The Project: A water power generation facility located in Bracebridge, Ontario, utilizing river water.

The Principals: The project was developed by Bracebridge Generation Ltd., a subsidiary of Lakeland Holding Ltd., which is wholly owned by the municipalities of Bracebridge, Huntsville, Burk's Falls, Magnetawan and Sundridge.

Because deregulation of the electricity market in 2002 required generation to be owned by a company other than the local utility, Lakeland was formed as a holding company with the municipalities as shareholders.

The electrical assets of the municipalities were merged and the generating component was separated. Bracebridge Generation owns and operates four water power plants.

Generating Facility: The project added a 1.5 MW plant to an existing 800 kW plant that has been in operation since the 1940s, for a total combined output of 2.3 MW. At full capacity the additional output will provide power for 1,600 homes in the area.

Including other plants, a total of 3,500 homes are supplied by water-generated power from Bracebridge Generation.

Information Source: Information was supplied by Mr. Chris Litschko, President and CEO, Bracebridge Generation Ltd.

Project Goal
The goal of the project was to further develop a water power generating facility that has been operating at High Falls, on the north branch of the Muskoka River, near Bracebridge, since the 1940s.

“When the original High Falls plant was constructed in the 1940s, the developers realized that it had greater potential and poured a concrete base foundation to allow for future expansion,” says Chris Litschko, President and CEO of Bracebridge Generation.

“Coupled with the fact that the site was already owned by the company, this gave the project a distinct advantage over a brand-new facility. At the same time, in terms of approvals, planning, etc., we went through exactly the same processes as if there were no existing plant.”

Assessment and Approvals

Unlike wind and solar operations, water power projects are dependent on run of the river water, which eliminates the need for complex resource assessment, Litschko says. It was clear that the site would accommodate a new 1.5 MW plant in addition to the existing 800 kW operation.

“With the municipalities as partners in the project, gaining municipal approvals and permits generally presented few problems,” Litschko says. “Also, a licensing agreement with the Ontario Energy Board was already in place for the existing plant, and distribution connection requirements with Lakeland Power presented no serious problems.”

On the other hand, completing environmental assessments for navigable waterways and water quality impacts was very time-consuming, he says, as was overcoming “NIMBY” (not in my backyard) concerns in a tourism and cottage area.

“Even with the help of a consultant, gaining approvals took almost two years,” Litschko says. “We would advise prospective developers to assume 18 months to two years for approvals before construction can begin.

Also, the costs of approvals for the project were about $250,000, and we can't see these costs changing regardless of the size of the project.”

Business plan and financing

“Along with projecting the costs for equipment and construction, the toughest part of preparing a business plan was estimating the price of electricity,” Litschko says.

“While the project was not dependent on incentives, our planning assumed that the Government of Ontario's support for renewable energy projects would result in a program that would justify the investment.

This is why the Standard Offer Program, which provides a 20-year contract with a guaranteed price, was critical to our project.”

The project team engaged a consultant for assistance with estimated costs and output, and obtained financing through a local bank.

“The bank offered terms that were as good or better than most federal or provincial funding programs, with less complex and time-consuming approvals processes,” Litschko says. “A federal loan was applied for and approved, but its covenants were too restrictive for us to accept.”

The total cost of the project was $4.8 million, even though a concrete base, dam and headpond for the plant were already in place, which saved construction costs.

Total Cost:                     $4.8 million

Annual electricity:          10,000,000 kWh

Simple Payback:            four years

Construction

The developers used a consulting engineering firm who divided the project into construction and generation equipment installation, which meant that the construction contractor had to coordinate with the equipment contractor.

The total time from the start of construction until the new plant came into operation was one year.

Lessons Learned

“Gaining approvals is onerous and can take a long time, although government officials act in good faith and with professionalism,” says Litschko. “Gaining federal or provincial funding is also an onerous process and excessively restrictive.”

“Also, NIMBYism will slow down the project no matter what you do. Many NIMBY concerns are legitimate and can result in a better project, but some just want to fight and make sure the project is never completed.

Litschko also advises that construction material costs are rising, although generators are steadily improving in efficiency. He adds that building contractors should have a high financial daily penalty to ensure that timetables are met.