Metro Vancouver’s business case to build a second garbage incinerator grossly overestimates electricity revenue and underestimates the project’s costs, according to a report paid for by one of the plan’s biggest critics.
It estimates the net costs could be $800 million to $1.3 billion higher than Metro has estimated over the 35-year life of the new waste-to-energy plant.
The analysis was conducted by consulting firm ICF International and commissioned by waste disposal firm Belkorp Environmental Services, which stands to lose business if a new incinerator is built.
Belkorp operates the Cache Creek landfill – which Metro aims to stop using – and has proposed to build a material recovery facility in Coquitlam that it says could sort more recyclables from what is otherwise garbage.
Metro has assumed BC Hydro will pay $100 per megawatt-hour for the power that would be generated over the full life of the project, but the ICF report warns BC Hydro might renegotiate a much lower rate in 15 years, after Metro pays off its capital investment.
If the power price drops at that point to $43 per megawatt-hour – which Metro now receives at its existing Burnaby incinerator – electricity revenues would shrink by $362 million, the report said.
“One of the really heroic assumptions is the price of electricity that they are going to receive from BC Hydro,” ICF report lead author Seth Hulkower told Coquitlam council Monday.
ICF’s estimate of the lifetime project costs are also 18 per cent higher than Metro’s and it also adds a 15 per cent contingency for operations and maintenance.
Its “downside scenario” estimate of a $1.3-billion cost overrun makes bleaker assumptions than Metro and assumes the regional district must sell electricity on the open market without any fixed price guarantee from BC Hydro.
Metro officials say their business case does not necessarily reflect what the final waste-to-energy project may be.
One project proponent – Lehigh Cement – proposes to retrofit its Delta cement plant to use garbage as fuel, replacing coal and tires it now burns.
“It doesn’t need to sell electricity at all,” Metro board chair Greg Moore said.
The cement plant option may also have considerably lower capital costs than the estimate of around $500 million for an all-new plant.
Other scenarios could see a new waste-to-energy plant located near a densifying urban area where steam could heat surrounding buildings in a district energy system, instead of being converted to electricity for sale.
“It’s not shocking that this report comes from the largest private landfill operator that wants to continue operating their business as a landfill,” Moore said.
Metro’s current plan calls for construction of a new waste-to-energy plant to take up to 370,000 tonnes per year of garbage, an amount it estimates will still require disposal if the region’s recycling rate climbs from 60 per cent to 70 per cent.
But the regional district is expected to re-evaluate its plans in light of the province’s rejection of Bylaw 280, which tried to ban the hauling of garbage out of Metro.
Belkorp vice-president Russ Black said he hopes more mayors and councils around the region push the Metro board to place a moratorium on the incinerator plan in light of the ICF findings.
Councils in Maple Ridge, Pitt Meadows, Coquitlam and Port Moody have previously supported a moratorium.
Black said it’s “completely false” to suggest Belkorp’s aim is to keep taking Metro garbage to its Cache Creek landfill by defeating the incinerator, pointing instead to its NextUse subsidiary’s plan to sort recyclables from garbage.
– with files from Gary McKenna