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“Site C” hydro-electric dam or Solar Panels? British Columbia’s choice

Site C or Solar Panels? British Columbia’s choice | 18/09/14
by John Brian Shannon

Since the 1970’s British Columbia’s award-winning power company BC Hydro has been making the case for what is known as the Site C hydro-electric dam, touting it as the next power generation capacity upgrade for the province.

It’s a fine idea on the surface, hydro-electric power has a lot going for it, BC Hydro has some world-class expertise and there is nothing intrinsically wrong with hydro-electric power.

But it has remained unapproved all of this time for good reason — and now, as BC Hydro looks forward to the next 20 years of serving its customers with reliable electricity via its interconnected network of hydro-electric dams and electrical grids, it is again promoting the Site C project.

Proposed Site C dam in BC

Proposed Site C dam for northeastern British Columbia would have an installation timeline of 10-years with costs estimated at $8 billion dollars.

This time around it has a unique selling feature

This time, almost all of the power produced at this proposed site is practically pre-sold to the growing natural gas industry in British Columbia’s Peace River region and to the operators of the proposed natural gas pipeline that would run from the Peace River region (where the natural gas is) to Kitimat, BC where the natural gas would be transferred to waiting ships delivering LNG to Pacific Rim nations.

As a stand-alone business proposal it’s a fine idea

But upon considering local concerns and when compared to other power generation proposals the dam begins to burst for Site C. Even though the business-only case is solid for Site C, the negatives are so concerning that this project will likely never see the light of day. Nor should it.

Some of the problems that face the project are that Site C is located far from major demand centres like cities. Which means that if this project is going to produce power far away from electricity consumers, then significant and expensive powerline infrastructure must be built at an average cost of over $1 million dollars per mile to deliver it.

Just for one example; If all of the proposed Site C power were to be delivered to Vancouver, it could cost more to deliver the electricity via the grid than the electricity is worth. If Site C can produce power at $.05 per kWh, but it costs $.10 per kWh to deliver it, you can see that the business case isn’t there.

“But that electricity won’t ever be delivered to Vancouver, as we have gas industry customers to buy a majority of the Site C power generation capacity”

What is different about this Site C application is that the natural gas industry along with the natural gas pipeline operators have promised to buy most or all of the power from Site C. And in their favour, both the regional natural gas industry and pipeline are a whole lot closer to Site C, than Vancouver.

It seems like a match made in Heaven until natural gas/LNG prices crash. Then the pipeline operators and the natural gas processing facilities would cease operations. Then what?

At that point it will cost far too much to deliver Site C power to the rest of the province, unless that electricity is sold at subsidized pricing.

Natural gas and LNG prices are volatile and many investors refuse to ride the roller-coaster, preferring to invest in such ‘heart-safe’ stocks as banks and technology.

If gas prices crash and stay down for any length of time, BC Hydro would have spent $8-10 billion dollars to build the dam, and then it would have to spend significant amounts of money to install powerlines and pylons to deliver the power to Vancouver. Note: It costs more than $1 million dollars per mile to install major powerline infrastructure to bring such huge amounts of electrical current to distant locations.

And let’s not forget, dam construction estimates are often fairy-tales. Unforeseen obstacles can arise, weather can add to construction delays, and gaining right-of-ways can be costly and time consuming. To say nothing of the costs and delays associated with legal challenges.

So, if natural gas prices plummet as they are known to do, Site C will be relegated to providing subsidized power to British Columbia until the day gas prices rebound. Alternatively, Site C could be mothballed until natural gas prices return to profitable levels.

Either way, that’s a lot of taxpayer and BC Hydro money tied up in one parked asset. In the worst-case scenario it could become known as the Mother of all Parked Assets in Canada.

