CONSIDERING SITE C
Take the long view on hydro power
Most Canadians accept the need to transition away from fossil fuels to mitigate climate change.
In B.C., we don’t worry about carbon emissions from the generation of electricity because of the investments made in hydro dams decades ago. With Site C, B.C. ratepayers are being asked to make another such investment.
Many environmentally responsible people question the wisdom of that investment. They raise three basic arguments: the high cost of construction, the lack of immediate electricity demand in B.C. and allegedly viable alternatives. Take each in turn.
If Site C was paid for by securing a loan over 30 years at an interest rate of 4.5 per cent, the cost of electricity produced from the dam would be about $90 or $100 per megawatt hour. That’s much higher than the average wholesale price of electricity produced by legacy hydro dams in B.C. or Alberta’s plants that burn coal or natural gas. Considering only the next 30 years, Site C would be a poor investment.
But after the loan is paid off, Site C would generate electricity at costs of about $10 or $15 per megawatt hour — and that carbon-free, low-cost power will benefit the people of B.C. for the next 100 years and probably more. Future generations of British Columbians will pay less if Site C is completed, just as we in B.C. today pay some of the lowest prices for electricity in the world because of past investments in hydro.
What about demand? It’s important to understand that moving away from fossil fuels will require two fundamental changes to the way we live.
First, we have to stop burning gasoline and diesel to meet our transportation needs. Electric vehicles and electrification of railway systems are essential to reduce greenhouse-gas emissions.
Second, we have to stop burning natural gas to heat our buildings. Geo-exchange heat pump technology makes that possible, but requires electricity for compressors and pumps.
Also, the market for Site C electricity need not be only in B.C. The governments of both Alberta and Saskatchewan have indicated that phasing out coal-fired generation is a high priority. The easy choice is to convert to natural gas, but is the continued reliance on a fossil fuel really the best approach for the Prairies?
A partnership between B.C., Alberta and Saskatchewan could increase the average capacity factor at dams like Site C while supporting vastly increased development of wind resources on the Prairies. When winds are blowing, B.C. hydro generation could be cut back and reservoirs could provide energy storage. When winds are calm, B.C. generation can assure adequate supply. A true energy partnership would accelerate the decarbonization of the western Canadian economy.
The third argument against Site C is that other renewable energy sources could cost-effectively replace the electricity generation from Site C. Most often discussed are wind and solar power.
The harsh reality is that on frigid winter nights, there is obviously no solar and often no wind energy available. Even if we install thousands of wind turbines to match the production from Site C, and even if we cover every roof in B.C. with solar panels, there would be many calm nights when electricity would have to be supplied in a different way. Batteries are far too expensive and unreliable, and in any case won’t help if there is no electricity to charge them.
A final point: The reduction in carbon emissions that will result from Site C has real economic value. A simple approach is to calculate the carbon tax that would apply if the same amount of electricity is generated from fossilfuel plants in Alberta compared with Site C. Over the next 30 years, that amounts to at least $4.6 billion.
The three arguments against development of hydro facilities such as Site C don’t hold water. If we are to maintain an adequate supply of electricity and not contribute to carbon emissions, we must endorse major projects such as Site C.
A long-term view of costs and benefits indicates almost certainly that it’s a positive investment for the future of B.C. and for the protection of our planet.
Davis Swan was energy critic for the Alberta opposition under Grant Notley and worked in the oil industry in Calgary. John Richards is an economist teaching in the School of Public Policy at Simon Fraser University.