Debate continues over cost of extending Saskatchewan coal plants

Two independent cost analyses offer differing views on SaskPower’s proposed $26B coal refurbishment, amid ongoing debate. Wayne Mantyka reports.

Saskatchewan’s decision to invest $26 billion to extend the life of coal-fired power plants near Estevan and Coronach is drawing mixed reactions from experts examining the long-term costs of the strategy.

The investment includes capital costs, maintenance, operations and fuel over the next 25 years.

Brett Dolter, an associate professor of economics at the University of Regina, has compared the cost of continuing to operate coal-fired generation with replacing it with natural gas generation. His analysis suggests natural gas would be the less expensive option under current market conditions.

“When I look at the numbers over 25 years, results in about $9 billion dollars in savings under current cost conditions. So that’s with the current price of natural gas and the current quotes of building a gas plant. Now the risk is that natural gas prices could go up,” he said.

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The comparison examined the cost of producing 1,500 megawatts of electricity over a 25-year period, including all associated expenses.

“That difference over twenty-five years in about $25 billion, that’s without carbon pricing. Now a big risk of this strategy is if we have carbon pricing in place, coal becomes such an expensive option,” he added.

Others disagree with that assessment including Brian Zinchuk, editor of Pipeline Online.

After reviewing the numbers, Zinchuk argues replacing coal generation with natural gas would require significant new infrastructure.

“If we go with natural gas, we’d have to build four more plants the size of Aspen near Lanigan. We’d have to do site selection, environmental assessment, all that. Totally greenfield, there’s no way that’s cheaper than rebuilding what you already have,” he said.

Zinchuk also points to the economic impact of fuel sourcing, noting that coal used by Saskatchewan’s power plants is mined within the province, while much of the natural gas supply would come from Alberta.

“All that money will leave and never come back but if we go with coal, that’s going to be my neighbours, five of them work either in coal mines or in power plants within fifty yards of my house,” he added.

Despite the differing views on how Saskatchewan should generate electricity in the future, both approaches are expected to result in higher power costs for consumers over time.