Atco's Barlow Solar Park is shown in Calgary. City of Medicine Hat officials say they will consider adding renewables to the municipally operated generating portfolio.--NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
City power officials will strongly consider renewable energy production – solar fields or wind turbines – when the municipal power plant next needs expansion, the News has learned.
That comes as this week’s federal budget opened up a system of private-sector tax credits to incentivize new green energy production projects.
Included as well however, is a separate line of support for non-taxpaying entities like Crown corporations or municipalities to add solar, wind or battery systems to their generation mix.
As much as 15 per cent of construction costs could be covered by federal grants just as the capital costs of new solar fields is falling below building new gas-fired assets.
Local officials say it could tip the economics in favour of green over gas.
“The future for our city is in renewables and abating carbon,” said Brad Maynes, managing director of the utility department.
“I can’t see us moving forward on a conventional energy path. That just doesn’t fit with the landscape internationally, nationally, or locally.
“Absolutely renewables will be part of our future.”
Any decision, or expansion, he stressed, could be years away however.
There is no immediate timetable for capacity expansion. The city currently has surplus power capacity. It is evaluating carbon capture as well as hydrogen blending to extend the economic viability of its gas-fired power plant.
“I believe they would be complementary and run parallel,” said Maynes, who estimated a carbon-capture hub could be operational by 2030.
“We wouldn’t wait to have that before (considering) renewables.”
Tuesday’s federal budget rolled out billions for green energy projects, net-zero manufacturing, as well as carbon capture and hydrogen investments.
Private-sector utility companies could receive tax credits for 30 per cent of new facility costs, while municipal power companies that operate their own facilities would see 15 per cent of costs of new facilities refunded.
Up to $20 billion in low-rate financing will be made available from the Canada Infrastructure Bank.
Mayor Linnsie Clark told the News that final investment decisions would be influenced by an “environmental road map” for city operations and a “transition strategy” for the utility division, both due later this year.
Meanwhile work continues to analyze carbon capture capability at the gas-fired power plant, and advancing a regional carbon sequestration hub that could be in operation by 2030.
“Those are strategic priorities and any opportunity to receive (federal grants) to realize that and protect the value of our assets is welcome,” she said.
Based on industry estimates, a 15 per cent grant would pay about $7.5 million to build a new 50-megawatt solar field – about equal to the production and $50 million total cost of the city’s last gas turbine expansion in 2022.
That new turbine, known as Unit 17, brought the city’s total generating capacity to 299 megawatts, enough to meet local demand, including two large contracts signed since 2018, plus export surplus power.
“We believe were well supplied,” said Maynes. “However, having additional power – especially renewable power or abated carbon power (gas with carbon capture) – moving forward would allow us to attract a wave of industrial customers that are looking for that power mix.”
Clark said the city will need to balance requests from potential investors with the city’s need to provide firm power supply, typically from fossil fuel derived power, and the production cap placed on the city as a grandfathered municipal power company.
“We need to keep our eyes open to how we might provide that service to industrial customers,” said Clark.
The city currently buys a power from a set of three privately owned wind turbines in northwest Medicine Hat on a long-term power purchase agreement.
The city also famously shut down a pilot project that used solar-thermal process to preheat water at the steam generators in the river valley plant after the research project ran its course. That city-provincial-federal cost-shared project wound up costing the city $3 million more than originally planned.
Maynes said photo-voltaic panels, which transform sunlight to electricity, are increasingly reliable and well proven technology that is decreasing in cost.
A solar plant would also provide carbon credits under the provincial TIER carbon pricing program. It charges on emissions of heavy industry, and total about $5 million each year from the city’s power division.
Alongside the federal carbon price, the TIER levy is expected to rise in step from $65 per tonne of CO2 in April, to $170 in 2030, though credits rise in tandem.
“It will become punitive,” said Maynes. “We can’t allow that without any movement on the part of the city to shelter our (utility) customers.”
