"Site C" - Can we afford to build it?

On many levels building the "Site C" dam on the Peace River is attractive.   The Peace already has two dams on it so much of the damage has already been done and the Site C location would simply capture more power.   It will have some significant impacts on the Peace River valley but I think the bigger impact is the cost of the project.   I think the current estimate of $7,900,000,000 is likely way too low and the final cost will be much higher than that making this very expensive power to bring online, more expensive than buying power from independent power producers.

The Peace River power projects first came about in the 1950s with Axel Wenner-Gren's bold proposals for Northern BC.   From this evolved Premier WAC Bennett's Two Rivers policy for developing hydro power in BC - the Columbia system and the Peace River.   Two dams were completed on the Peace River and serious consideration was to have two more.   What there is left of this project now is the "Site C" location.

Peace Dams - built and proposed

• The WAC Bennett Dam was finished in 1968 and created the very large Williston Reservoir and produces 13,100 GWh/yr.   It is located 18 kilometers west of Husdon's Hope
• The Peace Canyon Dam was finished in 1980 and created the small Dinosaur Reservoir and produces 3,500 GWh/yr.  It is located 21 kilometers downstream from the WAC Bennett Dam and 7 kilometers upstream from Hudson's Hope
• "Site A" dropped in favour of "Site C"
• "Site B" dropped because of bad geology
• "Site C" is located 83 kilometers downstream from the Peace Canyon Dam and 7 kilometers west of Fort St John.   It would produce about 5.100 GWh/yr
• "Site D" dropped because of bad geolocy
• "Site E" was proposed just to the west of the BC Alberta border on the Peace River.  It was dropped as an option in the 1980s

Locations that have been considered for dams on the Peace

BC Hydro has never let go of the idea of developing "Site C" even though it was dormant enough after 1991 that everyone thought the idea was dead.   It is now very seriously under consideration, in fact BC Hydro is acting as it is a done deal.   The one aspect of the project that concerns me more than any other is the cost to build the dam.

The early stage estimate in 2007 was for it to cost $6,600,000,000 to build the Site C dam on the Peace River.  In May 2011 this had been raised to $7,900,000,000.  

Given the stage of the project and the nature of public sector capital project estimates, I see the real construction costs of this project being in the range of $10,000,000,000 to $20,000,000,000.   Amortized over 30 years the construction cost per KWh is $0.0654 to $0.118.   What this means is that the construction costs alone of this power will be likely be higher than what BC Hydro will be able to sell the power for.   To arrive at my numbers I simply took the project costs that I suspect it will be and divided it by 30 years of power production.

In the May 2011 BC Hydro estimated a project cost of $7,900,000,000.  BC Hydro estimates the cost of the power to be $0.087 to $0.095 per MWh.  Most of this cost is from the costs to build the project

Based on the likely costs of the "Site C" project and what it costs BC Hydro to produce power, it would seem that BC Hydro would have to sell the power for about $0.09 to $0.14 per KWh to break even in 2020 with this rising to $0.12 to $0.17 per KWh in 2040.   BC Hydro currently buys power from IPPs at an average of $0.068 per KWh and most of their purchase agreements are set up in such a way that this price is highly unlikely to reach $0.10 per KWh anytime soon.   Building "Site C" will cost BC Hydro more than relying on the private sector.

"Site C" only makes sense if the cost of power is affordable and if it is the best option for more power in this province.   What I have not seen is a good business case for why "Site C" is economically the best option for BC.  The 2007 feasibility study certainly does not make a strong case because it does not look at what the other options are out there.

At the moment BC Hydro's latest call for power is at roughly $0.10 per KWh which then rises at half the rate of inflation for the term of the contract which is anywhere from 20 to 40 years.   The latest call for power is only available for very small projects, the upper limit is a capacity of 15 MW which is why the rates  are higher than for previous IPPs.   Because BC Hydro will only cover half the rate of inflation, it means that over time the cost of the IPP electricity will fall in adjusted terms.  A purchase agreement now for $0.10 per KWh would be $0.135 in 20 years with 3% inflation.  If the full rate of inflation were applied it would be $0.181.  

