FAQs

The City’s interest in this opportunity is driven by customer interest in green energy, regulatory risk mitigation, and financial value (plus secondary benefits, for instance, like learning how best to manage intermittent energy within our grid).

It is important to note that utility-scale solar is the least expensive form of solar. According to publicly available data from a commonly known industry resource (Lazard’s Levelized Cost of Energy* Analysis – Version 17.0):

• Utility scale photovoltaic (PV) solar is the least expensive at $29-92/MWh**
• Community and commercial/industrial PV solar is in the middle at $54-191/MWh**
• Residential rooftop solar PV is the most expensive of the three, at $122-284/MWh**

* Levelized cost of energy takes all cost of ownership (capital, operating) through time and determines the total cost/MWh, before considering production revenue. 

** The above estimates are in USD and assuming US-based locations, but they are directionally representative across the three categories of solar. 

The City supports deployment of residential rooftop solar as shown through its ongoing Hat Smart program and the newer Clean Energy Improvement Program. For electric generation, however, the most cost-effective approach is to pursue utility scale solar for the benefit of its customers.

Staff would only recommend proceeding IF our additional due diligence, supported by third party experts, provides sufficient confidence that any investment the City makes in the project would expect to see net proceeds from the project (and not net cost) over its lifecycle, commensurate with industry expectations.

On February 2, 2026, City Council approved a budget of $131.5 million to construct the initial 75MW solar park. Most of the expenditure will occur with the actual construction, which isn’t expected until 2027.

The funding committed for Saamis Solar comes from three sources:

1. the City’s Energy Transition Reserve (which was created specifically for these kinds of opportunities), and 
2. debt financing
3. Tax incentives between 15% and 30% of the cost of construction

There will be no impact to tax rates unless the energy division, as a whole, experiences a deficit. This is consistent with our current financial practices in energy.

No. There will be no impact to tax rates from the Saamis Solar project. The project is forecast to pay linear taxes into the City, on top of higher dividends from positive project earnings.

No. This project is not expected to have an impact on customer rates.

The project is forecast to improve the City’s financials and enhance the dividends from our energy business.

City Council had access to the business case and confidential information to inform their decision. However, details of the business case must remain confidential to protect business interests and achieve the best value for the community.

Exposing the City’s internal rate of return could allow experts to deduce a negotiated or required price in a power purchase agreement (as one example). This, in turn, could breach the terms of the commercial contract, and/or hinder the City’s ability to negotiate with potential parties.

This is about the business and the bottom line.

The project is forecast to improve the City’s financials and enhance the dividends from our energy business, (and help add carbon credit value for the City’s use, or for the benefit of our customers).

We know sharing the business case and financials would allow the community to feel more confident in this decision, but our energy business is different than other municipal services.

It is a commercial industry where confidentiality is necessary to protect elements that this project is contingent upon.  Adhering to industry practices including protecting commercial relationships and related contractual terms is key to the ongoing success of our energy business.

This is an inherent challenge for the City of Medicine Hat, as we are a public sector organization with high expectations of transparency.

WHY CONFIDENTIALITY MATTERS
Protecting both City and Third-Party Interests

Releasing sensitive information could compromise the City’s opportunity to drive value for our community by exposing us to legal, financial, reputational and missed opportunity risk.

• In the energy sector, negotiations involve complex commercial arrangements. Disclosing sensitive details can breach terms of any existing commercial contracts and jeopardize the ability to work with counterparties to find valuable win-win arrangements. The City enters commercial arrangements to benefit the energy business which drives value for our community.
• Energy projects can involve potential third-parties who have their own competitive and legal obligations that the City is required to protect.
• Sharing confidential information could compromise these relationships and expose both the City and its partners to unnecessary risk.
• Being able to negotiate in an unfettered way protects the City’s ability to negotiate in the future, and supports the City’s reputation within the energy industry as a reliable and trustworthy partner.

In other words:

• If we lay all our cards on the table, we won’t have a hand to play.
• If we lay everyone else’s cards on the table, no one will want to play with us.
• If we can’t play, we can’t drive value for the community.

Sections 19 and 30 of the Access to Information Act (ATIA) allows non-disclosure of information which, if disclosed, is harmful to business interests of a third party or to the economic and other interests of a public body. These sections routinely apply to information related to the City’s energy business (unlike more traditional municipal areas).

The first phase of due diligence (before we purchased the project in 2023) indicated favourable economics (validated by a third party).

The second phase of due diligence (approved in 2025) has refined those models/assumptions, along with further feedback and validation from external third parties. Consistent with energy industry business case analysis, some of the factors considered include:

• Siting/Location - Considerations for glare, noise, river setback, proximity to infrastructure, land and landowners, etc.
• Engineering/Technology - Technology options (e.g. fixed tilt, single axis tracker) and related costs and production levels
• Output/Production - The Energy Yield Analysis confirmed output varies depending on the combinations of siting and technology that is considered. Many combinations were assessed to determine optimal results.
• Cost - The capital and operating costs vary by technology
• Project Finance Structures – e.g. partners, balance sheet, or other ownership structures impact cash flow, debt levels, incentive options, etc.
• Risks and Opportunities – identified, with strategies to manage
• Lifespan/Reclamation Costs – The cost of reclamation is built into the financial analysis and lifecycle plan.

Pursuing solar energy is not ideologically-driven. The City is not considering clean energy for the sake of being green. Medicine Hat was built on gas-fired electricity and the City remains committed to providing reliable base-load power and advocating for the ability to do so as long as economically possible.

