Natural Resources Committee on Oct. 30th, 2017

[Mike Marsh]

Yes, I see opportunities. I've had many discussions with the Northwest Territories power company and with Manitoba Hydro. We have common interests when it comes to finding technical ways to serve communities that are on diesel.

The problem is just the vast geography that we deal with in western Canada, and the hundreds of kilometres of distance between communities and between potential supply sources. For hydro stations in the Northwest Territories and potential other hydro sources in northern Saskatchewan and Manitoba, getting it to those sites takes hundreds and hundreds of kilometres. That's where the economics break down very, very fast.

Certainly, there's an opportunity to move that energy long distances—as Tim indicated, you're going to experience line loss—perhaps with the emergence of good storage and the opportunity to use solar-hydro, and maybe in the longer term there might even be a potential for much safer and smaller nuclear reactor technology that might come into play for those types of communities.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you so much, gentlemen.

[The Chair, Liberal, James Maloney]

We're out of time.

Mr. Maguire, you have five minutes.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Mr. Chair.

I appreciate your comments.

Mr. Marsh, you indicated that you had coal conversion, and you have natural gas, hydroelectric power, wind, and solar. Obviously you're building a lot of hydro power in your province, as well. Over my years as the critic for conservation in Manitoba, and coming from the Brandon area, I have watched closely the developments that you've made with your coal-burning facilities in the Estevan area.

I'm wondering if you can you elaborate on the reduction of greenhouse gases presently in that area and how that competes with the other forms of power you're using in your province.

[Mike Marsh]

First of all, to touch on a comment you made on hydro, we are not adding any hydro generation at the present time. We did have a potential project in northern Saskatchewan, a river diversion project, which was very clean, renewable, and environmentally responsible. It was a 50-megawatt project. We just put that project on hold because the mining load in the north has dropped off considerably, and that's a predominant driver. That project has been deferred to a later date for a decision. It may materialize in the next few years—we do not know—but that was the only project on the books currently.

With respect to coal, we have our carbon capture facility at Boundary Dam. It's a nominal 160-megawatt unit. When it's operating on carbon capture, it produces about 120 megawatts. When it's operating at full design, it achieves a 90% reduction in carbon dioxide, and it's technology that works. It's now three years since we've had commercial operation of that facility. We continue to get improved performance each and every year.

The issue with that facility right now is that we are under contract with one offtaker, and that offtaker, because of the price of oil in the area, has elected to take a minimum amount of carbon dioxide. That means the revenue stream we can earn from that is somewhat reduced from our initial projections. The cost for doing carbon capture and storage, of course, is significantly more than conventional coal. I think the other aspect is that the substantial reduction in the price of natural gas in North America over the past number of years has shifted the equation significantly in favour of combined cycle gas technology in most jurisdictions.

One of the latest reports I have read said that, even in the U.S., natural gas is displacing conventional coal, and over 51,000 megawatts of conventional coal has been retired in North America in the last five years.

It is technology that is working. It does reduce emissions on one plant. Remember, we still have six other operating units in our fleet, and two of those we will be making a decision on in 2018.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Then the same would go with the reduction in gas prices, I assume, for expansion of any nuclear opportunities you would have in Saskatchewan as well.

[Mike Marsh]

Absolutely.

As you're making that economic decision and putting that business case together, you have to look at all the options and alternatives. The risk of natural gas prices climbing in the long term is certainly a big factor that you have to look at. The long-term risks of the nuclear fuel cycle have to be looked at. Right now we're not looking at nuclear in any firm way. We're keeping an eye on the technology and, as that small modular reactor technology develops, we will see if there's an opportunity. However, we haven't built that into any of our forward plans at this point in time.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Have you had any other discussions with other jurisdictions in Canada in regard to your natural gas use in their jurisdictions?

[Mike Marsh]

We don't operate the natural gas system here in the province. We just purchase the gas and use it in our generating stations. SaskEnergy looks after gas distribution here.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you.

I'll pass my time on to my colleague.

[The Chair, Liberal, James Maloney]

Actually, you're right on time there, so we'll have to move on.

