The layout of the Saamis Solar Park as presented by DP Energy to the Alberta Utilities Commission. The City of Medicine Hat energy division announced Tuesday it will apply to purchase the approved solar project, which could cost $600 million to build.--Supplied photo
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The City of Medicine Hat plans to buy a proposal for the largest urban solar array in Canada from a private developer that already has approval to build on 1,600 acres in northwest Medicine Hat.
The Saamis Solar Park is designed to produce 325 megawatts of power in peak conditions – slightly more than the city-owned gas-fired complex – and would partially cover a large former industrial site left over from fertilizer production.
Private-sector developer DP Energy earned approval to build the estimated $600-million project from provincial regulators in July.
On Tuesday, the city’s energy division announced it is seeking regulatory approval to purchase the project, stating it would add production capacity and position the city to meet net-zero timelines now being developed and debated by other levels of government.
“We can no longer ‘wait and see’ and must actively plan for the future.” said Rochelle Pancoast, managing director of energy, land and environment. “In this case, solar energy is a commercially viable option that is forecast to benefit our bottom line.”
No sale has been finalized, she told the News, but current applications are among several conditions that must be met ahead of time.
After that point, council would be presented with a phased construction timeline and business plan for sections of the massive array to come online and offset some gas-fuelled power production over time.
The entire plan will be discussed at council this fall as an expected “clean energy transition” plan is presented, alongside a general energy business third-party review, Pancoast said, but stressed council is apprised of the transaction.
“There are limited opportunities for large-scale clean energy production, especially inside a municipality, and this is shovel ready,” she said.
“It will help us meet requests for clean energy from our large industrial customers, help us meet (governmental clean energy regulations), and aside from that, we expect it to help us improve our bottom line.”
Coun. Darren Hirsch, chair of the energy committee, said the city is evaluating its energy production business model but must actively manage the company that supplies local customers and exports electricity.
It must also prepare for net-zero regulations and timelines being determined by Ottawa, and that includes acquiring assets.
“Until we see the business review, our intention is to continue operating a viable business, and we think (Saamis) is a good fit,” said Hirsch.
The News first revealed the plan to build the array north of Crescent Heights in 2018, when DP unveiled two similar projects in Calgary city limits that have since been built and sold to Atco.
DP officials said they have had a constructive relationship with the city since siting the project on Viterra-owned land in 2016.
“It’s rewarding to see that this project now has the potential to contribute to the city’s energy transition, whilst providing low-cost renewable energy to its residents,” said Damian Bettles, head of development for DP Energy in Canada.
City of Medicine Hat analysis states that each 25-megawatt block of solar capacity could reduce provincial TIER levy payments by $1.5 million each year, raising to $2.4 million in 2027, when initial phases of a city-owned Saamis array could be in operation.
Two years ago, energy officials and Mayor Linnsie Clark told the News that green energy would be strongly considered when the 110-year-old power company planned for its next expansion.
That was in response to federal budgeting that could provide up to 15 per cent of construction costs, low-interest financing from the Canada Infrastructure Bank and a guaranteed “contract for difference” that would pay a carbon levy rebate even if the levy was cancelled by a new Conservative government.
Clark did not return calls seeking comment Tuesday.
While the full construction estimate is $600 million, the undisclosed sale price would be much less.
Last April, council approved $7 million for an undisclosed “early clean energy opportunity” that this week Pancoast said related to the city meeting some conditions on its side of the sale.
Before it is finalized, the city will also need approval from the Alberta Utilities Commission to determine how intermittent renewable power production should be considered within the city’s electric generation charter.
Since the late 1990s, the city has maintained a local franchise area with the ability to export surplus power, but on condition that production capacity be limited to self supply plus a measure of backup.
That essentially caps the amount of tax-free exports from the city that compete against private generators on the Alberta grid.
