Opportunity for town to own wind turbines and supply power directly to customers
Bridgewater’s town council has been offered the opportunity to gain more power – although in this case it’s electrical. The proposed project would involve buying 3-megawatt wind turbines at a cost of $6 million each and selling the power generated to customers using Nova Scotia Power’s (NSP) grid.
“You own bridges, roads and buildings. Why not own energy assets?” asked John Woods, who proposed this concept, called Renewable to Retail, to council on April 7, along with Chris Peters of Minas Energy, a division of Minas Basin Pulp and Power.
“What we’re promoting to the municipality is that you don’t go this alone,” said Mr. Woods, vice-president of energy development with the company, who was offering the town an opportunity to own its own power. “We would suggest or encourage that Bridgewater meets with some of your other colleagues and talk it through. … Tonight is just one more message and opportunity for this group to think about what’s best for the future of Bridgewater.”
The company is approaching municipalities because of the low cost of capital. The project would be financed by the Municipal Finance Corporation.
As each turbine is $6 million, interested municipalities could borrow in $6-million blocks. There would be no equity invested, and the net profit has been estimated to be in excess of $100,000 per year for each $1 million borrowed.
The project is made possible thanks to the Electricity Reform Act, introduced in 2013 by Stephen McNeil’s government, which allows for the supply and sale of renewable low-impact electricity.
Chester has land owned by Minas Energy’s sister company, Timberland Holdings, near another wind project development, South Canoe and Card Lake. There is a transmission line here, available land and, most importantly, wind – the three things necessary for such a project. Chester is already monitoring wind on the site and the space offers enough room for 10 turbines.
It would be up to council to find a customer base for the business. Options include reducing the cost of its own electricity, using the cheaper electricity to promote economic development or providing more affordable energy to residents.
The projected reduction is a two-cent difference in the cost of electricity generation. The project developers assume the current rate, to be around 7 cents per kilowatt hour. Other costs concerning transmission, distribution, losses, administration and profit are projected to stay the same. There will be a rate hearing this fall, to determine the stranded asset charge for NSP. Regulations are currently being developed, and NSP still needs to establish tariffs and procedures for interconnection relating to the project.
The project developers are looking to identify interested municipalities this spring and aim to have the project completed in the fall of 2017.
Minas Energy’s role in the project is as a consultant. It would guide the project, help oversee municipal partnerships, provide a project site, help in supplier negotiations and deliver the project on behalf of municipalities.
A model for the concept is already under way. The Alternative Resource Energy Authority (AREA) is a partnership among Berwick, Mahone Bay and Antigonish to develop a 9.2-megawatt project in West Hants.
“They’ve used this concept of investing in a project with 100 per cent debt financing and their temporary borrow resolution was approved,” said Mr. Peters. “Minas Energy helped through all the financing, and how that structure works is it’s a cost-plus arrangement where the electricity rate is as cheap as possible, which is cheap enough to pay off the cost of the project plus a reserve.”
Council has directed staff to do a report on potentially investing in the wind turbine proposal.
“In 20 years, if you’ve got a facility that can produce five-cent-kilowatt green energy it’s a jewel,” said Mr. Woods. “Most of the facility will have 100 years of life.”
As originally published in LighthouseNOW Progress Bulletin