The Colusa City Council could make a decision as early as this month on whether to go into a joint business venture with a company that specializes in converting organic waste into a renewable source of electricity – or just purchase the excess power that it generates.
City Council members have been somewhat skeptical about entering into an agreement with BC&E for a 12.5% stake in the company because it seems like a deal that is “too good to be true.”
BC&E, which plans to convert biomass like sewer sludge and almond hulls into renewable energy, has promised that tax credits made available from the bipartisan Inflation Reduction Act, signed by President Joe Biden nearly a year ago, will provide the city will $3 million in 2023 and $2 million in 2024.
BC&E is in the process of building the biomass power plant on Niagara Avenue in Colusa Industrial Park.
“Usually, when something sounds too good to be true, it is,” said City Councilwoman Denise Conrado.
Colusa City Manager Jesse Cain has been working on a power purchase agreement with BC&E for over a year, and company principals have explained the proposal to the City Council and public at the last two regular meetings.
The proposed agreement binds the city to purchase all power in excess of BC&E’s needs for 15 years, with the option for the city to purchase the facility after five years.
“Essentially, with the PPA, we purchase the power for 16 cents a kilowatt,” Cain said. “That would offset the city’s power cost.”
Cain said once BC&E starts to produce more than what the city uses, the City Council would have to have a grid access agreement with PG&E to sell the excess at 19.1 cents.
Cain said the city stands to first benefit from lower energy costs, but would eventually make money on the deal and possibly, in the future, be able to operate the plant as a city utility to provide low-cost electricity to city residents.
“Last year, we paid PG&E $750,000 for electrical charges,” Cain said. “Right now, we are paying about 21-28 cents per kilowatt. At 16 cents, we would save about $330,000 per year.”
The City Council will likely take the matter up again at the July 18 meeting or a meeting scheduled in August.
BC&E Project Manager, Wayne Herling, said his vision is to develop a power generation model that will allow municipalities across the state to have their own renewable energy plants to convert sewer solids (the powdery residue left after wastewater treatment) into enough electricity to supply power to their entire towns.
Herling, who has been in the renewable energy business since 1984, said the crux of the project is to incinerate organic matter to create steam, which is then converted into electricity.
“The difference in this renewable type of project is that it becomes more of a baseload (around-the-clock) type power,” he said. “Most renewable energy (wind and solar), which are more prominent, are more intermittent, so they don’t provide energy all the time. With this power, we will be able to generate power on a 24-hour basis.”
While city officials said they understood the concept, they were still hesitant about whether the city itself would ever be able to assume responsibility for operating its own power plant, given the city does not actually own power transmission lines.
Others believe it is a step in the right direction toward meeting the State of California’s mandate that cities have renewable energy utilities that meet 100 percent of their needs by 2045.
If the project moves forward as BC&E proposes, with Colusa purchasing the plant after five or so years, Colusa could be the first municipality in the state to generate 100 percent renewable energy to meet its power needs.
While Herling agreed that the deal may sound too good to be true, he said the Inflation Reduction Act incentivized controlling carbon pollution from sectors that previously found the development of new and innovative technologies financially out of reach. ■