The City’s interest in renewables is driven by customer interest in green energy, regulatory risk mitigation, and financial value (plus secondary benefits, for instance, like learning how best to manage intermittent energy within our grid).

The City is expected to comply with regulatory standards and identify the most cost-effective way of doing so while ensuring reliable energy supply to our customers.

The City does not weigh in on the science behind clean energy or climate change. We focus on being compliant with the rules that apply to us and remaining nimble to adapt to potential changes to those rules.

We will continue to advocate other levels of government for rules that support the ongoing economic reliance on our natural gas fired electric generation assets. They play a critical role in local energy reliability, now and into the future.

• Economic growth enabler: With added electric capacity, the City can attract and accommodate new growth interest in the City, which will itself support economic growth (anticipated tax and job benefits.) Adding green energy broadens the potential customer base. Had the City not pursued this project, the original project (owned by DP Energy) was slated to bypass our City supply and connect to the provincial grid.
• Customer desire: Existing and potential customers have a growing desire/demand for green energy to meet their own carbon obligations and/or environmental mandates. This project adds a green product to our portfolio that may help attract new customers and retain existing carbon-intensive industry.
• Decarbonize: Carbon legislation and a persistence in net zero greenhouse gas targets (federally, provincially, and globally) is already impacting the competitiveness and sustainability of Medicine Hat’s current generation fleet. Adding solar energy to our fleet can dilute our carbon risk and help ensure our energy business remains economically feasible and environmentally compliant.
• Solar costs are competitive and the technology is proven:  Solar photovoltaic technology is now mainstream (and is different than the City’s earlier solar thermal concentration demonstration project). The costs are competitive with other electricity technologies and are further improved by current federal incentives.  As the sunniest City in Canada, we can take advantage of the free fuel.
• Opportunity knocks: This is likely the only practical opportunity (enough land) for utility-scale renewables within the borders of Medicine Hat’s franchise area (defined by our exemption from the Electric Utilities Act).
• Appropriate land use: Arguably, a solar farm is the highest and best use of the land during the project’s life cycle, prior to planned future residential development needs. Solar technology can be built on contaminated lands, though the first phase of the project will not be constructed on any contaminated land.

The decision to request control of the Saamis Solar Park project was a unique matter of timing. Solar assets have matured in recent years, allowing them to more recently become competitive with other forms of energy. At the same time, a third party was interested in this site to develop Saamis Solar Park. The City's interest in the site largely comes down to available space and a 'ready to build' opportunity. This is likely the only land within the municipal borders that is large enough and suitable for utility-scale solar.

The City had attempted to participate in Saamis Solar Park in other ways and when it became clear that would not be an option, the City took efforts to purchase the site to attain the option to develop clean energy now or anytime into the future.

The full size of the Saamis Solar Project (which was approved by the Alberta Utilities Commission on Thursday, July 18, 2024 under ownership of DP Energy) is 325 MW on approximately 1,270 acres within the City of Medicine Hat's municipal boundary.

The City has applied to build up to 75MW as a first phase. This represents 9-12% of the City’s annual energy supply.

Any subsequent phases would only occur if and when it makes sense for the City and our local needs.

Saamis Solar is forecast to add to the bottom line, and a long-term energy supply contract increases confidence, but the energy business is inherently volatile and not all of the City’s power production has the benefit of a long-term contract. There is risk of negative profits in any given year across the City’s energy business.

Overall, energy business has contributed meaningfully to the municipality over the years, paying dividends that subsidize expenses that would otherwise be borne by taxes, fees or rates.

If, at any time, the energy division is not able to provide a dividend, the reserves will support the operating needs. The commodity business is volatile so high earning years result in dividend contributions to the reserves and if needed, negative cash years will require withdrawal from reserves.

This is consistent with the City’s current financial practices in energy.

Utility-scale solar is the least expensive form of solar. According to publicly available data from a commonly known industry resource (Lazard’s Levelized Cost of Energy* Analysis – Version 17.0):

• Utility scale photovoltaic (PV) solar is the least expensive at $29-92/MWh**
• Community and commercial/industrial PV solar is in the middle at $54-191/MWh**
• Residential rooftop solar PV is the most expensive of the three, at $122-284/MWh**

The City supports deployment of residential rooftop solar as shown through its ongoing Hat Smart program and the newer Clean Energy Improvement Program. For electric generation, however, the most cost-effective approach is to pursue utility scale solar for the benefit of its customers.

* Levelized cost of energy takes all cost of ownership (capital, operating) through time and determines the total cost/MWh, before considering production revenue. 

** The above estimates are in USD and assuming US-based locations, but they are directionally representative across the three categories of solar.

No. The first phase proposed for the solar project is 75 MW (out of a maximum of 325 MW), representing 9-12% of the City’s annual electricity supply.  In comparison, the province’s portion of renewable (hydro, solar and wind) contributed 19% to the electricity supply in 2024.

Third-party engineers tied the technology options to expected output based on expected levels of solar hours and expected levels of technology ‘degradation’ through time. They then considered ‘average expected’ or ‘P50’ production levels, as well as more conservative ‘P90’ levels, where ‘low solar production’ is assumed (e.g. smoke years, etc.). The resulting financials reflect this analysis and found the projections to be within the range of ‘industry standard’ for solar panel production.

The City of Medicine Hat is in regular communication with the Canadian Renewable Energy Association (CREA) and the Alberta Recycling Management Authority (ARMA).

Effective April 1, 2025, renewable energy products will be designated as part of the Electronics Recycling Program administered by ARMA, including:

• solar panels
• wind turbine components
• EV batteries

Implementation planning for this initiative is still underway with various provincial and federal bodies.