With the latest call for very small scale power projects that is on offer BC Hydro, the company can be reasonably certain of new IPP power built now being available in 2040 for about $0.135 per KWh.   The cost of getting that power from "Site C" will be roughly the same cost but with BC Hydro taking all the risk.  A new larger scale call for green power in BC will very likely make power available to BC Hydro in the short term - less than five years - for significantly less than the cost of "Site C" power.

BC Hydro will add about 8,500 GWh/yr of power from new IPPs coming online over the next few years.   The cost of all of this power will be cheaper than constructing "Site C".  BC Hydro is already getting over 1,000 GWh/yr from projects that were part of the 2010 integrated power call.  

The economics of "Site C" simply make it a bad risk for BC Hydro and the province.   For that reason alone I do not think we should go ahead with the project.

Why do people buy larger vehicles?

The general cost of a vehicle has dropped over the generations when compared to the average income.   Cars now have more features that ever before which masks the drop in price over time.    It means more people can afford more of car than people could in the past.    The options of owning something bigger is easier to afford which means people can consider it.

The price for small City Cars is not all that low.  The most basic Fiat 500 starts at $15,090, the bottom end Smart Car is $15,895.   At the same a new minivan is available for $22,000.   For that extra $6,000 to $7,000 you can buy a vehicle that can do a lot more for you.

When we think of the sort of vehicle that is needed to achieve what we want we think about all the tasks we want to do.  In most cases we have to make one car work for a host of purposes and this means a larger vehicle than we need to have 90% of the time.   In the past the cost of an SUV or pickup would not have been reasonable for most people but that is no longer the case and therefore they are serious options when people consider what vehicle they wish to buy.

If you have a family with three kids it is barely realistic to work with a five seat sedan.   Anything that seats less than five is not going to work in any case.   If you want to go on a trip and carry all your gear and drive 500 to 1,000 km on you trip, three kids kids sitting in one row of seats starts to fall apart.   Most people would move to getting a minivan or a crew cab pick up.

When you should for a family of five at a big box store you need enough space to carry all that you purchased.    Buying groceries at Costco will save you a lot of money which then oft sets the cost of the larger vehicle.

If you own any sort of acreage you ideally want to be able to buy yard and garden stuff for it and haul away your waste, this means you are looking at a pick up.

If you like to go outdoors or go up skiing you will be predisposed towards a four wheel drive vehicle
Most families really would prefer to operate with one vehicle which means the main vehicle has to be versatile to do a lot of things.

What this all means is that for a lot of people their primary vehicle is a large one.    If families have a two or more cars it is the second car that can be something small like a Fiat 500.

An average minivan will use about 1000 litres more fuel than a small car in a year.   That is an added cost of about $1300 a year or a bit more than $100 a month.    This difference in cost is about the same as getting a Starbucks coffee everyday.   If the price of gasoline were to go to $2.50 a litre, this is still only about $2500 a year more in fuel to drive a minivan than a City Car.    The bigger impact is the general increase in the price of fuel but even then the cost for a minivan's fuel in a year is under $7,000 a year.

As long as the cost of small vehicles is not dramatically lower than large ones, or as long as gasoline prices remain so low, there is little reason to expect people to buy smaller cars.    

Tumbler Ridge Wind Energy Project gets construction permit

I got this email today:

Finavera Wind Energy Receives Construction Permit for Tumbler Ridge Wind Energy Project
  
Vancouver, Canada, July 5th, 2012 - Finavera Wind Energy Inc. ('Finavera Wind Energy' or the 'Company') (TSX-V: FVR) is pleased to announce it has received a General Area Licence of Occupation (the "Licence") for the 47 megawatt Tumbler Ridge Wind Energy Project located in northeastern British Columbia. The Licence, which was issued by the Ministry of Forest, Lands and Natural Resource Operations, provides the approval for construction to commence on the project. The Tumbler Ridge Wind Energy Project recently received an Environmental Assessment Certificate and has a 25 year power purchase agreement with B.C. Hydro.
  
