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SaskPower has announced it will proceed with a 350-megawatt natural gas power plant in Moose Jaw after reviewing new federal regulations that put the plans in jeopardy over the summer.
The federal government unveiled new rules in June that required natural gas plants coming online after 2021 to be emissions-free by 2030 or pay the carbon tax.
At the time, SaskPower’s CEO said the Crown corporation would have to examine the cost implications of the new rules and what technology it would be able to use.
“This just changes the whole equation,” Mike Marsh said then.
“With these changes, this could create considerable cost going forward for utilities like SaskPower … that are transitioning away from conventional coal and are trying to do it in a prudent way — manage the emissions, but also manage the cost, because the costs are significant.”
On Thursday, the minister responsible for SaskPower, Dustin Duncan, said the corporation looked at alternatives before deciding to build the plant.
“Knowing that by 2024 we need that 350 megawatts of baseload power and really doing all the analysis, this was still the most cost-effective way to do so, despite the fact that the carbon tax would now be applied on the emissions,” Duncan said at the Legislative Building.
“SaskPower went through a process over the last number of months and crunched the numbers and has still made the recommendation to their board — and ultimately to government — that this is the right approach.”
The facility is expected to be complete in 2024 and will produce enough baseload power for a city the size of Saskatoon, according to SaskPower.
Moose Jaw was chosen as the site of the plant over other locations in the province because that city is in a corridor where the demand will be the highest. Duncan noted that other plants could follow in other areas.
“This is not the end of the demand for baseload power,” Duncan said. “Moose Jaw is the next plant, but we’re going to have to be looking in the next decade as well as anywhere from 350 (megawatts) to perhaps a 700-megawatt plant somewhere in the province too.
“The next one is going to be Moose Jaw, but there will be other decisions beyond that.”
SaskPower’s decision came as welcome news to Moose Jaw Mayor Fraser Tolmie, as it’s believed more than 500 jobs will be created during peak construction of the facility, with 25 permanent positions once the plant is running.
“It is a relief,” said Tolmie, “Passion combined with hard work is paying off.”
Tolmie explained it’s not just a multi-million-dollar investment into the City of Moose Jaw.
“This is an investment in maintaining power independence for the province of Saskatchewan. I don’t think the people of Saskatchewan wanted to see their rates increase or their hard-earned money for power go outside of province,” said Tolmie.
Because the project was announced before the regulation changes, Tolmie plans to continue to push the federal government to have the gas plant grandfathered in.
“We will continue to advocate for this project because we believe it’s the right thing for this province,” said Tolmie.
Duncan said the plant will cost $800 million to build and there will be $350 million in carbon tax costs associated with the operations of the plant between 2024 and 2030. At that point, the emissions threshold from the federal government will drop to zero for natural gas-powered plants.
“It is a significant additional cost that we weren’t expecting,” Duncan said, “but despite that, the economics of it in terms of baseload power, this is still the project that makes the most sense.”
— With files from 980 CJME’s Lisa Schick and Andrew Shepherd