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City recommends halting solar farm; project not economically viable: report

Coun. Sheena Hughes expressed gratitude for the report, saying the city "came dangerously close to a financial train wreck."
2608 SolarFarm CC
The city released the solar farm agenda report for the upcoming Sept. 6 council meeting on the evening of Aug. 31, 2022. ATCO/ Supplied

City of St. Albert administration is recommending council not proceed with a proposed solar farm project, according to a recently released agenda report. 

The city released the solar farm agenda report for the upcoming Sept. 6 council meeting on the evening of Aug. 31. In the report, administration recommends council rescind approval for the $26.1-million solar farm project, and rescind the first reading of the project’s $33.75-million borrowing bylaw, both passed on June 21, 2021. 

According to the report, the options the city is exploring for its solar farm project would not be economically viable. 

Council voted in February to proceed with a detailed design of a hybrid solar farm that would both supply power to the commercial grid and offset consumption at the city’s own facilities.

The decision came after Regan Lefebvre, the city's senior manager of utilities, told council pursuing a detailed design for the hybrid would give insight into as many options as possible, while saving on costs. 

In working with consultants ATCO and Boost, administration completed the design on the hybrid options and due diligence on the commercial and Municipal Own Use Generation (MOUG) options, the report said. 

As a result, the city drew up a new project charter for the hybrid solar farm: a roughly five-megawatt MOUG solar farm, and 10-megawatt commercial farm. 

The updated project charter found the costs would be higher than the previously estimated $26.1 million, coming in instead at around $39.8 million.

The significantly increased price is a result of inflation costs, added construction costs, public engagement requirements, additional studies, and the cost for some equipment almost doubling in comparison to numbers used in 2021, the updated charter said. 

The solar farm would cost around $120,000 to operate annually, according to the charter, and also require a one-time cost of around $1.4 million to replace its invertors — devices that convert electricity for the grid. 

In explaining why the project would not be viable, the report broke down the risks associated with a commercial solar farm, and those associated with a MOUG solar farm. 

Commercial solar farm

Based on the city’s draft design and revised economic analysis, the internal rate of return for a commercial solar farm project would be lower than the city’s borrowing costs, the report said. 

The city had initially viewed the solar farm project as a way to provide a new revenue stream beyond St. Albert’s residential tax base.  

In the agenda report, Lefebvre noted previous assumptions with the solar farm project business case focused on the city’s access to low-cost financing, and benefits of provincial and federal grants.

However, accepting federal or provincial grants only available to municipalities would make the solar farm non-compliant with the Electric Utilities Act, Lefebvre said in the report. 

Additionally, borrowing rates for municipalities have climbed in the last year. 

“Through the due diligence for this project, it has become apparent that power generation is a difficult industry for municipalities to participate in,” Lefebvre said in the agenda report.

According to the report, existing companies have several advantages over municipalities when it comes to electricity generation (for example, years of experience and diverse assets). 

Additionally, municipalities must meet strict regulations to generate power. In February, Lefebvre told council a municipal corporation would facilitate separate accounting to prove the solar farm is not being subsidized by the city through exemptions — for example being exempt from municipal taxes — and calculate the taxes it would pay. 

In the recent agenda report, Lefebvre noted previous estimates for a municipal corporation came in at $400,000 needed per year for a board focused on growing the corporation alongside dedicated staff. 

Lefebvre said newer estimates for a pared down corporation the city considered would be $50,000 per year.

After factoring this cost of a municipal corporation, costs of engagement with the Alberta Utilities Commission, and other costs associated with running the facility, including contingency, the city has determined that the internal rate of return would not be enough to repay the proposed borrowing bylaw. 


The city was eyeing the Badger Lands — located in the northwest above Villeneuve Road and west of Hogan Road — for the solar farm project. 

Previously, the city said the site would be optimal due to associated costs of remediating the land — meaning to remove the contaminants — as the site was used as a snow dump until 2017. 

While previous city estimates placed the cost of remediating the land in the range of $15.5 million to $25 million, a new study completed by the city places those costs at approximately $4.5 million. 

In the newly released report, Lefebvre said placing a solar farm on the site would involve the placement of fill material above the contaminated soil to even out the elevation.

Lefebvre said adding fill material might put the remediation costs at risk of being higher in the future. 

Municipal Own Use Generation (MOUG) 

In addition to a commercial solar farm, the city also looked at a smaller-scale project that would offset consumption at the city’s own facilities, known as a Municipal Own Use Generation (MOUG) solar farm.

Going the MOUG route would allow the city to avoid some requirements involved in commercial generation — for example, a municipal corporation would not be required to allow for separate accounting. 

However, the facility would have to show each year that all electricity generated is consumed on an hourly basis at all facilities and sites owned or leased by the city. 

Lefebvre said the city found the solar farm would produce “significantly more electricity” during peak hours in the summer than its facilities can consume. 

Decreasing the size of the proposed solar farm would help address this problem, but would also not likely be economically viable, Lefebvre said in the report.  

The city also explored designing the MOUG solar farm with battery storage so the electricity produced would be equal to that consumed at city facilities, but found this would increase the capital cost of the project by at least 50 per cent. 

