Weyerhaeuser CHP Project

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Weyerhaeuser CHP Project

• NWPPC CHP Roundtable
• June 24, 2003

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Project Profile

• Located at Weyerhaeuser mill, Kamloops
• 30 MW hog-fuelled turbo-generator
• Annual turbo-generator output 200 GW.h
• Annual pulp mill displacement 155 GW.h
• Excess 45 GW.h annually available for market
  sales
• Will become electrically self-sufficient

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Project Profile (cont)

• Start-up scheduled for Spring 2004
• Backup power and ancillary services available
  from BC Hydro

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Project Profile (cont)

• Project cost 28 million CDN
• Power Smart Incentive 18 million CDN
• Incentive deal announced Jan 2003

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What made Weyerhaeuser a Willing Partner ??

• Interested in the project a decade of effort to
  get the project advanced, but the financial
  hurdles had not been met
• Operates similar projects at this and other sites
  technical basis well proven
• Positive economic spin-offs (construction jobs,
  permanent trucking jobs)
• Excess of hog fuel in the region

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What made BC Hydro a Willing Partner ??

• Open to non-utility options for generation
• Two options to acquire CHP projects --- Customer
  Based Generation (CBG) and Load Displacement
  (Power Smart)
• CBG, establishment of 15-20 year Electricity
  Purchase Agreements, payments over the life of
  the agreement
• Power Smart, establishment of 10-15 year
  Incentive Fund Agreements, payments provided as
  upfront capital to assist construction

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What made BC Hydro a Willing Partner ?? (cont)

• Projects present a reasonable risk profile
  (technical, financial, credit, performance)
• Resource stack prioritization
• DSM, Resource Smart, Private Sector (green
  alternate, independent power)

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How Did Government Policy Support This Project ??

• Recent provincial Energy Plan promotes
  conservation, energy efficiency and low rates
• 9, Electricity distributors will acquire new
  supply on a least-cost basis, with regulatory
  oversight by the BC Utilities Commission
• 13, The private sector will develop new
  electricity generation, with BC Hydro restricted
  to improvements at existing sites

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How Did Government Policy Support This Project ??
(cont)

• 20, Electricity distributors will pursue a
  voluntary goal to acquire 50 of new supply from
  BC Clean Electricity of the next 10 years
• 21, New rate structures will provide better
  price signals to large electricity consumers for
  conservation and energy efficiency
• 23, The Utilities Commission Act will be amended
  to remove a disincentive for energy distributors
  to invest in conservation and energy efficiency

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How Did Government Policy Support This Project ??
(cont)

• www.gov.bc.ca/em/

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How Did the Regulatory Regime Support This
Project ??

• DSM treated like generation projects for rate
  basing and rate of return
• Investments judged on Total Resource Cost
  (project cost being less than alternate
  resources)
• BC Utilities Commission historically supportive
  of DSM, alternate energies, net metering

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Win-Win Project

• Weyerhaeuser
• Receives staged payments totalling 18 million
• Alleviates capital requirements
• Utilization of hog fuel to generate electricity
  rather than beehive burner disposal

• BC Hydro
• Receives 155 GW.h of load displacement for 1.5
  /kW.h
• Avoids new generation at 5.5 /kW.h
• Supporting environmentally beneficial projects
• Reduced transmission loadings

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