Due to oversupplied power market, TransCanada delays 338-MW Alberta project

TransCanada Energy Ltd. (TCE) applied April 30 with the Alberta Utilities Commission for approval of a construction delay for its 338-MW Saddlebrook Power Station project.

TCE wants to extend the construction completion date contained in a 2010 commission approval from June 30, 2015, to June 30, 2021. The proposed Saddlebrook Power Station is a combined-cycle power plant consisting of one gas-fired combustion turbine generator and one steam turbine generator, which together have a combined nominal capacity of 338 MW. It will be located within the Saddlebrook Industrial Park, approximately 10 kilometers north of High River, Alberta.

A condition of the 2010 approval was that construction be completed by June 30, 2012. As a result of uncertainties regarding federal coal emissions policy, as well as local transmission capacity and regional system constraints, construction did not commence at that point. In 2012, the commission granted a TCE application for the new June 30, 2015, deadline.

Since TCE filed the 2012 delay application, the following activities have been undertaken:

  • advancement of engineering design work; and
  • preparation of construction bid packages.

TCE said that it worked with the Alberta Electric System Operator (AESO) throughout 2012 and 2013 to investigate transmission connection alternatives. TCE also participated in several of the AESO’s applications concerning the Foothills Area Transmission Development. Saddlebrook was included in the AESO’s system studies supporting the applications for transmission reinforcement in the area and TCE said that it understands that construction of these reinforcements is ongoing at this time. In addition, and as noted in TCE’s quarterly progress reports, TransCanada signed a one-year lease with the Government of Alberta, which commenced on June 30, 2013, for a portion of the Saddlebrook site to assist with flood relief efforts. The lease allowed for the construction of a temporary housing camp for displaced residents of High River. The housing camp occupied the northwest corner of the property before being fully decommissioned in March of this year.

TCE said that it previously procured roughly C$80 million worth of equipment for Saddlebrook, including the gas and steam turbines. This equipment is currently being stored in controlled conditions within the existing MagCan building on the site and will remain there pending construction of the power station.

Oversupplied markets, uncertain regulations cited as reasons for this delay

Said the April 30 application about the reasons for this latest delay: “At this time, electricity market signals are not indicating the need for substantial new generation resources in Alberta. Accordingly, TransCanada anticipates delaying construction of Saddlebrook until there is sufficient market need to support new generation build. In TCE’s view, the current market conditions are generally being driven by three factors: (i) present generation oversupply; (ii) reduced demand growth; and (iii) continued uncertainty regarding emissions regulations. Current reserve margins indicate that there is surplus generation capacity in the Alberta market resulting from the recent addition of substantial new generation. This surplus capacity is reflected in the current pool price environment, which adversely impacts the economics of investment in new generation.

“In addition, the recent collapse in oil prices has created a slowdown in demand growth. This reduction in demand growth will result in a longer timeframe before the current generation oversupply is absorbed into the market.

“Lastly, the Alberta government is reviewing its greenhouse gas policy framework, which could have significant implications for the electricity market. Clarity on the greenhouse gas policy is necessary to understand the timing of retirement of existing coal assets and the corresponding need for new generation in Alberta.

“As a result of these factors, TCE does not currently anticipate that market conditions will support the addition of Saddlebrook until the latter part of 2019, at the earliest. For this reason, TCE requests an extension to complete the construction of the Power Station until 2021.”

Attached to the delay request is an April 2011 approval from Alberta regulators of an air permit for this project. Approved under that permit were:

  • one 230 MW (gross capacity) natural gas fired turbine generator equipped with dry Low NOx combustors, turbine inlet air evaporative coolers, and acoustic enclosure;
  • one heat recovery steam generator equipped with, low NOx duct burner, and selective catalytic reduction system;
  • one 160 MW (gross capacity) steam turbine generator;
  • an air-cooled condenser for exhaust steam from the steam turbine generator;
  • wet surface air cooler for providing cooling water to the various heat exchangers;
  • one natural gas-fired auxiliary boiler equipped with low NOx burners;
  • one 500-KW standby diesel generator using low sulphur diesel fuel; and
  • one diesel fire-water pump.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.