There is no equivalency agreement yet when it comes to carbon dioxide emissions from SaskPower’s coal fleet, and time is running out to achieve one. As a result, SaskPower would have to retire Boundary Dam Power Station Units 4 and 5 at the end of 2019 if one is not achieved.
Mike Marsh, president and CEO of SaskPower, came to Estevan on Dec. 6 to speak just a week after the release of a report about the cost of implementing carbon capture and storage (CCS) at the Shand Power Station. But those who may have expected some sort of announcement about a CCS project in the near future were disappointed.
That report by the International CCS Knowledge Centre on Nov. 28 said the cost to implement carbon capture and storage at the Shand Power Stations would be two-thirds less, per tonne, compared to the Boundary Dam Unit 3 (BD3) carbon capture facility. However, a decision to go ahead with a project at Shand would not be made until 2024-2025. And if the decision is to go ahead, it wouldn’t be competed until 2029.
Those were some of the key points in a wide-ranging speech and question and answer session Marsh made to the Estevan Chamber of Commerce at the Estevan campus of Southeast College. The chamber reported it was their largest luncheon yet, and the those in attendance were rapt with attention with regards to the future of the Energy City, which is so closely tied to the two power plants and the coal mines that support them.
The discussion ranged from solar power to the recent massive power outage which tripped off all three of SaskPower’s coal-fired power plants due to heavy frost taking down transmission lines. In the question and answer period, several people encouraged SaskPower to keep the coal plants going, and to build solar power near Estevan.
Marsh spoke of SaskPower’s Strategic Direction Towards 2030, a plan timed to coincide with the federal government’s plans to end coal-fired power generation across the country. Four areas of this plan include improving customer value, developing SaskPower’s workforce, ensuring financial health and modernizing the grid.
“We spent a lot of money in the last several years on infrastructure spending, both in the generation stations, and on the grid, so that we have a healthy grid,” he said. This includes balancing those decisions with the ability to keep rate increases low, or not at all.
“There will be no rate increase from SaskPower over the next year,” he said.
SaskPower intends on reducing its greenhouse gas emissions by 40 per cent from 2005 levels by the year 2030.
Fitting in more renewable energy is important for a modern grid, Marsh explained. “A more modern grid will pave the way for innovations such as power storage, electric vehicles and customer self-generation.”
That means a grid with more sensors and more data that allows energy to be moved in more than one direction. “I think that’s the fundamental change that’s occurring in our industry today. It’s the movement away from these large, single station units that supply large amounts of energy in one direction, to customers all over the province. With distributed generation, with the wind towers that are going up, with solar beginning to go in, the ability to move that energy in multiple direction is what’s needed. It’s going to require a lot more smarts on the grid,” Marsh said.
The plan to transition SaskPower, from today to 2030, has several moving pieces.
“We need a supply plant that outlines the role of coal, considering changing federal regulations while making sure we have the right mix of power generation for our customers when they need it,” he said.
“We also need to consider our employees, and how this changing landscape will affect them.”
Marsh went on, “The biggest thing is the equivalency agreement,” he said, referring to a long-requested agreement with the federal government that would allow greenhouse gas emissions to be considered on a fleet-wide basis, instead of individual power generating units as is currently the case.
If an agreement is reached, Boundary Dam Unit 4 could continue to work until 2021, and Unit 5 could go on until 2024, “Something we’d prefer to do,” he said. But that agreement is still not in place.
“If we don’t have it in the next few months, federal regulations require we shut down in 2019,” Marsh said.
SaskPower can’t continue to run them regardless, as there were penalties for the company and its directors, he noted.
As for Shand Power Station, its original plans were to run until 2042. But current federal regulations call for all conventional coal to be shut down at the end of 2029, he explained.
“If Shand has to shut down, we can retrofit it with CCS,” he said. That would allow it to continue to operate.
Combined cycle natural gas power generation was prominent in Marsh’s presentation. He spoke of the long-term price forecasts for natural gas being very low.
“Conventional coal is now more expensive than natural gas, and CCS is even higher,” he noted.
The Chinook Power Station near Swift Current will be online soon. A further 350 megawatt plant will be announced next year, with construction in 2023-2024.
He spoke to concerns about coal mining company Westmoreland’s financial viability. “SaskPower has priority assignment of the coal reserves and equipment,” he said, noting several U.S. coal companies have successfully restructured their debt.
But more broadly, Marsh pointed out in the last five years, over 50,000 megawatts of conventional coal power production has been retired in the United States. “Most utilities are moving to the natural gas option,” he said.
When SaskPower went ahead with carbon capture and storage, he said, “There was anticipation of more CCS projects around the world. That simply has not yet happened.”
If SaskPower were to proceed with CCS at Shand by 2029, the decision would be made in the 2024 to 2025 time period.
SaskPower does have 60 megawatts of new solar power planned. This includes 10 megawatts in southwest Saskatchewan. The next 10 megawatts will be competitively bid, and SaskPower will not offer a preferred site.
Some in the audience suggested to Marsh that Estevan be the location for that, but he was noncommittal.
SaskPower is also tripling the amount of installed wind-power generation in the next few years, with a further 200 megawatts to be announced in 2019.
Saskatchewan will also be importing another 100 megawatts of hydroelectric power from Manitoba starting in 2021, and has recently signed a term sheet for an additional 215 megawatts starting in 2022.
Marsh also mentioned the possibility of small modular nuclear reactors, 50 to 100 megawatts in size, in the future.