Slow SaskPower carbon capture performance costing millions

REGINA – The eyes of the world are on SaskPower’s $1.5-billion carbon capture and storage facility, but so far the performance is well below expectations.

The facility at Boundary Dam near Estevan, which officially opened in October 2014, is still running at less than half its projected capacity, according to SaskPower CEO Mike Marsh, and could soon cost taxpayers $27 million in revenue shortfalls.

Part of the carbon capture and storage project’s promise was that the province would make money off selling carbon to oil companies. Marsh says SaskPower projected 800,000 tonnes of carbon to be captured this year, but that figure will likely be in the range of 400,000 tonnes.

At roughly $25 per tonne, the shortfall could be $10 million.

“We’re working through design and technical issues every week,” Marsh said. “Performance is getting better and better.”

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“We weren’t forecasting a large deficit or payment.” – SaskPower CEO Mike Marsh

The Opposition NDP raised the issue in Monday’s question period, asking the government about SaskPower cutting a $12-million cheque to Alberta-based Cenovus Energy because the Crown couldn’t hold up its end of a contract.

SaskPower had an agreement in 2012 with Cenovus to provide a minimum volume CO2 captured at the facility. If SaskPower fell short of the roughly 800,000 tonnes of CO2 per year, it would pay a penalty of $25 per tonne.

“Saskatchewan taxpayers are now on the hook for what appears to a questionable contract,” said NDP SaskPower critic Cathy Sproule. “We’ve looked at a 42 per cent increase in what taxpayers are paying right now for power, this is just adding to the mix.”

“This is an incredibly expensive project but it appears to be even more expensive than we’d been led to believe.”

The information came from briefing memos for the minister responsible for SaskPower, Bill Boyd, obtained by the NDP and provided to reporters Monday.

“We were certainly anticipating the power station and carbon capture facility would be on several months earlier,” Marsh said. “We weren’t forecasting a large deficit or payment to Cenovus because we couldn’t make the volume commitments, but it did happen and it’s part of the contract.”

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SaskPower may owe Cenovus another $5 million in 2016 due to the same contractual obligation, the CEO confirmed.

Marsh says the project is still well-worth the investment, pointing to the international attention SaskPower has received.

“If this carbon capture facility proves itself, you’re going to see many more of them around the world in the years to come.”

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