Environmental framework leaves room for renewables
Whether the city chooses to go that route in next power expansion still TBD
A new environmental framework being drawn up by the City of Medicine Hat will set new standards for municipal operations but might also mean a greater mix of renewable power in the city’s power production business.
But, as elected officials and top administrators stressed Monday night, it might not influence how the city’s power unit plots its next expansion.
“We will make the decision on what is most cost-effective for new generation going forward,” said Mayor Ted Clugston following Monday’s meeting, referring to how to control capital costs while still meeting peak power demand by customers.
“And that might be solar. If we need to shave our peak in the summer, solar is most effective ... but there will be a full cost-analysis.”
The entire issue arose as councillors debated a new round of rebates in the HatSmart program that aims to help utility customers reduce energy use and their bills.
Coun. Kris Samraj unsuccessfully argued that since goals in the 2008 Community Environmental Roadmap are no longer considered attainable, HatSmart should be halted until a new framework is developed later this year.
That plan could focus on conservation efforts, but may also set new targets for renewable energy use just as the city’s power plant is exploring best options for future expansion. It plans to spend $1 million in 2019 evaluating options and doing initial design work for adding new generation after the capacity of the yearold Unit 16 generator was locked up by huge industrial contracts this year.
Utility commissioner Cal Lenz told the News he wouldn’t prejudice the process, but he favoured stable cost and production, though economics of several scenarios will be taken into account. Such a recommendation is expected before the environmental plan is decided.
Utilities committee chair Phil Turnbull said during the HatSmart debate that a new framework will be key as the city’s power company adjusts to home-based solar systems, also known as microgeneration, adding power to the local grid.
As well, the capital costs of constructing large-scale wind and solar are dropping to the point where recent contract awards by the province are attached with kilowatt supply prices comparable to natural gas-fired plants.
“We want to make sure that any renewable resource (large investment) has to be financially responsible,” he said. “We don’t have the deep pockets to subsidize it.”
“The provincial government does, but I must say they’re getting a pretty good price,” said Turnbull.
“We want to look at it, where are we going and what’s in the best interests of the city.”
The city’s previous environmental goals called for 25 per cent of Medicine Hat’s power to be sourced from renewable sources by 2025.
When a city committee revisited the report in 2016, it found green energy accounted for only 6.7 per cent. That, combined with other failing results in other areas, led council to allow that plan to expire.
Most of that power comes from a supply-purchase agreement the city signed with the three-turbine wind farm in the city’s north end. Originally a city-led project that proposed nine turbines, it was handed to private development company, WindRiver, which pays lease and taxes on the essentially barren land in the far northwest of the city.
The impetus in 2012 for abandoning the project was a potential $24-million price tag.
Since then however, the technology involved and the costs have dropped significantly. Recent provincial government contracts place a break-even plus small return power price of under 4 cents per kilowatt hour, less than the grid market price on many days this year. The city’s contract price to Windriver was said at the time to be in the 10-cent range, and that has since been indexed to inflation.
At the time it was said for the city to meet the target would require nine additional turbines or installation of solar panels on 8,600 homes, equal to about onethird of the residential customer base.
Those estimates are also based on the city’s power demand in 2016. It has since risen dramatically with new industrial contracts for Hut 8 data processing and the coming Aurora Cannabis production facility.
The city’s generating capacity has increased by one-fifth with the new Unit 16 gas-fired complex.
When that $55 million was planned, officials said the obvious next step would involve adding a second LM-6000 gas generator (Unit 17), then enclosing both engines to recover heat in a combined cycle operation.
In the shadow of wind turbines, municipal officials break ground at the site of the city's Unit 16 gasfired power plant in this June 2016 file photo. One year after the $55-million power plant was completed the city is studying potential expansion options that could include renewables, which are decreasing in cost.