The $125-million project will be located 8 kilometres west of Tumbler Ridge. Once completed, the project will generate enough power to provide electricity for up to 18,000 homes. The 12 month project construction period is expected to generate 560 person years of direct employment, and the operational phase of the project is expected to create 188 person years of full-time direct employment.

Finavera Wind Energy CEO Jason Bak said, "This is a key milestone for the Tumbler Ridge Wind Energy Project and allows Finavera to progress through the final steps towards construction of this project. Our next steps are to finalize financing for the project, execute a turbine supply agreement, and contract a group to undertake the construction process."
  
 Jason Bak, CEO  

For more information:

Finavera Wind Energy
Myke Clark
SVP Business Development
Finavera Wind Energy 
(604)-288-9051
mclark@finavera.com 

I wonder if this is the sort of project that the NDP will oppose if they become government in BC?   As long as electrical rates are as low as they are now, the long term contracts are not making BC Hydro money, but I know of know one that thinks the price for electricity will not rise and rise a lot over the next five to ten years.   Once the price goes up BC Hydro will look like genius for having a large supply of green power at below market rates.

Metro Vancouver considering producing power from water system

Metro Vancouver is seeking a a consultant to do a feasibility study to investigate developing power from the water transmission system.   I am very interested to see that they are doing this as all over BC we have water systems that could be producing power.

The energy of the water could turn turbines and produce electrical power.   The sale of this power would help defray the costs of the water system and would offer another source of green power.

Generating power from municipal water systems or from irrigation systems is the lowest hanging green power generation possible.    The water system is already in place, all that needs to be done is adding some form of a turbine at an appropriate spot in the system.

At the moment the only municipal water system that I know of that is producing power is Lake Country from their Eldorado resevoir.  It is a very small system, but provides Lake Country with about $250,000 to $300,000 a year in revenue.  I am not certain, but I think there are three systems connected to ranch irrigation systems.

We have about 200 other municipal water systems that could produce power.   My quick estimate is that they could bring us about 1000-2000 GWh of power per year.    This is on the order of 1/4 to 1/3 of what Site C on the Peace would produce.   This would also be around $10 million a year for local water systems in electrical power sales.

Municipal water systems would have consistent flows year around, there would be not slow times as people are always showering and washing.

If we look further at irrigation systems, there is a potential for something on the same order of power production per year, though they would be on average much smaller.

It is these easy small solutions with no negative impacts that should be pushed.

Will it make any difference?

One of my rain barrels

Saanich is offering a series of free lectures on topics related to climate change and what people could do at home.   The first one is on rainwater management and is this coming Saturday.

The cost to hold these lectures and the impact they will have are not likely going to be worth it.  The municipality would have a much bigger impact if it spent more money on building good sidewalks than holding these lectures.  They would also have more of an impact if they made some changes to streets to allow buses to move a bit faster.

The whole set of pages for Saanich on climate change are simplistic.   As an example, the carbon calculator, it has various problems.  

It assumes all vehicles in a class and how you drive them are the same, if you want to calculate the CO2 emissions you just need to know the number of litres you use in a year.   The CO2 emissions for electrical power is constantly fluctuating based on what power source we are drawing on.   If you use power in the middle of the night, you have a higher CO2 impact because that power is in part coming from coal fired plants in the US or Alberta.

Air travel is also not as simplistic as the calculator suggests.   Much depends on the number of passengers on the plane, how old the plane is and the speed it is flown at.   If you fly WestJet, your CO2 emissions will be lower because they have very new planes and have more passengers than average.  If you fly Harbour Air you have zero CO2 emissions since the airline is carbon neutral.

The calculator misses out a major source of greenhouse gases, the eating of meat.

It also misses out the impact of what I do that might reduce CO2.

