Plasco's waste-to-energy plant in Ottawa has yet to handle the amount of waste the city would like to divert. (Plasco Energy Group)

The City of Ottawa and Plasco Energy Group signed off on a contract Saturday to divert residential waste from landfills and use it to produce electricity.

The 20-year, $180 million contract Saturday could see upwards of 300 tonnes of residential waste per day diverted from landfills, converted to gas and burned to generate electricity for the city's grid.

The agreement, expected to go before the city's environment committee and council for final approval in the new year, calls for the waste management company to be paid a starting rate of $83.25 per tonne of waste handled. In the deal, the city will supply Plasco with 109,500 tonnes of waste annually for a minimum of 20 years.

The city reserves the right to continue the arrangement for an additional 20 years, in four five-year extensions. In Plasco's court is all related construction, operating and maintenance costs of an as yet unbuilt processing facility with a purported capacity to handle 130,000 tonnes of waste annually.

The processing facility will be built at 3704 Moodie Dr., at the corner of Moodie Drive and Trail Road, an area in the south end of Ottawa with the appropriate zoning.

While Plasco was expected to ask for an extension to one of the main conditions of the tentative agreement — that Plasco secure financing by March 2013 — according to a news release from city hall, the deal "is in accordance with the terms and conditions approved by council in December 2011." Among these conditions is that Plasco secure financing by March of next year.

The deal is also contingent on the company completing construction of its waste-processing plant by 2016.

Technology unproven on large scale

Plasco uses a process called plasma gasification that uses electrical energy and the high temperatures to break down waste, primarily into elemental gas and solid waste.

The technology is seen as a way to send less waste to landfills, while offering the possibility of using energy generated by the plant to add power to the electrical grid. But the technology has not been proven to work on a large scale.

Plasco's demonstration facility is still in what they're calling a "campaign" phase, and hasn't operated in a sustained manner. As of September 2012, Plasco had processed just 3,600 tonnes of waste in 2012.

"The city took rigorous steps to protect the interest of taxpayers when negotiating the contract," said Maria McRae, chair of the city's Environment Committee, in the news release.

Nobody was available at city hall on Saturday to answer questions regarding specifics of this protection.

The release also quotes city manager Kent Kirkpatrick saying the deal is "an important milestone in the city's ongoing partnership with Plasco Energy Group Inc."

A report on the commercial lease for the facility site at Moodie Drive will go to the Environment Committee and council for consideration and approval at the beginning of 2013.