​SaskPower will not be transforming Boundary Dam units 4 and 5 to use carbon capture and storage technology. Instead, both units will be shut down, the government and the utility announced Monday.

Environment Minister Dustin Duncan cited the historically low price of natural gas as a "significant factor" in the decision, along with both units — built in the 1970s — having reached the end of their useable life in accordance with federal regulations.

Duncan said the business case is not there to retrofit the facilities with CCS technology, as it would be quite costly.

Throughout a news conference on Monday, Duncan maintained the provincial government's belief in CCS technology when it comes to reducing emissions from coal plants, and combating global warming.

He attributed the decision not to retrofit units 4 and 5 to a confluence of factors which differed from 2010 when it decided to retrofit one of its coal-fired generating units to capture and store carbon emissions.

For example, he said Ottawa is not putting up money to fund CCS at the units.

"I certainly don't sit here today thinking that this is the end of CCS. It's certainly not the end of CCS for SaskPower, obviously BD3 [Boundary Dam 3] is an important component of SaskPower's future, We'll have decisions to make on additional units," Duncan told reporters.

Corwyn Bruce, head of technical services for the International CCS Knowledge Centre, said the second generation of carbon capture technology will be 'significantly cheaper'. (Matt Howard/CBC)

Gov't looks to Shand power station

Duncan said there's a "high-level" feasibility study underway to examine whether CCS could work at the Shand power station, located near Estevan. The study results are due back later this year and would need to be followed by a more practical study.

The current study is being conducted by the International CCS Knowledge Centre, a non-profit organization sponsored by BHP and SaskPower that exists to boost research and promote CCS.

Corwyn Bruce, the centre's head of technical services, said they partnered with SaskPower and Mitsubshi Heavy Industries — the technology provider being considered as part of the study.

Without providing any figures or cost estimate, it stated early results of the study indicate"the next generation of CCS technology will be significantly cheaper, more efficient, and integrate well with renewable energy."

"As with any second-generation technology, cost reductions are expected."

Bruce explained the Shand power plant is a 300-megawatt facility as compared to Boundary Dam 3, which is a 150 megawatt plant.

By scaling up, Bruce said it could capture as much as 2 million tonnes of carbon dioxide annually.

He said the the study, which was launched in fall 2017, will be finished later this year and publicly available on its website.

SaskPower says it continues to refine its carbon capture and storage unit at Boundary Dam in Estevan. (CBC)

Units could shut down next year

In the meantime, the provincial government hopes to extend the lifespan of Boundary Dam unit 4 and 5 to 2021 and 2024, respectively, so it can continue to generate power for Saskatchewan until then.

However, that depends on an agreement, which still remains in limbo, being inked with Ottawa. Otherwise, federal regulations stipulate these units are to be retired at the end of 2019.

Duncan told reporters he expects an agreement to be reached "soon."

Duncan said the impending shutdown of both units will impact about 40 jobs, which he said can be eliminated through attrition, not layoffs.

Official opposition and NDP leader Ryan Meili said the government made the right decision to forgo CCS at the two Boundary Dam units.

He also expressed concern with the lack of agreement in plan to expand the lifespan of both units.

$90-million increase in net income

SaskPower brought in considerably more money this past year, according to its annual report, also released Monday.

The Crown corporation's net income was $146 million in 2017-18, an increase of $90 million from 2016-17.

It credits increased usage power usage, a rate increase and cheaper natural gas for the additional revenue.

"Every winter, we continue to see new peak power demand records being set," said SaskPower president and CEO Mike Marsh in a news release. "The increase in energy use last year is the equivalent of adding 150,000 homes onto the grid."

The power company also said it is still on track to meet and exceed federal emission regulations by 2030. That would mean a decrease in emissions by 40 per cent from 2005 levels.

SaskPower also noted its debt ratio remains within the company's targeted range.

This year, the company spent $996 million on upgrading the provincial power grid.

Marsh said on Monday a recommendation on whether or not to increase rates will be presented later this summer or fall. He said at worst case scenario, rate increases will be "moderate."