Navigant Research Blog

British Columbia Wrestles with Energy Future

Peter Asmus — May 23, 2014

Today, British Columbia has one of the cleanest (and lowest cost) power generation systems in the world, with over 90% of its electricity generated from hydroelectric dams.  BC Hydro, the provincial government utility, projects an image of a benevolent partner for both industry and First Nation (the Canadian term equivalent to Native American in the United States) communities.  For example, the utility’s obligation to serve extends out even to those communities not connected to its power grid.  To its credit, BC Hydro claims that it hopes to meet 78% of new demand with energy efficiency and other forms of demand-side management.

At the same time, the lack of regulatory scrutiny of its activities has led critics to charge that its decision-making lacks transparency and, worse, requires a radical overhaul in light of new technologies and market realities favoring small over large resources.  These issues have become magnified due to the controversy surrounding the liquefied natural gas (LNG) developments proposed to be powered up by a hydroelectric facility at a new dam on the Peace River, known as Site C, and could have lasting repercussions in British Columbia, not just for regional economic development, but for independent power producers looking to develop non-hydro renewable resources, such as wind farms, over the next decade.  I got a full view of the controversy and the issues surrounding it at the recent BC Power Summit in Vancouver.

What Does “Clean” Mean?

The BC government wants to create the “cleanest” LNG industry in the world, a response to critics who contend new plans to explore fracking and other forms of shale natural gas exploration are a boondoggle in the making.  While the prime motivation for developing Site C is to export LNG to markets in Asia Pacific, LNG could also power up gas-fired generation capacity within the province itself.  Unlike most markets in the United States, where natural gas displaces coal and lowers overall prices, LNG could not only raise prices for BC consumers, but also increase greenhouse gas emissions.

Yet, the largest controversy revolves around how best to provide power for the massive LNG infrastructure contemplated for drilling and terminal operations.  The leading proposal is to construct a large hydroelectric dam in the vicinity, which would exceed 1,000 MW in capacity.  In the process, the Peace River valley would be flooded, and that, according to First Nation indigenous peoples, would violate past treaties with the Canadian federal and provincial governments.  Furthermore, the hydroelectric development would have major impacts on grizzly bears and a host of other wildlife species.

An Alternative to Diesel

Renewable lobbies such as Clean Energy Canada have put together portfolios of wind, solar, and natural gas that could provide an equivalent amount of electricity as Site C hydro, with only a 2% cost increase over the preferred hydroelectric option.  But it appears the writing is on the wall and British Columbia will probably move forward with what will likely be its last major hydro project.

Many of the 30 or so remote First Nation communities in BC still rely upon diesel as their primary source of power generation as they are not interconnected to the BC Hydro power grid.  Perhaps the oddest twist to this story is that there are proposals circulating to ship LNG to these First Nation communities – which might actually shrink their carbon footprints, in light of the need to also truck diesel fuel over long distances.  Companies such as Koho Power Corporation are working to transform these communities into microgrids, incorporating distributed renewables.

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