ACHO DENE KOE/FORT LIARD
A project to build a geothermal plant in Fort Liard has come to an unsuccessful end.
A proposed geothermal plant for Fort Liard, which has been in the works for about five years, will not be moving forward. The plant would have created enough electricity to meet all of the hamlet's needs. - photo courtesy of Borealis GeoPower
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Borealis GeoPower, a Calgary-based corporation, has been working with Acho Dene Koe First Nation for approximately five years on a project to build a geothermal plant in the community that would create enough electricity to meet all of the hamlet's needs.
Borealis and the Northwest Territories Power Corporation (NTPC), which was approached by Borealis to purchase the electricity from the plant, have differing views on why the project has ended.
It has been apparent since the end of December that the project wouldn't be moving forward, said Tim Thompson, the company's chief executive officer.
"We were pretty disappointed," he said.
Thompson said the primary reason the project couldn't be completed is because Borealis couldn't reach a power purchase agreement with the power corporation. Among other things, the agreement would have guaranteed that the corporation would purchase the electricity generated by the geothermal plant, and the price the corporation would pay for that electricity.
Borealis needed a binding contract in place by Dec. 31, 2012, said Thompson. Together with Acho Dene Koe First Nation, Borealis applied to Natural Resources Canada's Clean Energy Fund around 2009 and was conditionally approved for between $10 million and $20 million in funding for the geothermal project. The funding was supposed to end on Jan. 1, 2012, but the company was able to get an extension until December of that year to meet the conditions needed to receive the funding.
Borealis needed the binding agreement in order to attract investors to help finance the project, said Thompson. The company had to show they had matching funds from other sources as one of the funding conditions.
Borealis continued to look for partners in January and February despite the fact the deadline had passed.
Since then, the company has been wrapping up the project, said Thompson.
In an e-mail, Bob Kelly, a spokesperson with NTPC said it's not correct for Borealis to claim the lack of a power purchase agreement is the reason the project did not proceed.
The corporation was seriously pursuing a power purchase agreement with Borealis, Kelly said.
"NTPC is interested in partnering with private sector organizations where there are benefits to the corporation's customers," he said.
The corporation has to make sure that any initiative would not have negative impacts on customers including rate increases or a deterioration in service, said Kelly The corporation did a due-diligence review of the proposal for the plant before starting negotiations approximately a year ago.
All the main points that form the basis of a power purchase agreement had been agreed upon between the corporation and NTPC and were included in a term sheet. Borealis was given the term sheet to show potential investors the terms the corporation was offering in relation to purchasing the electricity, said Kelly.
From NTPC's perspective, things seemed to be on track to reach an agreement, he said. In December, Borealis told the corporation it hadn't been able to find a third party investor. Following that, Borealis didn't join in any further formal discussion, he said.
NTPC tried to contact Borealis a few times in the new year to learn what was happening with the project, but couldn't reach anyone, Kelly said.
However, Thompson said what happened between Borealis and the corporation in relation to the term sheet wasn't that simple.
Thompson said Borealis needed a binding power purchase agreement by Dec. 31 in order to secure investors, not the non-binding draft term sheet that the companies were still working on.
"We couldn't get the deal done," said Thompson.
Because the geothermal plant won't be built the community of Fort Liard is losing out on a number of opportunities, he said.
The construction of the plant and the plant itself would have provided a few jobs for community members. One of Acho Dene Koe First Nation's economic arms was also part of a joint venture with Borealis in a development company that was created to move the project forward. Through the company, the First Nation would have had an economic interest in the plant and received a portion of the plant's profits, said Thompson.
The plant also would have created a lot of waste heat. As a secondary benefit, that heat could have been used for other projects such as greenhouses built near the plant, he said. Thompson estimates the plant and related businesses could have created between 10 and 30 jobs.
"I think the community would have benefited," said Thompson.
The project did break some new ground. Borealis obtained the first geothermal land use permit and type A water licence issued by the Mackenzie Valley Land and Water Board. According to Thompson, they were also the first geothermal licences of their kind issued in any federal jurisdiction in Canada. Obtaining those permits has hopefully created a pathway for other people to get similar permits for other geothermal projects, he said.
Thompson added the geothermal plant for Fort Liard has been fully designed and was ready to go out to tender to be constructed.
Chief Harry Deneron of Acho Dene Koe First Nation couldn't be reached by press deadline to comment about the project.
