Published Tuesday June 22nd, 2010 
Generation: Government policy for renewable energy doesn't pay enough for producers to be viable, farmer says

B1John PollackFor the Telegraph-Journal
 
Corey McQuarrie literally has tonnes of manure he'd like to burn for energy, but says the government won't pay him enough to do it.
 
The Sackville-area beef farmer has 1,800 cattle, which together with his cousin's 1,000-cow farm down the road produce up to 25,000 tonnes of manure a year.

By heating the smelly waste, the carbon within would decompose into methane, which could be burned in a natural gas generator. The biogas could produce up to 170 kilowats, enough to power 80 homes with clean energy, as ironic as that may sound.

But the $2-million project wasn't viable despite getting $1 million in grants because neither banks nor investors would front the second million, says Fredericton-based agriculture and energy consultant Cedric MacLeod, who works with McQuarrie.

"The rate of return was so marginal," MacLeod says. "Because of that low feed-in-tariff we couldn't sustain it on a long-term basis."

McQuarrie couldn't come up with the collateral that banks would want, and investors worried replacing a broken piece of equipment, which can cost six figures, would put the project under.

NB Power's embedded generation program pays 9.445 cents per kilowatt-hour, but MacLeod says generating the electricity would cost at least 16 to 19 cents per kilowatt-hour.

He points to Ontario, where the power authority pays more for renewable energy and a project of this size would get 18.5 cents per kilowatt-hour. A biogas project would have to produce more than 10 megawatts to receive one of the lowest rates: 10.4 cents per kilowatt-hour.

McQuarrie says his generation project would not only be greener than burning coal or fossil fuels, but the liquid fertilizer left over is more efficient for his crops.

"The thought of someone who is polluting the atmosphere to make energy getting the same payment as myself for reducing the carbon footprint and producing energy is ludicrous," he says.

"They want to make a good rate of return," Energy Minister Jack Keir says of proposed renewable energy projects. "But what we also have to balance on that is the impact on the rate payers in New Brunswick."

He says Ontario has gone too far.

"They're shutting down cheap forms of generation because so many people got involved in their feed-in-tariff system," Keir says.

In Germany, where about 15 per cent of the energy generation is from renewable sources, the government predicts by 2015 household energy rates will go up by four euros (C$5.07) per month.

MacLeod says this isn't a huge increase.

"Yea power rates may go up, but they're going to go up anyway if we rely on fossil fuels," he says.

Keir says the rates are fair and the business case won't work for every project, but it has for some.

Jacques LaForge, a Grand-Falls dairy farmer, says his 450-kilowatt generation project should be running in September, largely thanks to organic matter being supplied by the "potato belt."

He will be operating a public dump, for organic waste only, which will quadruple the size of his originally planned generation station when nearby farms and businesses, such as McCain Foods Ltd., drop off their unwanted leftovers for a fee.

He says the more than $2-million project will likely work at 9.445 cents per kilowatt-hour because of his location.

"We were lucky to be in the perfect location where there was a lot of organic waste available," he says.

"You can not set this up just about anywhere."

McQuarrie is aware his location in Cookville, 18 kilometres northeast of Sackville, is a disadvantage.

Where Laforge had to pay $30,000 to have power lines link from his generator to the main lines about 300 metres away, McQuarrie says NB Power wanted $333,000 for the upgrade.

With no nearby abundance of organic waste, McQuarrie couldn't make the project viable by increasing the scale.

"There's no incentive in this province," he says.

"There is going to come a time where we probably will have a biogas plant, but for the time being we just have no policy."