Energy system a first of its kind

July 7, 2010
News Release

QUESNEL, B.C. –The City of Quesnel and Terasen Gas have signed a letter of intent (LOI) to conduct final feasibility work on a unique renewable energy system in Quesnel in cooperation with West Fraser Timber Co. Ltd. and BC Hydro. The LOI represents an agreement in principle to implement a combined heat and power system that will serve as both an energy source and economic benefit for its partners and the communities they serve.

The Quesnel Community Energy System (QCES) is a biomass system that will use waste heat and left-over residues from milling at West Fraser’s Quesnel sawmill to generate both heat and electricity. The approach and technologies employed make the project a first in North America. No trees or other forest biomass will be harvested solely to power the QCES.

“The City is excited about this innovative and sustainable energy project,” said Mayor Mary Sjostrom. “The project would not be moving forward without Terasen’s critical technical and financing role, or without West Fraser’s strong cooperation. We look forward to forging a strong and lasting relationship around this project.”

“I also commend the city’s Economic Development Corporation for its great work advancing the project and these partnerships,” she continued. “Finding revenue that isn’t based on property taxation is one of Council’s strategic objectives, and this project has the potential to be a significant economic generator for the community.”

“Community-based energy solutions allow us to incorporate new or alternative technologies – in this case, recovered heat and sawmill residuals – as part of our regulated energy service offerings,” said Doug Stout, Vice President of Energy Solutions and External Relations at Terasen Gas and FortisBC. “The City of Quesnel has shown great leadership and vision in exploring the potential for this project, and moving it forward, which supports our efforts to move B.C. towards a sustainable energy future. The QCES will provide many benefits, including environmental protection, affordable costs for customers and proven reliability.”

The system is expected to provide 5.5 megawatts (MW) of heat to numerous industrial, municipal, commercial or multi-family residential buildings in Quesnel. It will also produce up to 1.7 MW of electricity, which is proposed for purchase by BC Hydro for re-sale, providing its customers with access to a clean source of power.

The QCES supports the City of Quesnel’s commitment to become carbon neutral by 2012 and its aim to generate revenue independent of property taxes, as well as Terasen Gas’ commitment to the environment, which includes developing safe, reliable alternative energy solutions. The QCES will be designed to achieve more than 90 per cent energy efficiency, and each year would:

  • reduce greenhouse gas emissions by 6,000 tonnes per year, the equivalent of taking more than 1,000 cars off the road
  • produce 81,000 gigajoules of carbon-neutral heat, enough to heat the homes of about 5,000 people
  • produce 14.2 gigawatt hours of carbon-neutral electricity

“BC Hydro looks forward to adding the power from QCES to its portfolio of clean energy sources,” said BC Hydro’s Deputy CEO and Executive Vice President, Bev Van Ruyven. “Projects such as Quesnel’s demonstrate that creative solutions can result in a ‘win-win’ for both our customers and BC Hydro.”

“This is a good opportunity to investigate ways to expand the value of our energy system, reduce our carbon footprint and explore a new approach to community cooperation,” said Martin Ellefson, Manager of West Fraser’s Quesnel Sawmill.

The initial capital cost of the QCES is estimated at $14 million. The City of Quesnel, through its Economic Development Corporation, secured grant funding of $4.13 million through B.C.’s Innovative Clean Energy Fund, with Terasen Gas funding the balance. Western Economic Diversification Canada, the Green Municipal Fund, BC Hydro and the BC Bioenergy Network have also been instrumental in moving the project forward.

Under the proposed agreement, the City of Quesnel, Terasen Gas and West Fraser will each participate in the project. It is proposed that QCES purchase excess heat from West Fraser, and BC Hydro purchase the electricity generated under an Electricity Purchase Agreement.
The partnership will now begin detailed engineering work to finalize analysis of the economic viability of the QCES. The BC Bioenergy Network is contributing and co-investing $200,000 in conjunction with Terasen Gas to facilitate the timely completion of the required business, financial, and legal frameworks as well as the detailed engineering work.

“BC Bioenergy Network is pleased to contribute to this innovative project that will be a first of its kind demonstration of community heat and power here in B.C., as well as provide an effective source of clean energy for the City of Quesnel. The project will demonstrate effective cooperation between communities, our two major utilities, and the forest sector in reducing greenhouse gases,” said Michael Weedon, Executive Director for the BC Bioenergy Network.

Terasen Gas and the City will also work to negotiate and conclude detailed agreements with BC Hydro and West Fraser Timber. With the successful conclusion of these agreements and the engineering work, approval from the BC Utilities Commission will be required to proceed with the project. If approved, the QCES is expected to be operational in 2012.

The City of Quesnel is nestled in British Columbia’s Cariboo Country at the confluence of the Fraser and Quesnel Rivers. More than 10,000 people call the City home. Its local government strives to provide its residents with an outstanding quality of life in a vibrant, prosperous, diversified community, achieved through a process of public consultation and trust.

Terasen Gas is mainly composed of the operations of Terasen Gas Inc. and Terasen Gas (Vancouver Island) Inc., both indirect wholly owned subsidiaries of Fortis Inc. Fortis Inc., the largest investor-owned distribution utility in Canada, serves approximately 2,100,000 gas and electric customers and has total assets exceeding $12 billion. Its regulated holdings include Terasen Gas and electric utilities in five Canadian provinces and three Caribbean countries. Fortis Inc. owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns hotels and commercial real estate in Canada. Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at or

West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States. A provincially-owned crown corporation, BC Hydro reports to the B.C. Ministry of Energy, Mines and Petroleum Resources. It is the third largest electric utility in Canada and serves customers in an area containing over 94 per cent of British Columbia's population. BC Hydro endeavours to provide energy solutions to its customers in an environmentally and socially responsible way by balancing British Columbians’ energy needs with the concerns of the environment.

Established in April 2008 with a $25 million grant from the BC government, the BC Bioenergy Network is an industry-led association that acts as a catalyst for deploying near-term bioenergy technologies and organizing mission-driven research for the development and demonstration of sustainable to build a world class bioenergy capability in BC. For more information about the BCBN, visit


See attached backgrounder.
Media Contacts:

Marcus Wong, Corporate Communications Manager, Terasen Gas
Phone: 778.571.3263

Matt Wood, Communications Supervisor, City of Quesnel
Phone: 250-991-7475

Martin Ellefson, General Manager, Quesnel Sawmill, West Fraser Mills Ltd.
Phone: 250-992-9244

Bob Gammer, BC Hydro Northern Community Relations
Phone: 250-561-4858
Cell: 250-961-0676

Michael Weedon, Executive Director, BC Bioenergy Network
Phone: 604-891-1257

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