The Capital Regional District will become the sole owner of a gas-fired power plant at Hartland Landfill after buying out its private partner, Maxim Power Corp.
The CRD has agreed to pay Maxim Power $1.8 million for its 30 per cent stake in the 1.6 megawatt power plant, minus $900,000 for ending the lease agreement, for net cost of $900,000.
The CRD and Maxim Power entered into the partnership in 2003 to produce electricity from methane gas discharged from the landfill. Maxim paid the CRD an annual royalty for the right to sell power to B.C. Hydro.
Andy Orr, who speaks for the CRD, said the CRD and Maxim Power came to a mutual agreement for the Calgary-based company to exit the operation, on the prompting of the CRD. Orr said the regional district now has the expertise to run the power plant.
“Once upon a time the thought was, when we did the original deal, that going with the private sector was the best way,” he said. “We’ve had time to think about things ... that there’s no need to have them involved.”
The landfill produces 18 cubic metres of gas each minute, enough to generate 12,274 MW-hours of energy per year, according to the CRD. Under the base power rate paid by B.C. Hydro, the plant could generate $1.2 million per year in revenues, although B.C. Hydro also paid a “green premium” for part of the power generated.
In a press release, Maxim Power said it planned to use the $900,000 for “strategic corporate purposes.”
It’s unclear why Maxim opted out of the project, although it had “the option to sell its portion of the facility to the CRD for fair market value, if production of power drops below a pre-determined threshold for a pre-determined period of time,” according to a CRD report on the project. Maxim Power didn’t respond to requests for comment.
When the deal was struck in 2003, Maxim Power contributed $840,000 to build the $2.8-million plant, and the CRD chipped in $1.96 million, which Maxim agreed to pay back to the CRD over the 20-year project. Orr couldn’t say how much Maxim actually paid back over nine years of operations, citing a confidential contract.
All revenue generated by the power plant will become part of Hartland landfill’s revenue stream. He couldn’t say if the CRD is planning to expand the generating capacity of the plant, but said the potential is there.
“When people think of landfills, more and more they think about capturing energy,” Orr said.
editor@saanichnews.com