City staff to make decision on Saamis Solar Park by year-end

By James Tubb on October 1, 2024.

NEWS FILE PHOTO Medicine Hat’s power facility is pictured in this 2024 News file photo.

Collin Gallant

Regulators are expected to decide by year-end on whether the city can purchase the DP Energy “Saamis Solar Park” or operate it under the City of Medicine Hat’s unique power generation charter.

Meanwhile, power division heads are clarifying potential costs and the timeline of the 1,600-acre project in the city’s north end.

In late August, the city announced it had secured purchase rights to the 325-megawatt solar power array that is already approved to be built by regulators.

City power officials said in a series of presentations last month that the city-owned utility is evaluating a number of different strategies to address changing power markets and low-carbon requirements that are now being developed.

“We need to see some things fall into place before we can make some bold moves,” Energy Division head Rochelle Pancoast told council on Sept. 16, later adding that she has heard concern from the public about Saamis project, including DP Energy’s full construction estimates.

“We have no intention of spending $600 million anytime soon,” said Pancoast. “What we’ve asked for is to have regulatory approve… for the purchase, so we become the owners and control what happens with that site from here on out.”

“We’d consider building a first phase (of 75 megawatt capacity) and then subsequent phases only when it makes sense.”

A phase that large, about one-quarter the full project, could cost more than $100 million using industry standards, but be eligible for a 15 per cent federal government capital grants.

Financial officials say the first phase would earn as much as $7 million per year in provincial government carbon credits while producing lowercost power into the city’s energy supply.

At that scale, the project is small enough to manage and finance, said Pancoast, and would be beneficial, regardless of other factors like clean electricity regulations, or the results of an divisional business review due later this year.

Energy Division chair,

Coun. Darren Hirsch, told a committee meeting last month that the purchase would add value, and the city had to act quickly or risk lose out.

“We’d be blocked from developing solar (field at utility scale),” he said on Sept. 6. “What we’ve done is secured the (first) right to buy the project.”

Considering the land mass involved and the city’s need to operate within city limits, buying an already approved solar project that is scalable makes strong financial and strategic sense.

Critics have called for more information about the deal and business plan, with the Medicine Hat Utility Ratepayers Association filing for intervenor status as the AUC decides the issues.

The AUC issued a notice in late September that it expects to request further information on issue depositions in 90 to 120 days from the application date of Aug. 27.

The city is asking for two main questions of the Alberta Utilities Commission: one, authorizing the purchase and a revised construction plan; and another, proactively rule on how renewable energy relates to its production limit in the city’s municipal exemption under provincial power regulations.

As a grandfathered municipal operator in an otherwise deregulated market, the city must maintain only enough generating capacity to meet its own needs. Saamis Solar phases could move the city above that point, but, it argues, on an intermittent basis, not with firm power that could be relied on for exports.

It would also lessen carbon emissions and provide power at times when Medicine Hat’s power demand peaks, during the hottest days of summer.