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Merritt to receive power plant

Merritt is to be the site of a new 40 megawatt, biomass-fired power plant for BC Hydro.

Merritt Green Energy Limited Partnership announced Friday that it has closed on its financing for the Merritt Green Energy Project, a $235 million investment.

An Environmental Appeal Board document indicates the plant will be built "on land at the intersection of Houston Street and Midday Valley Road in Merritt," adjacent to the Tolko Industries yard.

The project will sell power under a 30-year electricity purchase agreement to BC Hydro and, with financing in place, has now moved into its construction phase with commercial operation expected in October 2016.

BC Hydro put the project to tender several years ago and have since been upgrading the power grid in Merritt to be able to connect to the new facility.

Merritt Green Energy Project’s developers and equity investors are Fengate Capital Management Ltd.(Fengate) and Dalkia Canada Inc.

Project debt financing of $180 million was sourced from five leading project finance banks: Bank of Tokyo-Mitsubishi UFJ (Coordinating Bank), Canadian Imperial Bank of Commerce, National Bank of Canada (Administrative Agent), Natixis and Rabobank. 

The Merritt Green Energy Project will consume approximately 200,000 tonnes (dry) of biomass fuel – mostly sawmill waste – annually to generate more than 285,000 MWh of renewable electricity. 

That's enough to power more than 40,000 homes for a year.

Fuel will be sourced mainly from local saw mill waste, but could also come from "roadside debris" which is defined as slash piles in logging areas. 

Vice president and head of western operations for Dalkia Canada Fadi Oubari said roadside debris would be a fuel source of last resort. 

The plant will use state-of-the-art emissions reduction equipment. 

The facility will be operated by Dalkia under a long-term operations and maintenance agreement. Fuel will be provided by local partners, including Tolko Industries, under a long-term fuel supply agreement.

Don Hanson, communications manager for Tolko said "We're really a small partner in that whole Dalkia project. But it will represent a significant amount of our waste."

Tolko's waste already goes to co-generation plants in Armstrong and Kelowna he said, but could not comment on how much the supply agreement is worth to Tolko Industries.

This project will also create around 250 jobs during the construction phase and 80 new direct and indirect jobs during the plant’s 30-year operation.

In addition, Merritt Green Energy Limited Partnership has signed an Impact Benefits Agreement with the Lower Nicola Indian Band, which will provide employment and investment opportunities. 

“B.C.’s economic future is bright and will require additional power, and we are excited to be part of the province’s burgeoning green energy sector,” said Oubari. “We look forward to working with the community of Merritt, our supply partners and First Nations on building this plant and generating green energy for British Columbians."

The Merritt Green Energy Project is the second biomass plant project being developed in British Columbia by Dalkia and Fengate. In November 2013, they announced the financial close on the $235 million, 40 MW Fort St. James Green Energy Project, which is expected to begin operations in July 2016. 

Oubari said the two projects are really one for Dalkia Canada. "We are using the same equipment, the same design, the same builder - there were lots of synergies on these projects that help reduce maintenance and replacement costs."

Dalkia and Fengate have now invested $470 million in the province on green energy projects.

“The potential for generating green energy from wood waste is significant in British Columbia, which is why we are investing in this sector,” says George Theodoropoulos, Managing Director of Fengate Capital Management. “Both the Merritt and Fort St. James Green Energy Projects will provide reliable green energy to BC Hydro and create employment opportunities in both regions.”

Oubari said Dalkia Canada is looking at other energy related projects, but said that "none are as imminent as these two."

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