Werner's Blog — Opinion, Analysis, Commentary
Clean energy and the Site C Dam

On October 14 the proposed Site C Dam along the Peace River in Northeastern BC received approval after going through an environmental impact assessment by a Joint Review Panel. The federal government and BC's provincial government both gave a green light. However, the ultimate decision rests with the provincial government, which has to approve financing of the project. If built, the Site C dam would provide 1,100 Megawatt (MW) of capacity and produce about 5,100 Gigawatt hours (GWh) of electricity. Site C Dam would be the third dam along the Peace River, after the W.A.C. Bennett Dam (2,876 MW capacity with 13,100 GWh annual generation) and the Peace Canyon Dam (700 MW capacity with 3,500 GWh annual generation).

Site C Dam, British Columbia

The Site C dam is expected to cost $7.9 billion. After its completion it would produce electricity at a cost between $87 and $95 per Megawatt hour (or about 9 cent per kilowatthour). The construction itself is estimated to cost $3.9 billion, but indirect costs (development, regulatory requirements, insurance, mitigation measures and compensation, contingency, and inflation) will effectively double the bill.

The federal-provincial Joint Review Panel made a number of recommendations and imposes a number of conditions, but none of them should pose a significant obstacle. However, there remains the risk of delays that could arise through legal challenges by some of the affected aboriginal communities, who claim that the dam violates treaty rights, as was reported in The Globe and Mail on January 27, 2014. Chief Roland Willson of the West Moberly First Nation maintains that his community holds title to the Peace River valley where the dam will be built. The band also tried to draw a link between its support for LNG an the dam, saying "you can't have both" to the province. The provincial Minister of the Environment, Mary Polak, maintains that aboriginal communities do not hold a veto right under the Canadian constitution. Five of the seven bands in the region with treaties are negotiating benefit agreements with the province, while similar offers have been made to the other two bands. The conditions imposed by the Joint Review Panel set up a compensation fund and require several mitigation measures.

‘Approval of the Site C Dam will be decided by its cost—and how it compares to clean energy alternatives.’

Despite the environmental impact assessment approval, the future of the dam is far from assured. Independent Power Producers (IPPs) have made a strong pitch for providing clean generating capacity. An alliance of IPPs, Clean Energy BC (CEBC), is trying to "put its best foot forward" to suggest alternatives. CEBC hired a consulting firm, London Economics International LLC, to study BC's energy needs and develop an alternative proposal. While the final version of the report has not been released yet, it was reported on the CEBC web site that alternative sources could deliver electricity at $74 per MWh, less than the cost of the Site C Dam. Without doubt, BC Energy and Mines minister Bill Bennett will be reading this report with great interest when it will be released. It is clear at this point that approval of the Site C Dam will be decided by its cost, and how these costs compare to clean energy alternatives.

IPPs already provide about a fifth of BC's electricity. As of April 1, 2014, BC Hydro has 86 Electricity Purchase Agreements (EPAs) with IPPs, which account for a total of 3,764 MW of capacity and deliver 15,950 GWh of annual generation. Many are small run-of-the-river hydro projects. There are currently three wind farms in operation: Dokie Wind (capacity: 144 MW), Quality Wind, also known as Tumbler Ridge (capacity: 142 MW), and Cape Scott near Port Hardy (capacity: 99 MW). The largest IPP is actually Rio Tinto Alcan's Kenny Dam on the Nechako River near Kitimat, with an installed capacity of 896 MW. More IPP projects are being developed, but some have come under scrutiny as they failed to deliver. BC Hydro cancelled or deferred delivery dates on 19 projects in September 2013.

A quick back-of-the-envelope calculation suggests that the province would need 13 new wind farms similar to those currently in operation in order to match the output of Site C Dam (5,100 GWh, the expected generation of the Site C Dam divided by 380 GWh, the average annual output of the existing three wind farms). That is not impossible but would require that the cost of wind farms is fully competitive without any subsidies. It would probably require large windfarms similar to those in Denmark, Germany, the Netherlands, and Great Britain. For example, Great Britain has surpassed 10,000 MW in wind farm capacity in 2013, with over 27,000 GWh of annual output. The massive 175-turbine London Array wind farm alone has a nominal capacity of 630 MW. The prospect of cheap wind power constitutes a viable alternative to the Site C Dam, albeit it will require a careful portfolio approach to wind energy because of its intermittency. (And the latter is a topic I am working on in my research.) BC Hydro estimates a potential for wind energy at 121 on-shore and 43 off-shore sites. Many of these projects may be too expensive, and off-shore installations have higher capital and integration costs.

While wind energy is now well-established around the world, other alternative energy sources are still standing in the shadow. One of these alternatives is geothermal energy. The Canadian Geothermal Energy Association (CanGEA) claims that British Columbia could generate 5,700 MW from geothermal sources—more than the Site C Dam. Unlike wind, geothermal energy is not intermittent and can be used as "base load" capacity. If construction of the Site C Dam proceeds, this will probably put geothermal energy exploration on hold for many decades. As Derrick Penner reported in the Vancouver Sun on October 8 (Geothermal research puts heat on government's Site C dam decision), BC Hydro identified 16 locations that could deliver up to 780 MW of generating capacity at varying cost levels. CanGEA has posted a related webinar on YouTube that explains the basics of geothermal power and the potential of geothermal power in BC. It may be interesting to note that half of the geothermal potential is in the Lower Mainland, and the other half along the North Coast.

Posted on Thursday, October 16, 2014 at 11:15 — #BC | #Environment
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