While it helps to have a practically guaranteed customer for most of Site C’s output, we must remember five things;

  1. If Site C construction costs escalate (some hydro dams in the past, have eventually cost twice the original estimates) who pays that? The province? (Meaning taxpayers) BC Hydro? (Meaning all electricity consumers — even the ones who get zero benefit from Site C) The natural gas industry? (Can we have that in writing, please?)
  2. If there are significant construction delays due to citizen protests or construction delays, can China (the customer) sue the province or BC Hydro, due to the now active Canada-China trade deal where China can sue for contract non-performance?
  3. What if natural gas prices fell dramatically at any point during the estimated 10-year Site C construction period. What then? Would the deal be ‘off’ partway through construction?
  4. The natural gas/LNG market is unpredictable at best. Investors will tell you it’s a roller coaster ride on LSD. In the space of only 6 months the whole ride could end; companies could go insolvent.
  5. If the deal to sell all of Site C capacity to the regional natural gas industry/pipeline operators falls through (after the dam is built) the costs to build new powerline capacity to deliver that power to major BC demand centres would be astronomical. Upgrading existing grid capabilities to allow Site C power to piggyback part of the way, would cost even more. Sometimes it is cheaper just to build ‘new’ than it is to upgrade ‘old’ infrastructure. Are we up for that?

All of those are very real concerns, but all of them are merely economic ones. No matter what though, adding more money (courtesy of the taxpayer or energy consumers) will completely solve those problems. That’s a choice citizens and energy consumers will have to make.

Do let us inform our elected officials and BC Hydro about our feelings on these matters in advance, please. It’s only fair to advise them beforehand, and not after the fact.

Are we fine with picking up the tab in the case that everything Site C doesn’t go according to BC Hydro’s best plans and intentions?

We are? OK, fine. Then let’s talk about the other costs of Site C

Renowned agrologist Wendy Holm testified earlier to the Joint Review Panel investigating the project that it would render over 30,000 acres of quality land unfarmable. According to Ms. Holm, that is enough land to feed a million people. (See YouTube video here)

“These soils are completely unique,” explained Holm, a past president of the BC Institute of Agrologists. They are in an east-west running valley with a Class 1 climate. They are alluvial soils. These were undervalued by the BC Hydro process. — CommonSenseCanadian.ca

I felt the Earth move!

Water is heavy. And there’s nothing like the weight and underground seepage of millions of tons of water to lubricate the existing earthquake fault that runs below the western shoreline. That means an earthquake, or earthquake ‘swarms’ are possible (likely?) for the entire time that Site C sits full of millions of tons of water.

You haven’t lived until you’ve lived downstream from a major dam that is built right on top of an existing earthquake fault line.

“What’s that?”
“Relax, it’s the toaster-oven buzzer!”

It’s difficult in principle to be against hydro-electric power. But sometimes hydro-electric dams pass the test and sometimes they don’t. As in every proposed hydro-electric dam project there are benefits, but as each location faces different set of challenges, there can be any number of downsides. Site C just doesn’t make the grade and regulators have said as much.

Need for Site C dam not proven: joint review panel 

The joint review panel assessing the Site C dam concluded that, although there will be an increasing need for power in the future and Site C is likely to be the most cost-effective option, BC Hydro failed to prove that the new energy would be needed within the timeframe set out in the proposal. “The panel concludes that the proponent has not fully demonstrated the need for the projects on the timetable set forth,” says the report submitted this month to the federal and provincial governments. The panel makes it clear that federal and provincial government decision-makers need to be sure the power is needed before giving the go-ahead. Justification for Site C “must rest on an unambiguous need for the power and analysis showing its financial costs being sufficiently attractive as to make tolerable the bearing of substantial social and other costs,” the report says. — DeSmog.ca

The Solar power solution to this fracking problem

Many people are unaware of how far solar panel prices have fallen over the past few years. In the late 20th century, you would pay about $100. per watt (installed price) for solar panels. In the early 21st century we are seeing installed prices of $4. per watt installed (and that’s on rooftops in the U.S.) and $2. per watt (installed price) in Germany and most other nations.

That puts ground-level utility scale solar installations on par with other types of electrical power generation. Like along a pipeline route, for instance.

Instead of building a huge and expensive hydro-electric dam far from energy consumers and spending every day praying that the price of natural gas doesn’t fall, or that weight of all that water doesn’t trigger a decades-long earthquake swarm, or feeling guilty about all that submerged prime farmland that has been lost, why not simply run solar panels along the whole length of the proposed natural gas pipeline route and be done with it?

If the pipeline begins at the natural gas processing facility deep in the interior of British Columbia and terminates at Kitimat, BC, that means that instead of getting power from the very remote Site C location — more than enough electrical power can be collected from the Sun via solar panels installed along the pipeline route.

