The City of Medicine Hat's main river valley power plant is seen on Monday from near Saamis Drive in north Medicine Hat.--News Photo Collin Gallant
cgallant@medicinehatnews.com@CollinGallant
City power officials are watching closely a dispute between the province and Ottawa over net zero targets that will have long-lasting implications on power production and planning in Medicine Hat.
Currently, the city’s power plant exclusively uses natural gas to produce electricity, with about one-sixth of total capacity driven by steam turbines at the main river valley power plant.
Regulations announced late last week by federal Environment Minister Steven Guilbault point to potentially allowing natural gas-driven turbines after a planned 2035 deadline but only to provide “peak power” to cover shortages on what would otherwise be a net zero grid.
Premier Danielle Smith has vowed that, depending on talks with Ottawa, she is prepared to ignore the “nonsensical” regulations, and, if needed, develop the province’s own time table of 2050 for a “net-zero grid.”
But, that could leave millions in federal grants off the table when private sector utilities and Medicine Hat’s grandfathered municipal company consider upgrades.
Travis Tuchscherer, the city’s manager of energy marketing and business analysis, said the power division is tuned into the issue, but with its own planning to reach net zero in the early stages, major decisions won’t be made until the issue is more settled.
“The city is definitely looking at an energy transition framework and developing a plan, obviously we’re keeping a close eye on federal and provincial announcements,” said Tuchscherer.
“We’re trying to take a diversified approach until we have more certainty, and not big leaps, but will be a conservative approach.”
Last winter, the city released a policy overview of how it would adjust to renewable power and net-zero requirements in the energy division, and a “roadmap” to net-zero in other city operations is due later this year.
It discusses “energy expansion” as a way to meet an expected increase in demand, adding small pilot projects and financially viable renewable production while using fossil fuel powered assets to their full potential.
That could include large scale renewable facility construction, as well as “abating” emissions from the power plants either through hydrogen blending or carbon capture, but capital costs would likely run well over $100 million in any case.
The spring federal budget included a 15 per cent grant for Crown power providers and municipalities to cover the capital cost of upgrades to greener sources.
That could provide tens of millions of dollars to the municipally-owned company to build up green power production, but under provincial rules Alberta cities cannot enter into bilateral agreements with Ottawa without provincial government approval.
Smith told reporters Monday that her position is firm and she believes that too fast a switch would be costly, cause reliability issues and hurt consumers.
“We agree with the greater goal of carbon neutrality and have a plan to get there by 2050 … but 2035 is unattainable,” she said. “We’ll never allow these regulations to be implemented here – full stop – but that doesn’t mean we’re closing the door on co-operation with the federal government.”
NDP energy critic Kathleen Ganley said Smith’s jousting with Ottawa is discouraging investment by both new renewable projects as well as traditional utilities looking to modernize.
“There are people considering things like hydrogen plants, but if people don’t know the rules and what the objective is because you have a provincial and federal governments more interested in fighting each other, that becomes extremely problematic,” she told the News. “In particular they should be advocating for investment in Alberta.”
Currently, the city’s generation portfolio has a capacity of 299 megawatts, including 88 megawatts from two high efficiency gas turbines built in the north end since 2018. The remainder consists of turbines at the river valley plant, where a 60-megawatt unit is set up in a combined cycle.
A recent report to the energy division found the city’s existing generators could operate with a portion of zero-emitting hydrogen blended in with natural gas fuel mix, said Tuchscherer.
But, no action is expected until more is known about cost of upgrades and a local hydrogen supply is developed.
The goal of enticing local hydrogen production as well as developing a regional CCUS hub are related twin strategies in the city’s industrial attraction strategy.
