Plasco deal scrapped

Plasco Energy Group’s bid to build a waste-to-energy plant in Central Alberta has been scrapped.

Plasco Energy Group’s bid to build a waste-to-energy plant in Central Alberta has been scrapped.

The nine municipalities on the Central Waste Management Commission decided on Thursday that it could not guarantee enough garbage to feed the proposed 200-tonne-a-day plant that was to use plasma technology to convert garbage into a syngas that could be used to generate electricity.

“We think the Plasco technology is a great solution, but their minimum-sized plant is too big for our needs,” said commission chairman Dave Hoar.

“It’s disappointing for the commission when they spent five or six years dating and then don’t proceed,” said Hoar, a Red Deer County councillor. “But it’s better than marrying the wrong girl, too.”

The commission has not given up on finding an alternative to landfills. Hoar said the commission believes waste-to-energy is “dynamic and changing” and new technologies could emerge at any time. Other players have approached the commission previously with proposals, which the commission can now look at more closely.

Plasco executive Alisdair McLean agreed in a statement issued on Friday that “we are not the right size for them. If the commission finds more municipalities interested in the project, we are ready to re-start our work in Central Alberta.

“If not, we wish the commission luck in finding an alternate solution.”

McLean, who is the Ottawa-based company’s senior vice-president of business development, said the company is proceeding on its first commercial plant in that city, where it has been running a test plant. Ottawa city council approved a 20-year contract in December to process a minimum of 109,000 tonnes of garbage a year.

Plasco first announced it was looking to Central Alberta to build its first commercial gasification plant nearly five years ago and was championed by former Red Deer MP Bob Mills. However, the project never seemed to pick up any significant steam.

Company officials said the project hung on lining up millions in federal government Green Infrastructure Fund cash. The amount being sought changed over time from $24 million or so to $17 million, but no funding announcement ever came.

Deadlines outlined in agreements with the commission were extended and missed and negotiations on new deals begun anew.

The size of the project, to be built in Red Deer County near Penhold, also changed over time. First proposed as a 300-tonne-a-day plant, it was later scaled down by a third. However, in the end even that smaller plant proved too big for the local garbage market.

The writing appeared to be on the wall after the commission met last month to discuss negotiations. It was revealed after that meeting that the commission’s municipalities could only guarantee 20,700 tonnes of garbage a year, far short of the 84,000 tonnes needed to run the plant at capacity, and at a profit.

Plasco said it would look for some more sources of garbage, but asked the commission to come up with another 35,000 tonnes itself.

In the end, the garbage commitment killed the deal.

“Plasco really needed a firm 20-year commitment on a lot more garbage than we had control over,” said Hoar. “Red Deer County was not prepared to guarantee what we didn’t control. And I think the other members were very similar.”

While there is plenty of garbage out there, much of it is controlled by municipalities and tied up in existing contracts. The county produces about 20,000 tonnes of garbage a year, but could only promise 3,500 tonnes to Plasco.

A significant reduction in the amount of waste created because of the economic downturn also squeezed the numbers.

Failing to meet garbage targets triggered financial penalties for commission members, he said. If power costs were high, those penalties could be severe.

That left municipalities in the position of having to assume unacceptable levels of risk.

“We as a customer, why do we have to take all the risk of supplying commodity for 20 years? The technology might change three years from now and we’d look like dummies.”

The garbage guarantee arose only during negotiations over the last year, and for municipalities that represented a significant shift in their commitment, he added.

The Plasco foray has not been costly because the commission was not required to up-front any cash for the project, which was to be financed by Plasco. Only $11,500 has been spent by the commission, although staff hours directed to the project have not been tracked.

Much of that staff work may prove useful in any future negotiations, he said. “We’ve got a better idea now of what volume of garbage we have, which we didn’t know before.

“Not everything has been wasted.”

Coun. Lynne Mulder, the City of Red Deer’s representative on the commission, called Thursday’s meeting a “difficult day for the commission” but said municipalities will continue to pursue composting, recycling and waste-to-energy alternatives to landfills.

“We are committed to finding a green alternative to waste management and will continue to assess our needs and explore other alternatives which will comprehensively address those needs,” said Mulder in an email.