Instead of the usual 1/4 mile pipeline right-of-way, the pipeline operator or BC Hydro could simply apply for a 1/2 mile wide right-of-way, and run the panels parallel to the pipeline.

Cities like Prince George, Prince Rupert, and smaller towns like Kitimat could all receive benefit from this additional daytime grid capacity.

Yes, the Sun only shines during the day

Obviously this isn’t much of a concern. Of course, it could be ‘amped up’ to become a concern because the Sun doesn’t shine at night. But let’s look at the facts.

Q: When does natural gas need to be moved?
A: Every day.

The power to run the pipeline would come from the Sun, so is every day of the year good enough? Perhaps you wanted more days than that?

Q: When does the natural gas processing facility (the refinery) need to operate?
A: Every day.

See how well that works out?

As the Sun shines everyday, the natural gas can be processed everyday and it can also be moved along the pipeline route everyday.

Gas refinery employees will work the day shift. “Are you saying that I’m permanently stuck with the preferred shift?” Yes.

Not only all of that, but we can do it pollution-free.

Woot! Chalk one up for British Columbia!

And quite unlike Site C, solar panels installed along the pipeline route have following advantages:

  • Build the solar power plant only to the size you actually need
  • Need more power next year? Add another row of panels along the route
  • Need more power next decade? Add another row of panels along the route
  • Cities along the pipeline route will directly benefit from the pipeline-routed power plant
  • Many jobs would be created for locals installing not only a ‘ribbon of pipe’ but also a ‘ribbon of solar panels’
  • Solar electricity is produced close to where it will be used and won’t need expensive transmission infrastructure
  • During the daytime merit order pricing will take effect, and other power producers can taper their power generation
  • No huge subsidies or risk
  • No water-weight earthquakes
  • No submerging of thousands of acres of prime farmland
  • No 10-year construction timeline — where a lot could change over that timeframe
  • No unexpected billions of dollars cost over-runs that are common with many large-scale hydro-electric dams
  • In the case of natural gas price drops and a corresponding shutdown or insolvency of the natural gas industry or pipeline operator, the solar panels will merely continue to provide power without interruption to local towns and cities without any additional billions of dollars of new infrastructure to run huge powerlines in order to deliver power from Site C to major centres like Vancouver
  • We know that Site C will have far too much capacity at first. But in later years, demand will outstrip the maximum capacity of Site C
  • Pollution-free power that is a fine example to industry generally, the gas industry specifically, to pipeline companies and to other jurisdictions around the world

A note about Merit Order ranking/pricing

The Fraunhofer Institute found – as far back as 2007 – that as a result of the Merit Order ranking system – solar power had reduced the price of electricity on the EPEX exchange by 10 percent on the average, with reductions peaking at up to 40 percent in the early afternoon when the most solar power is generated.

Here’s how the Merit Order works.

All available sources of electrical generation are ranked by their marginal costs, from cheapest to most expensive, with the lowest having the most merit.

The marginal cost is the cost of producing one additional unit of electricity. Electricity sources with a higher fuel cost have a higher marginal cost. If one unit of fuel costs $X, 2 units will cost $X times 2. This ranking is called the order of merit of each source, or the Merit Order.

Using Merit Order to decide means the source with the lowest marginal cost must be used first when there is a need to add more power to the grid – like during sunny afternoon peak hours.

Using the lowest marginal costs first was designed so that cheaper fuels were used first to save consumers money. In the German market, this was nuclear, then coal, then natural gas.

But 2 hours of sunshine cost no more than 1 of sunshine: therefore it has a lower marginal cost than coal – or any source with any fuel cost whatsoever.

So, under the Merit Order ranking of relative marginal costs, devised before there was this much fuel-free energy available on the grid, solar always has the lowest marginal cost during these peaks because two units of solar is no more expensive than one. — Susan Kraemer

See, we really don’t need a Site C dam costing billions of dollars and with a 10-year construction cycle, located far from cities, towns and industry and complete with a whole set of other significant drawbacks.

What we need is electrical power capacity installed along the pipeline route (which can be incrementally increased as demand rises) and the pipeline can run relatively near to the electrical demand centres of cities, towns and industry as it wends its way through the countryside to terminate at the port facility.

In short, a continuous solar power array running the length of the natural gas pipeline is what we need, with none of the negatives associated with the proposed Site C hydro-electric dam.

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