Alternative energy projects will be pushed from iffy to profitable with a $239 million Alberta government investment into the bioenergy industry, said a pioneer in the field.
As part of the province’s new plan to encourage investment in bioenergy, projects that turn manure into electricity like at Highmark Renewables will get a six cents a kilowatt top-up from the government, said Mike Kotelko, manager of the feedlot project.
The Vegreville, Alta., plant turns manure from 7,500 cattle in the Highland Feeders feedlot into methane gas, which is turned into electricity and sold into the electricity grid.
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Kotelko said the biogas plant needs to sell electricity for about 14 or 15 cents a kilowatt hour to make a reasonable return on investment. The present average pool price for electricity is between six and eight cents a kilowatt hour. The government’s extra six cents pushes the $7.9 million project closer to profitability.
“It makes it economically viable for renewable energy projects,” said Kotelko.
For the Highmark plant, which produces 24 megawatts of electricity a day, the top-up translates to an extra $1,440 a day when the program kicks in next April.
The new government investment won’t just benefit existing plants, but will help boost future projects teetering on profitability, said Kotelko.
Alberta agriculture minister Doug Horner and Alberta energy minister Greg Melchin announced the four-year investment program Oct. 3, as a way to diversify Alberta’s energy projects beyond oil and gas.
“We wanted to start signalling by support, by direction, by funding, by programs, alternative energy as part of the mix,” said Melchin.
The government incentive plan includes a $209 million renewable energy credit program. Biogas projects will receive six cents a kilowatt and biofuel projects will receive up to 14 cents per litre as a blending credit for four years.
“We want to spur the industry on. We want to become the leaders in North America on these energy initiatives as it relates to agriculture and rural development,” said Horner.
The other $30 million is aimed at market development, research and development, and infrastructure programs.
Horner believes the government investment will translate into several billion dollars worth of economic activity in the rural areas of Alberta by farmers and other investors.
“In agriculture we’re talking about the establishment of considerable new markets in biofuels and biogas,” he said.
Matthew Machielse, director of Alberta Agriculture’s bio-industrials technology division, said he knows of 40 to 50 potential projects in the province that hope to use bioenergy, biogas or ethanol to create alternative energy.
The technology that turns canola into biofuel or wheat into ethanol is expensive and relatively unproven, said Machielse.
The government’s incentive plan is designed to take some of the risk out of the new technology. It will also help establish a strong biofuel industry in Canada by 2010 when the federal government hopes to have a mandate that all fuels must include at least two percent biofuel.
Ward Toma, general manager of the Alberta Canola Producers Commission, said the announcement is good news for the prairie canola industry.
The incentive programs will go a long way to stop the exodus of canola from the Prairies and help establish biodiesel plants in Canada, he said.
