Incinerator power deal gets green light
Opponents of Metro Vancouver's waste-to-energy strategy have been dealt a blow by the B.C. Utilities Commission.
Regulators there have approved an electricity purchase agreement that will see BC Hydro pay $43 per megawatt-hour for power from Metro's existing garbage incinerator in Burnaby.
Critics had argued Metro's garbage-fueled electricity can't count as clean and renewable under provincial law and therefore should be worth much less – closer to the $24 spot price for power exported to the U.S.
The aim of incineration opponents was to blow a hole not just in the revenue from the existing plant but also in the business case for a future new waste-to-energy plant, which Metro Vancouver has assumed will earn around $100 per megawatt-hour.
But the utilities commission decided air pollution concerns raised by the Fraser Valley Regional District were "not relevant" in okaying the contract renewal and made no finding on whether the incinerator counts as clean, green power.
It concluded the negotiated price between BC Hydro and incinerator operator Covanta Energy appropriately reflects the cost of power generation plus a reasonable return.
The $24 spot market price wasn't an appropriate comparison, the commission said, because it doesn't apply to electricity that is firm (incinerator power is always on, unlike wind farms) or guaranteed in large volumes for many years.
BC Hydro said the $43 contract price is well below its long-term cost of building new generating capacity of $85 to $100 per megawatt-hour and still attractive compared to the $51 it would pay for non-clean natural gas-fired power.
Metro's existing incinerator burns 280,000 tonnes of garbage per year, while a new one at a yet-to-be-determined location would take an additional 370,000 tonnes.
Critics of Metro's strategy had argued BC Hydro will be blocked from paying a premium price for the new incinerator's electricity, making the project a financial flop, or at least uncompetitive compared to continued landfilling.
Estimates of the capital cost of a new incinerator run as high as $517 million.
Metro Vancouver senior engineer Chris Allan said the BCUC decision wasn't surprising because it was a renewal of a contract to buy power from an existing source, not for a new one.
Russ Black, vice-president of Cache Creek landfill operator Belkorp Environmental, still predicts Metro won't get a premium price based on green power for the new incinerator because the regional district admitted during the proceedings that 40 per cent of the energy from garbage comes from non-renewable sources like plastics, contributing to greenhouse gas emissions.
"We've laid the foundation for the fight in the future," he said.
But even an unfavourable power price from Hydro may still not be the silver bullet critics hope would unravel Metro's plans.
"Not every technology is reliant on selling electricity," said Metro board chair Greg Moore, noting the new plant might sell little to no power into the grid and instead pipe steam to a district heating system or an industrial user.
He noted one of the waste-to-energy project bidders is a Delta cement plant that has no plans to sell to Hydro at all.
"You've got Lehigh Cement that makes cement and they want to replace coal and rubber tires with municipal solid waste as fuel."