The Saanich pages feel like "flavour of the month".   There is no real thought or rigorous academic backing for what is being done or what is suggested people do.   Lots of resources are going into project work that will have no impact.

Good piece from George Monboit

George Monboit writes in the Guardian and outlines the problem with climate change in this article.   We have to reduce the use of fossil fuels and the biggest replacement will have to come electricity, specifically electricity with low carbon emissions.   It is the need to replace the dirty the power with clean power that leads us to the problem.

Read his piece, he really does outline the dilemma well.   Here are some of my comments in relation to it.

• Global energy use is going to rise for at least the next thirty to fifty years, likely for longer than that.  We have the majority of the global population going to go through the point in their economic development in which energy needs will be dramatically rising.
• To reduce demand the price of energy will have to rise dramatically.   The one and only thing that has ever managed to reduce demand has been a rise in price.   If the goal is a net reduction of energy use over the next generation, there will have to be a 100% or more increase in all energy prices immediately and then a phase in over the next 30 years an annual increase several times that of inflation.
• There are various green energy sources but as of yet many of them are not competitive with a coal fired power plant.   As we see here in BC, the subsidy of green power is seen as a bad thing - not that I would call the BC Hydro IPP contracts a subsidy as they will be hugely  financially beneficially in a few years.
• No government has the tiniest ability to deal with the situation.  People have to accept that any serious solution is going to come from the private sector that sees a buck can be made.
• Most of the public is in complete denial about what it will take to actually lower CO2 emissions.

One low carbon power source is off the table

After the tsunami hit the Fukushima nuclear power plants - there are a total of 10 reactors at two sites producing a peak of 9096 MW per hour - nuclear power worldwide has been dealt a serious blow.

Global warming has offered a new life to nuclear power globally because once a reactor is up and running there are very few CO2 emissions.    In general the environmental movement has not jumped on the nuclear band wagon, but given that the Kyoto protocol calls for a drop in CO2 emissions in developed countries and nukes achieve that, many countries have ramped up plans for new nuclear power plants

Since the late 1980s the rate of new nuclear power reactors globally has remained steady at about 420.   Basically the near disaster at Three Mile Island in 1979 and the actual melt down at Chernobyl in 1986 ended the expansion of nuclear power.  It has only been with the rise in concern about global warming that the expansion of nuclear power has come back.   There are now numerous plans around the world to build large numbers of new reactors.  2008, 2009 and 2010 saw the start of 10, 12, and 15 new reactors.  At teh end of 2010 there were 441 nuclear power plants in operation and 63 under construction.

And then there was a tsunami.

On its own, the Fukushima nuclear disaster would be worldwide news, but it is only one part of the earthquake-tsunami.   It is not only the Fukushima plants, but the Onagawa and Tokai plants that had problems as well.   It also has highlighted the fact that in 2007 the Kashiwazaki-Kariwa Nuclear Power Plant suffered some damage in a small earthquake. The same happened in 2008 at the Kurihara Nuclear Power Plant.

The idea that nuclear power is safe is not nearly as certain as people thought a couple of weeks ago.

The problems in 2007 and 2008 in Japan highlight the relative danger of nuclear power plants and earthquakes and this does not take very large earthquakes.  The potential of a major nuclear disaster in the event of a major earthquake seems to be almost certain.

Diablo Canyon Power Plant in California

Within the region of the Cascadia subduction zone, there is one nuclear power plant, the Columbia Generating Station in Richland Washington.  There was a second one, the Trojan Nuclear Power Plant in Oregon, which closed in 1992 after only 16 years of operation.  Of bigger concern is the Diablo Canyon Power Plant in California.   It may survive an earthquake, but what about a tsunami?

Diablo Canyon was designed and built before there was a lot of thinking of megathrust earthquakes of tsunamis.

Nuclear power is not likely to be dead, but it has been hit with a serious blow and is unlikely to recover anytime soon if there is a complete meltdown of the Fukushima power plant.