NB Power hydrogen-energy project 2 years behind schedule

NB Power's planned rollout of a hydrogen-energy demonstration unit by its Florida partner is at least two years behind the utility's original schedule.

CEO Gaëtan Thomas told the provincial energy minister in October 2016 that the unit would be operating by 2018, according to internal documents obtained by CBC News through a right-to-information request. 

But there's still no sign of that. Both Thomas and the Florida company, Joi Scientific, have recently pushed the rollout date to 2020, almost two years later than the original forecast.

"As with many startups, development times will vary from original projections," NB Power spokesperson Marc Belliveau said Thursday. "A prototype is targeted for early 2020."

NB Power has paid Joi $13 million for exclusive licensing rights to its hydrogen technology for electricity generation. One option is to convert the coal-fired Belledune generating station to hydrogen ahead of a federal coal phase-out deadline of 2030.

Thomas made his early rollout projection when he and his officials were drafting an official request to the Brian Gallant government for $6.7 million. That represented half the licensing fee due to Joi on Oct. 28, 2016.

Thomas wrote in an Oct. 22, 2016, email to other NB Power officials that Joi's prototype was expected to get independent verification "within 3-4 months" and he anticipated "the demonstration unit in New Brunswick within 6-18 months."

Two days later, in a letter to then-energy minister Rick Doucet asking for the money, Thomas said the unit "could be constructed in Belledune in the next 12 to 18 months." 

That would mean April 2018 at the latest. 

Pushed back to 2020

But in an interview in May 2019, Joi Scientific CEO Traver Kennedy said it could take until next year or even later. 

"We're working with NB Power towards a demo unit to be deployed as a showcase in New Brunswick," he said. "That might happen as early as early 2020. But that's really totally up to them, not to us."

Thomas said in a May interview that the unit would be "a small prototype," either a water heater or a small-load generator. He said NB Power wanted to demonstrate it "by the end of the year" but moments later said they'd like to do it "within a year or 18 months."

Belliveau said this week that Joi "continues its effort to refine and advance the technology."

Joi's marketing vice-president, Vicky Harris, referred to Thomas's 2016 projection as "the internal dialogue of our customer" and wouldn't comment.

"We are working to support our licensees and are still looking to have a demo unit in 2020," she said.

Funding source fell through 

CBC News obtained hundreds of pages of emails and documents from NB Power through the Right to Information and Protection of Privacy Act.

They reveal that NB Power was banking on another unidentified source of funding for the project back in 2016, but that it apparently fell through.  

The $6.7 million that NB Power obtained from the province came from the Regional Development Corporation.

The documents say another entity, whose name is blacked out, had "expressed support for this opportunity" and was "prepared to consider some form of funding."

But in the end NB Power drew on its own research and development fund to pay the second half of Joi's licensing fee.

Belliveau said the utility could not reveal the other potential funding source "due to ongoing discussions."

Technology, financials a secret

Joi's technology is still a secret and has not been the subject to any published, peer-reviewed scientific papers. In October 2016 an NB Power vice-president wrote that the company had "never been audited, therefore no financial statements." 

But Belliveau said this week that NB Power "reviewed Joi's financials in 2016," without giving a precise date.

Harris said in an email: "We have not gone through a traditional audit of our finances by a third-party accounting firm. This is not unusual for a privately held, early-stage company. As a privately held company, we do not share our financials."

NB Power has said it needs to explore hydrogen because it's facing costs of $80 million to $90 million that will have to be passed on to ratepayers if it can't find new, emissions-free technologies exempt from the federal carbon tax. 

"We think the risk of doing nothing is actually higher than doing, and developing, this technology," Thomas said in May.

The Blaine Higgs government has unveiled its own carbon price for industry that would ease the impact on the utility, but it's not clear whether Ottawa will approve it as a substitute.

Early skepticism

The partnership with Joi has raised eyebrows among some independent scientists and experts. They say Joi's claim that it can get more energy out of its secret hydrogen process than it puts in — a process the company itself has called "magic" — is too good to be true.

The documents show that as the utility and Joi began negotiating in 2016, some NB Power officials were skeptical too.

"Energy in has to be greater than energy out," NB Power physicist Dean Taylor says in one email. 

But later that year, after looking at data in a scientific paper, Taylor wrote that Joi's claims "do appear to be in line" with it. 

Board members raised questions

The documents also show that two members of NB Power's board of directors raised questions about the deal after CBC News published two stories earlier this year. 

One story reported on the doubts about the science. A second revealed that Joi was the subject of a Florida state regulatory investigation into alleged extortion following accusations by a former employee. 

The investigation by the Florida Office of Financial Regulation is still open, a spokesperson said this week.

"As a board member, I have concerns," Jennifer Henry, executive director of the Northern New Brunswick Airport Authority, wrote in a May 14 email. She asked for an update at the next board meeting in June. 

Judith Athaide, CEO of a Calgary-based energy consulting company, agreed. She said the coverage "has increased my unease with my knowledge of the status of the technology and investment and the path forward."

Concerns addressed

Henry said Wednesday that she was satisfied and her concerns were addressed at the June meeting. Athaide refused to comment. Both referred questions to NB Power. 

A briefing note prepared for the board and dated June 12 recaps what NB Power has said publicly about Joi: that the company is "looking to lead the global transition to use hydrogen to produce clean, safe, low-cost energy solutions."

It says converting existing coal-powered generating stations to hydrogen would be cheaper than having to shut them down under a federal coal phase-out deadline of 2030.

'The perfect expression'

The briefing note calls the Joi proposal "the perfect expression" of Ottawa's goal of meeting emission-reduction targets in the Paris climate agreement and shifting to clean-energy alternatives.

But large sections of the document, including the entire six-paragraph passage about the "current status" of the project, were blacked out before being released to CBC News.

NB Power said that as of April 2019 it had spent $104,000 in travel costs sending officials to Joi's Florida headquarters and poured $75,000 into a laboratory there, where the company is working on its hydrogen process.

Message co-ordination

The documents also reveal close co-ordination between Joi's marketing staff and NB Power's public relations teams in response to media questions.

In one lengthy exchange, officials from the two companies try to figure out how CBC News identified Joi Scientific as the utility's new partner in January 2018, more than a year before the deal was announced.

Harris, Joi's marketing head, suggested that NB Power's then-director of public affairs Patrick Lacroix change the wording of a statement he was sending to CBC because it closely resembled Joi's own wording and might reveal the connection.

Some of the phrasing in NB Power's briefing notes for the provincial government, including the "perfect expression" line, is lifted word for word from a set of five "talking points" that Joi gave to utility CEO Gaetan Thomas on Aug. 25, 2016.

Belliveau said Thursday it is "completely normal for both companies, who are working together, to approach journalism requests together."