Mr. Harvey.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

I want to start by asking a quick question on the 40% line loss. I'm assuming that's due to the length of the line. How can that be affected by the size of the line? In terms of the bigger the line relative to the amount of power that's transferred across it, is there less line loss? Also, is there a substantial difference between AC and DC? Is your system there AC or DC?

[Tim Eckel]

The system is AC, and yes, there's a substantial difference between the AC and DC systems. DC systems have very little loss.

That's why, if they're going long distances, a lot of the utilities, such as Manitoba's and Quebec's, have DC lines. With very little loss, they can move a lot of power.

With the DC lines, too, you have control at each end. You can really control the amount of power that flows on that line. With AC lines, there's a factor.... Wire has a resistance, so it heats up, and you lose power as you transmit it a long way.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

As a utility, is converting over to a DC system something that you've considered?

[Tim Eckel]

The cost would be significant to do that for the amount of generation and load that we have in the north right now. For today, because of the small amount of load and generation we have, the AC system is okay. The losses aren't that high, but if we were to put in large amounts in the north somewhere, or bring them in from the Northwest Territories, we'd have to consider that as an option.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

For the most part in the southern part of Saskatchewan, then, you wouldn't have that 40% line loss.

[Tim Eckel]

That's correct. Typically, our transmission system would have maybe a 5% to 6% loss in the south part of the province.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Okay. That clarifies it.

In terms of the north, and following up on what Larry was talking about earlier, we briefly did touch on SMRs and the inevitability that this technology will come about. What about isolated microgrids in those northern regions? Is that something that could be done between communities but could be completely set aside from the rest of your grid?

[Mike Marsh]

Absolutely. The technology is starting to emerge that would allow it to be a real possibility, but it will require storage and additional control systems that will allow the storage and, for example, the ability for batteries to manage that intermittency. You may need substantial battery capacity in the north, but with a very small amount of generation capacity. Currently, those pilot projects are numbered today; there are not very many of them. In northern communities such as those in Alaska and in the Northwest Territories, I know, and in Scandinavian countries, that technology is certainly being developed at a relatively fast pace.

We at SaskPower have been working with the University of Saskatchewan and their school of environment and sustainability. They're looking at a program that would enhance renewable energy for northern and indigenous communities. They're looking at all of this technology and, indeed, we're starting to look at what pilot projects we might be able to help them with here in Canada, in Manitoba, Saskatchewan, and the Northwest Territories.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

You've touched on the 1,600 and some megawatts of coal. Have there been conversations around converting that coal-fired generation to gas? What are the economic constraints of doing so?

[Mike Marsh]

Yes, we're certainly looking at it. There's a substantial difference just in technology between the boilers used in Alberta and the boilers we use in Saskatchewan. The boilers in Alberta burn sub-bituminous coal. We burn lignite coal. There are also different design characteristics, which don't lend themselves as efficiently to gas conversion as do the boilers in Alberta.

The efficiencies are not as great, and therefore the CO2 emissions would be higher in any coal-to-gas conversion project. We're looking at that carefully, but right now it doesn't look like it might be feasible to do that.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Thank you.

[The Chair, Liberal, James Maloney]

Mr. Schmale.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you, Mr. Chair.

Thank you, gentlemen. Those were very interesting comments.

I just want to go back to what you were talking about, if I could, regarding nuclear. According to what I've been able to find, there was a panel appointed in 2009 to look at the process of, possibly, nuclear power in Saskatchewan, and I noticed you did mention that a few moments ago. Could you go back to that? Where are you in that process? You did say that you're not looking at it any further. Can I ask where that is and why?

[Mike Marsh]

The decision to move down a nuclear path would have to be something that the provincial government would speak to and direct. As a utility, we want to remain agnostic to the technology. We want to understand what technologies are available to be integrated into our grid, but until that bigger political decision is made to move forward, we're just keeping abreast of the technology. If and when it becomes of a size and a cost that would allow it to be integrated into the Saskatchewan grid, we may make a recommendation at that point in time. That's where it sits with us today.