.