Hybrid solar farm 

Based on the above analysis, the city has determined a hybrid commercial and MOUG solar farm would also not be viable.

In addition to presenting the challenges described above, Lefebvre noted the hybrid facility would have higher application and interconnection fees. 

Private lease

Lefebvre said the city also considered partnering with private industry, however, issues such as site remediation would present “significant disadvantages” to such a partnership, he said. 

“No private developer of a solar farm is going to want to pay the costs to remediate lands that they do not own and have no legislated responsibility to remediate,” Lefebvre said in the report.

Additionally, if a commercial solar farm was developed, the city’s bylaws would trigger the payment of millions of dollars in off-site levy costs. 

Off-site levy projects are large infrastructure such as sewer pipes and water lines that then connect to the smaller lines within developments. 

Similar to the cost of remediation, Lefebvre noted a private developer would not want to pay off-site levies for urban services in what is now a rural area.  

Alternate land uses

Lefebvre said city administration will need more time before it can make a recommendation about a preferred alternate use for the Badger Lands. 

Any recommendation would need to consider remediation costs, as well as how to relocate other city operations currently taking place on the site. 

At the moment, the city is using the site for storing wood waste, used street sand, silt collected from catch basins and oil and grit interceptors at outfalls of the Sturgeon River, and other stockpiled materials such as asphalt millings. 

Lefebvre noted the north and south portion of the lands fall under two different area structure plans (ASPs), one of which — the St. Albert West ASP — is still being developed. 

In addition to recommending council rescind the solar farm motions, the city is also suggesting council put forward a motion to review potential uses for both the north and south portions of the Badger Lands, as divided by the future Fowler Way. 

The portion of the land north of the future Fowler Way will fall under the St. Albert West ASP, and the portion to the south currently falls under the North Ridge ASP. 

The report recommends administration provide a recommendation for future use of the lands by the end of 2023. 

'Financial train wreck' avoided

Coun. Sheena Hughes said she is “extremely grateful” administration is recommending council pump the brakes on the project.

“It does not change everything that happened up to this moment,” Hughes said. “We came dangerously close to a financial train wreck that would have been compounded if the MEC had also continued.”

Hughes said it is “concerning” council approved the project charter and first reading of the borrowing bylaw for the solar farm. 

“We were brought down to the 80- to 90-per-cent mark for approval without having the correct information in front of us,” Hughes said. “That’s what keeps me up at night.”

Contrastingly, Coun. Ken MacKay said the solar farm process demonstrates that proper checks and balances are in play. 

“The project had different phases,” MacKay said. “There were a number of gates where council was asked to make decisions about whether to continue in the project or not.”

MacKay noted that it is St. Albert city council’s procedural norm that the first reading of a bylaw be passed before it is debated by council at the second and third reading. 

“It doesn’t compel us to do anything,” MacKay said. “It just starts the process.”

Asked whether administration’s resources could have been better spent this past year looking into service reductions to reduce the tax increase, MacKay said if the solar farm would have turned out to be a revenue opportunity, it would have helped do just that. 

“We had to investigate it, in my opinion,” MacKay said. “This was an opportunity, recognizing all of the challenges we were going to have with revenue and keeping our taxes manageable.”

When asked for a breakdown on how much the city has spent on the solar farm project to date, city spokesperson Cory Sinclair said in an email administration will not be addressing media inquiries on the solar farm until after the Sept. 6 council meeting. 

Similar to MacKay, Coun. Wes Brodhead said council “needs to be open to examining new and different ways of finding revenue streams for our community.”

“Sometimes that requires an in-depth look,” Brodhead said. 

Brodhead said he was “disappointed” to see the results of the report, but glad to have more answers. 

“I love our community and try to do what’s best for it, and sometimes what’s best for it is to have a sober second thought,” Brodhead said.  

Mayor Cathy Heron was not available for an interview. 

Coun. Natalie Joly said there were "no surprises" in the report.

"The environment has completely changed over the last two year in terms of the supply chain," Joly said. 

In recent months, members of council — including Joly — have argued it is important to trust administration in their recommendations to council.

Asked if the results of the report have raised questions about that approach, given that last year administration recommended council approve the borrowing bylaw, Joly emphasized that much has changed in a year's time.

"Administration has always been wonderful at being open to changing their advice based on new information and based on a change in environment," Joly said. "This report is reflective of their professionalism."

Coun. Shelley Biermanski said she was “very happy” with the report. 

“The enormous expense of this project with no guarantee of return is laid out now,” Biermanski said. 

Coun. Mike Killick said the major question always was whether the project would make enough money. 

“The whole idea behind this was that it made a profit that we could either invest in new things or use to offset taxes,” Killick said. “I think the analysis that was done shows that solar farms can be a good thing but in some instances, it just isn’t the right fit.”

Killick, who addressed the past council with concerns about the project as a resident before being elected himself, said in hindsight, the project could have perhaps been approached in a “smoother” way, without stages passed before all the information was gathered, but noted what matters is that council still "ended up at the right place by getting the facts."

Speaking Friday, Killick said he is looking forward to the council meeting on Sept. 6, and any future discussions on the potential for the Badger Lands. 

“I'm going to be very interested in seeing what the other next steps are for that land,” Killick said. 

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