Kimberley City Council discusses 2017 SunMine numbers

The City of Kimberley has released the preliminary figures for the SunMine, after considerable public interest in energy production and revenue generation.

2017 revenues are $189,210 on 1771 MWh, while expenses were $62,847 and debt was $125,720. The contribution to the reserve was $643.

In 2016, revenues were $193,551 on 1681 MWh (including business interruption insurance), $62,847 in expenses and $125,720 in debt. The contribution to the SunMine reserve in 2016 was $12,626.

City Chief Administrative Officer, Scott Sommerville says the City brought in $4,300 less revenue and expenses were $7,300 more than they were in 2016, which significantly reduced the contribution of reserve.

“We’re expecting a reserve contribution of $643 from 2017,” explained Sommerville. “We generated more power in 2017, but we didn’t have the luxury of getting business interruption insurance like we did in 2016, and we had some issues with production so we weren’t able to dip into that insurance. If you notice a discrepancy in the power generation figures, that would be why. I also included the figures I gave to the CFO (Chief Financial Officer – Jim Hendricks) on the five year plan, so we’ve revised those figures going forward to help with financial planning. We are expecting that we will generate a bit of a profit until 2020, but then it looks like we’ll have to start dipping into those reserves again to keep ourselves in the black. [The] weather hasn’t been great, every day the sun comes out we expect to do a little better, but it seems that we’re in a bit of a dip in the weather pattern which should average out in the long run.”

Councillor Darryl Oakley says that the business case as a 1MWh facility has always been “extremely weak and sketchy” in terms of revenues coming in and costs to run it, without factoring in the SunMine as a “brand of the community”.

“It’s 1MWh, it’s always been sketchy and we’ve always known that,” said Oakley. “Now it’s time, as far as I’m concerned, for all of Council to get aggressive and get this thing growing. It needs to very quickly be doubled and hopefully in the near future go up to 5MWh. It needs to get to that because then you can build your reserves and replace the equipment when it starts to wear out. That’s what’s going to happen here so it doesn’t cost the taxpayers any money. I’m totally in support, one way or another, of trying to grow this thing.”

Councillor Albert Hoglund says that it was originally intended to be a 2MWh project, however timelines affected that initiative, causing the city to loose a grant of $1.6 million.

“I firmly believe that it was the inability of council to get this project going in a timely manor that we lost that $1.56 million grant,” said Hoglund. “It took forever for council to get this project up and running and I think we had two extensions of that grant from Western Economic Diversity. We wouldn’t be having this conversation around this table if it would have been a 2MWh project. The numbers are there.”

Councillor Sandra Roberts says that another “unforeseen” aspect of 2017’s numbers is all of the smoke from the forest fires/

“All summer long we had no sun; we had smoke,” said Roberts.

Mayor Don McCormick says that the businesses cases put together took the last 20 years of data to determine how much sunlight the city could expect. He says that the diagram showed the highs and lows, with a median going through the centre.

“The reality is you never have a median year; it’s a fictitious number. You just can’t predict which year is going to be on the extreme, plus or minus,” said McCormick. “That’s why, at 1MWh, virtually a break even, is a really difficult place to be. Not withstanding how we got to where we are.”

He added that at the time of the project initiation, there were 12 different partners and 18 contracts to be negotiated, along with the construction of the SunMine itself.

“There was a layer of complexity in there that I don’t think we understood at all when we got into it. Certainly, I think we managed through that quite nicely,” McCormick said. “It was really unfortunate that we did loose that $1.6 million, to take it from the 2 to the 1 [MWh].”

He went on to explain that council had a choice to wait until the city could raise those funds in order to proceed with the 2MWh project, however the decision was made to go with what they had (1MWh).

“Of the revenue coming in, a huge part of breaking even is our debt,” he explained. “There’s $125,000 a year right now and the $2 million that was borrowed that has to be applied to those revenues. That’s a pretty big number, that represents more than half of the revenue that’s coming in on the project itself. Our goal now is to get that expanded to 2MWh, so that we have the breathing room necessary within the business case to be able to deal with all of that. We’ll look forward to those discussions.”

Council voted to receive the 2017 SunMine Report.

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