Saint John wind energy project will deeply undercut NB Power rates
Saint John Energy assessing bids for cheap wind power that represent 'dramatic reduction in costs,' says CEO
Saint John Energy has received bids on a proposed city wind farm that will provide electricity so cheaply the utility plans to proceed with the project even if NB Power does not allow the use of its transmission infrastructure to move the energy.
"NB Power cannot stop the project from moving forward," said Saint John Energy CEO Ray Robinson.
"We can do this within our own means."
Saint John Energy is one of NB Power's largest customers but has been working on a project to generate some of its own electricity by constructing a small wind farm on the western edge of the city.
The plan calls for the installation and operation of up to 10 wind turbines by 2022 on hills overlooking the Bay of Fundy, not far from NB Power's Coleson Cove oil-fired generating station.
Saint John Energy wants to tie the farm into nearby transmission infrastructure owned by NB Power that serves Coleson Cove and then move it into the city's distribution system from there, but the two utilities have not yet been able to come to an agreement on that issue.
Too much wind?
NB Power has expressed concern at its last two rate hearings about having too much wind on its system already and has so far been non-committal about working with Saint John Energy on its plan.
NB Power spokesperson Marc Belliveau said the utility currently manages and balances the unpredictable output of more than 100 windmills in New Brunswick, Prince Edward Island and northern Maine with more coming online soon and needs to assess what else, if anything, it can take on.
"NB Power is currently studying the issue in order to better understand these costs and to ensure that the right price signals are allocated to all project developers in order to ensure that the most economically efficient projects are integrated into the system on behalf of all New Brunswickers," wrote Belliveau in an email to CBC News about the Saint John Energy project.
Saint John Energy is expected to select a developer for its wind farm this summer from a shortlist of companies who responded to a request for proposals that went out last winter. The particulars of the proposals received are not known, but Robinson said they include prices for electricity similar to those recently announced in western Canada.
Late last year, Saskatchewan accepted a bid on a wind farm development for an "all in" price of 4.2 cents per kilowatt hour, including transmission costs. In 2017, Alberta accepted a bid of 3.7 cents per kilowatt hour after holding an open auction for wind energy.
That's as much as 45 per cent cheaper than the 6.7 cents Saint John Energy currently pays NB Power for electricity —not including separate electrical "demand" charges. That's more than enough to finance construction of its own infrastructure to connect a wind farm to the distribution system if NB Power declines to help.
"These are very credible proposals from credible developers and yes it's a dramatic reduction in costs and it is in that order of magnitude we've all seen out west," said Robinson about the bids Saint John Energy has received.
The city utility believes it can generate up to 140 million kilowatt hours of electricity annually from 10 windmills — as much as 16 per cent of what it currently buys from NB Power.
That could provide the utility up to $3 million per year in savings on its power bill. Saint John Energy's preference is to pay NB Power a fee to use its transmission system for the development, but it will not be deterred if the answer is no or the price NB Power eventually proposes is too high.
Robinson equated NB Power's transmission lines to a toll highway and said Saint John Energy will happily use it unless its cheaper to build its own thoroughfare.
"Are we permitted to access the highway and, if we are, what's the toll rate," he said. "The scenario where we do it on our own — we can do it."
Swings in production
NB Power is less enthusiastic about wind energy — and supporting Saint John Energy's project — because of the difficulty managing the huge swings in output wind produces.
At its rate hearing last month, NB Power's senior system planning engineer, Darren Clark, described how large high-pressure systems sometimes settle over the province and kill all wind everywhere at the same time.
At other times, he said, wind blows strongly when demand for electricity is low, forcing NB Power under terms of its contracts with wind farm owners to pay for power it cannot resell.
"If it's windy, there is wind (power). If it's not, then there is not," said Clark. "It's a reliability and a capacity (issue)."
Because wind energy can drop away to nothing from time to time, NB Power needs to have enough generating capacity to operate as though the province had no windmills at all.
NB Power vice-president Keith Cronkhite said in 2017 between Christmas and New Year the province was hit with a windless cold snap that drove wind production almost to nothing, just as it was needed the most.
"With an installed capacity of approximately 300 megawatts of wind on the system we were generating six megawatts of wind during those peak days," said Cronkhite. "We need to have, and are required to have backup for when those events occur."
NB Power estimated it costs one cent per kilowatt hour for it to manage swings in wind production and to have alternative generating resources standing by to deal with them.
Although NB Power will not be involved in the Saint John Energy wind purchase — it will have to deal with the rising and falling production of the wind farm by filling in gaps in Saint John Energy's supply like it does for all wind projects.
Robinson does not see that as a serious problem for NB Power.
The Saint John project will reduce overall demand on NB Power's system — which is a corporate goal of the provincial utility — and Saint John Energy will continue to pay significant demand charges to NB Power, in excess of $20 million per year, to reserve generation capacity for itself for when the wind doesn't blow.
Robinson said NB Power's recent purchase of the Bayside natural gas generating station in Saint John should also help it better cope with the peaks and valleys of its wind power responsibilities because natural gas generators are more easily ramped up and down than oil and coal plants.
Either way, Robinson said Saint John Energy is committed to its wind project whether NB Power approves or not.
"I'm an advocate of getting more renewables on the system," said Robinson.