Value of Metro Vancouver incinerator power disputed
Critics say Metro Vancouver's updated business case to build a new waste incinerator depends on BC Hydro paying an artificially high price for its electricity by declaring garbage to be a green power source.
The business case shows Metro has estimated the potential price BC Hydro will pay for the new plant's electricity at $100 per megawatt-hour, which regional district officials say is in line with Hydro's cost of generating new power with its planned Site C dam.
But Belkorp Environmental, which operates the Cache Creek landfill, says the estimate amounts to a huge public subsidy of Metro's incineration plan.
BC Hydro is asking regulators to approve a renewed power purchase agreement with Metro's existing Burnaby incinerator that would pay $43 per megawatt-hour to operator Covanta Energy.
Hydro's submission indicates the market price of B.C. power exported to the U.S. is $24 per megawatt hour.
Belkorp vice-president Russ Black says that's the price Metro would have to accept for the new incinerator if its electricity isn't counted as clean or renewable, as Hydro can buy only green power under provincial law.
He said that means Metro has pencilled in electricity prices that are four times too high in determining a new incinerator is viable and would cost less in life cycle costs compared to using a B.C. landfill.
"The only justification for the incinerator today is if BC Hydro rate payers subsidize it to the tune of $200 to $300 million," Black said, referring to the difference in prices over the plant's life.
Belkorp has challenged the proposed $43 price for the existing incinerator, arguing before the B.C. Utilities Commission that Hydro should pay only $24.
Port Moody Coun. Rick Glumac said he doesn't see how a new Metro incinerator can count as green energy or how the region can expect $100 per megawatt-hour.
"I don't think you can consider waste-to-energy to be clean energy by any stretch of the imagination because more than half of the energy derived from there is from the burning of plastics," said Glumac, who voted Monday with Coquitlam Coun. Neal Nicholson against accepting the revised business plan.
Eight other Metro directors voted to accept it.
Metro solid waste manager Paul Henderson said he's confident $100 is "an absolutely reasonable" price based on Hydro's investments in its own projects and because Metro would take on project risk.
He said the power price for the existing incinerator reflects the fact it's an old plant that's fully paid off – any new capacity would come at a much higher price to reflect the actual cost of generating new power.
Metro has just begun negotiations with BC Hydro on power pricing for a new waste-to-energy plant.
Henderson also noted the business case didn't quantify the potential to sell energy into a district heating system, potentially at better value than electricity, because that depends on which site is selected.
The updated business case, completed by consultants CDM Smith, concludes a new incinerator is "cost-effective" with costs marginally lower than landfilling at a capacity of 250,000 tonnes per year, and significantly lower if the new plant is 370,000 tonnes per year.
Metro estimates it needs the larger burner if it can't get beyond a 70 per cent recycling rate, up from 58 per cent now.
It estimates it would need to burn 250,000 tonnes of garbage if the diversion rate reaches 80 per cent and there's no net increase in garbage generated.
Henderson called the targets "very aggressive."
The capital costs are estimated at $424 to $517 million in 2018 dollars, depending on the size of the plant.
Glumac and others on Metro's zero waste committee were critical the business case didn't consider the potential for highly automated mixed-waste material recovery plants to pull more recyclables from garbage before it's incinerated.
Some waste-to-energy opponents say such plants could make a new incinerator redundant. Belkorp has proposed to build one in Coquitlam.
Burnaby Mayor Derek Corrigan said the justification for a new incinerator is solid.
Others said Metro could – if recycling in the future proves better than expected – scale down the use of the older less efficient incinerator.
Metro directors would not openly discuss the BC Hydro price point at which a new incinerator is no longer viable. Debate related to that continued behind closed doors.
Vancouver Coun. Andrea Reimer said another question mark hanging over the project is whether the province will eventually charge B.C.'s carbon tax on waste-to-energy emissions.
According to the business case, Metro waste could be sent to a B.C. landfill for $65 to $75 per tonne, or by rail to a U.S. landfill for $55 per tonne.
But Metro didn't use the $55 figure in its comparison because it never consulted the public on the potential for long-term shipments of waste to the U.S., and therefore can't technically pursue that option under its solid waste plan.
The business case estimates a new incinerator's operating costs at $76 to $81 per tonne, while electricity sales would bring in $76 per tonne.
See related story: Metro delays unveiling of more incinerator sites