SaskPower 'highly unlikely' to recommend further carbon capture projects

SaskPower’s president says it is "highly unlikely" his company will recommend the government pursue further carbon capture and storage projects in the foreseeable future.

President Mike Marsh says price of natural gas makes economics of ‘clean coal’ difficult

Part of a carbon capture and storage facility is pictured at the Boundary Dam Power Station (background) in Estevan, Sask., in 2014. (Michael Bell/Canadian Press)

SaskPower's president says it is "highly unlikely" his company will recommend the government pursue further carbon capture and storage projects in the foreseeable future because they are too expensive.

Mike Marsh was asked about the future of CCS while speaking at an editorial board with journalists at CBC Saskatchewan on Friday.

He said the economics of power generation have changed since it decided in 2010 to retrofit one of its coal-fired generating units to capture and store carbon emissions. 

In particular, the price of natural gas has dropped precipitously in recent years. 

Marsh said electricity generated from gas now costs about $60 or $70 per megawatt hour, versus twice that much —$140 per megawatt hour — to produce electricity with carbon capture and storage technology.

1st of its kind project

In the fall of 2014, the $1.5-billion Boundary Dam power station near Estevan became the first power station in the world to install carbon capture and storage technology on a commercial scale.

Since then, the project's merits have been hotly debated in the Saskatchewan Legislature as well as by proponents of alternate energy sources. 

The Opposition's critic for SaskPower, Cathy Sproule, said the news that future carbon capture projects may not make financial sense confirms her party's fears.

"They pushed ahead with a business case back in 2013 when the price of natural gas was already falling," she said. 

"I think really this shows how bad a decision that was back then and how it's still a bad business decision."

The NDP's Cathy Sproule has been asking questions in committee about carbon capture and storage as the critic for SaskPower. (CBC News)

Despite that, Sproule said it would not make sense to stop production at the unit that is capturing carbon now, which sells the CO2 to the oil industry.

"That's the only sort of salvation at this point in time is the fact that we at least can sell some of it and get some money back, and obviously the benefit of getting the carbon out of the atmosphere, but I don't think they can mothball it at this point," she said. 

Premier Brad Wall has described carbon capture and storage as a weapon against the high emissions from coal in Saskatchewan and around the world.

SaskPower said there may still be places in the world where CCS makes economic sense but it says for the next decade it believes other sources of electricity will be cheaper in Saskatchewan.

It says a final recommendation to cabinet about whether to proceed with retrofits of two more units at Boundary Dam will likely come late this year or in early 2018.