Saskatchewan has developed a bit of a negative reputation on the environmental front lately.
Guess that’s what happens when a premier threatens to sue the federal government over mandated carbon pricing and instead promotes the extremely expensive technology of carbon capture and storage.
That’s why it came as quite a surprise when provincial electricity utility SaskPower announced in mid-May that it had signed a power purchase agreement (PPA) — a contract for guaranteed sales at a fixed price — with geothermal company Deep Earth Energy Production.
The project in Williston Basin is an extremely small one: at five megawatts (MW), it will represent only 0.1 per cent of the province’s current electricity capacity. But it will be the first geothermal power project in Canada and experts say that it’s a huge step forward for geothermal, not only for Saskatchewan but the entire country.
“Saskatchewan is very quiet and all of a sudden boom, they make an announcement,” says Alison Thompson, chair and co-founder of the Canadian Geothermal Energy Association (CanGEA), in an interview with DeSmog Canada. “This is a little bit unexpected, but of course very, very positive. It has to start somewhere.”
“We don’t have any geothermal power generation in Canada yet,” adds Kirsten Marcia, president and CEO of Deep Earth Energy Production, also known as DEEP. “A successful project like DEEP will really help bolster other projects in other provinces to move ahead and get a little more traction.”
There’s also plenty of opportunity for retraining oil and gas workers for geothermal projects, including in manufacturing components, performing electrical work and operating rigs. In 2014, it was calculated by CanGEA that while the controversial Site C Dam in northeastern B.C. would only generate 150 permanent jobs, the same amount of power produced by geothermal would result in 2,000.
— DeSmog Canada (@DeSmogCanada) June 7, 2017
A downturn in oil and gas production in Alberta has also left a highly skilled drilling workforce without jobs. The geothermal industry has argued the province’s abandoned oil and gas wells present an opportunity to potentially put thousands of drillers back to work.
Recent Changes to Federal Tax Code Helped Push Project Forward
It’s anticipated that drilling for the project will commence later this year, but DEEP has been attempting to build this project for many years.
Initially, it was expected that power production would begin in 2013.
But Marcia says in an interview that it encountered problems in funding the project, resulting in delays. In 2014, a $2 million pre-feasibility study that was co-funded by Natural Resources Canada and SaskPower concluded that 2017 was a viable operational date for the project if studies and tests were completed in a timely manner.
Thompson — who also serves as a principal of Borealis GeoPower — points to the federal government’s recent change to the tax code to recognize geothermal heat as renewable energy, which allows for flow-through share capabilities, as a key reason for why the project could finally move forward.
“The province wants to know that the developer is actually going to spend their money and develop,” she says. “By having the mechanism available to raise financing for a project and drill wells, that signals to the province that if they provided the PPA, the private sector could do their part and go ahead and get financing.”
Aquifer Could Support 20 Small Geothermal Plants
Thompson says that in the “volcanic section of the world” — which includes the likes of Iceland, New Zealand and California — it’s not unusual to have a geothermal plant with capacity to generate 200 megawatts of electricity.
That’s simply not possible in most of Canada. Instead, geothermal companies wishing to generate electricity from heat will have to drill over three kilometres into the earth to reach the resource in the range of 120 degrees Celsius, constructing a series of small plants within the same region.
Marcia notes that most geothermal gradings are about 30 degrees Celsius per kilometre. At this location — right along the United States border, near Estevan — it’s about 40 degrees Celsius per kilometre.
In other words, it’s an ideal spot.
According to DEEP, the Williston Basin Hot Sedimentary Aquifer could support 200 megawatts worth of capacity from more than 20 plants.
The current estimate for the first five megawatt plant is around $40 million in capital costs, or about $8 million per megawatt of new installed capacity. For context, British Columbia’s proposed Site C Dam would add 1,100 megawatts for $9 billion, or about $8.2 million per megawatt of installed capacity.
However, Marcia notes that she anticipates the federal government will fund about half of the project, bringing down capital costs significantly. It’s also expected that economies of scale in later projects would result in capital cost savings of 10 per cent.
In addition, DEEP plans to sell the wastewater before reinjecting it back into the earth. Marcia says the most obvious client would be a greenhouse developer, with the wastewater discounted to the price of readily available natural gas and coming with carbon credits for the developer.
“There’s a huge business case for our wastewater,” she explains. “The water that comes out of the plant is still 65 degrees Celsius, so it’s extremely hot still. We’ve done some modelling on what we can do with that: as it turns out, from just one of our plants, we could heat a 45 acre greenhouse.”
In an interview with a Saskatchewan radio station, Marcia suggested that heat could help grow a variety of products, including legal marijuana.
Province Still Plans to Expand Fossil Fuel Power In Future Years
This is all taking place within the context of Saskatchewan’s commitment to have 50 per cent of generating capacity from renewable sources by 2030.
Saskatchewan’s grid currently has 4,437 megawatts of capacity. The plan is to increase that to 7,000 megawatts by 2030, meaning that 3,500 megawatts of capacity will have to come from renewables if the government sticks with its commitment.
“Obviously, five megawatts isn’t a lot when they’re looking at possibly a 7,000 megawatt grid by 2030,” says Mark Bigland-Pritchard, energy consultant and co-author of the report SaskPower’s Carbon Capture Project: What Risk? What Reward? “By itself, it’s insignificant. If they can do a whole lot of them as they are saying, then it’s another contributor.”
Most of the growth in renewables to 2030 will come from new wind power, via a controversial procurement process that only allows for utility-scale producers to bid (effectively disqualifying the community-scale wind projects). Solar projects are expected to add another 60 megawatts, an arguably small amount given the province is one of the sunniest places in North America.
Bigland-Pritchard notes that Saskatchewan’s plan completely disregards the “low-hanging fruit in climate policy” of conservation, and includes a further buildout of fossil fuel powered electricity. In addition, Saskatchewan is the only province that relies on coal-fired power that hasn’t announced a roadmap to phasing out the high-polluting source.
Despite that, he suggests there is potential for geothermal projects in Saskatchewan, especially if DEEP manages to get its first pilot plant working in two years or so.
“If — and it’s an enormous ‘if’ — they can make this geothermal system work in the first one to five units, then they could easily get enough to replace at least one coal unit,” he says.
Electric Utilities Must Grant More Permits for Geothermal
Next up for DEEP is the completion of the $8 million bankable feasibility study, which the company has already secured funding for. Marcia says the company will be drilling in the fourth quarter of this year, once final well licensing is completed and depending on rig availability.
Thompson emphasizes that SaskPower will have to give out far more permits to DEEP and other geothermal companies in order to ensure the power source is allowed to expand; she emphasizes that it’s not that companies don’t have the knowledge or technology or even the financing. The hold-up is the permitting process.
She adds there have been no permits given for geothermal in Alberta.
“[SaskPower’s decision] really speaks to not the resource quality, but to their commitment to use all the tools in their toolbox for renewable energy,” she concludes. “And I hope it sends a strong message to British Columbia, who has been very, very slow in giving out electricity purchase agreements to the geothermal industry, even though the resource there is the best in Canada.”