Steve Davis: Independent power producers generate green energy and jobs in B.C.

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      By Steve Davis

      About once every two years, B.C. Hydro invites independent power producers to compete against several alternatives to fill the gap they forecast between electricity demand and existing supply. In January, B.C. Hydro president Bob Elton stated: “Over the next 20 years we expect demand to increase by as much as 30 percent.”

      B.C. Hydro’s annual report states: “Prior to fiscal 2008, BC Hydro was a net importer of electricity for seven consecutive years....The outlook for fiscal 2009 is...that BC Hydro will once again be a net importer of electricity.” B.C. Hydro is to eliminate net imports and become self-sufficient by 2016.

      B.C. Hydro plans to fill the gap in three ways: conserve more, build more, and buy more.

      Before it builds or buys, B.C. Hydro must pursue cost-effective conservation. It plans to fill half the gap through demand-side management.

      B.C. Hydro is building and expanding its own facilities. It has recently acquired hundreds of new megawatts by expanding its hydroelectric facilities at Revelstoke, Aberfeldie, Cheakamus, and Bridge River. It plans to add hundreds more at the Mica, John Hart, and Ruskin dams. Its application to the B.C. Utilities Commission includes a request to spend $41 million on moving forward with their 900-megawatt Site C project that they estimate will cost $6.6 billion. This activity negates claims that B.C. Hydro has been banned from building new generation.

      B.C. Hydro buys from many competing suppliers, including imports from Alberta and the U.S., and contracts with Rio Tinto Alcan, Teck Cominco, several pulp mills, and two large hydro projects owned by Columbia Power Corporation.

      It also buys from IPPs. This requires B.C. Hydro to first get the BCUC’s acceptance of an overall system need to justify holding a call for IPP power. After the competition, each winning IPP must still get the BCUC’s approval that its contract is in the interest of B.C. Hydro’s ratepayers.

      Contrary to IPP critics, with all these options and reviews, B.C. Hydro only buys from IPPs when there is a proven need and if the price is right.

      For the past eight years, the only type of electricity B.C. Hydro has bought from new IPPs is green energy.

      Since 2001, 23 run-of-river projects have started operations. Their average size is 13 megawatts. That is much smaller than B.C. Hydro’s storage dams on the Peace and Columbia rivers that range from 900 to 2,400 megawatts and that flood areas several hundred times larger. Another dozen run-of-river IPP projects are under construction.

      Four wind-power projects have been awarded B.C. Hydro contracts. Two are under construction. They average about 125 megawatts. A half-dozen biomass projects have recently been awarded B.C. Hydro contracts. None have started construction.

      Currently, IPPs supply just under 10 percent of B.C. Hydro’s total demand. This is up marginally from the eight percent IPPs supplied in 2001 and is a far cry from the rapid privatization fears being spread by anti-IPP groups.

      These critics say that the hundreds of water-licence applications filed on potential run-of-river sites are too many. But filing an application is simply the first step in a long road with no certainty of actually getting built.

      Of the 650 run-of-river sites on which IPPs filed water-licence applications between 1997 and 2007, over 200 were refused or abandoned. In the typical B.C. Hydro call for power, only one bidder in four wins a contract. And then about half the contract winners eventually get built.

      In two years, when all the run-of-river projects now under construction join the existing operating projects, those 49 plants will represent less than five percent of all the water-licence applications filed by IPPs. Since the first run-of-river project started in 1989, the total number actually operating will represent a completion pace of less than three per year. Not exactly the gold rush claimed by critics.

      IPPs also help reduce greenhouse-gas emissions. None of the IPPs built since 2001 produce new GHGs. Achieving self-sufficiency by replacing recent levels of imports, much of which is from coal-fired plants, with green IPP energy will reduce GHGs by about 6 million tonnes.

      Replacing imported electricity with made-in-B.C. green energy generates jobs here instead of elsewhere. Currently 1,100 workers are putting on IPP hard hats and going to work on IPP construction projects located in rural areas all around B.C.

      Steve Davis is the president of the Independent Power Producers Association of B.C.

      See also:
      Gwen Barlee: Private run-of-river power projects make no sense in B.C.




      Feb 20, 2009 at 4:20pm

      IPPs produce green energy at a cost well below BC Hydro's run of river cost of production. BC Hydro is causing power rathes to skyrocket and is importing coal fired power from the US.

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      Feb 21, 2009 at 7:54am

      Actually David because BCHydro can borrow at 4% and your New York hedge funds lend at 15%, BCHydro can build run of river at a third the cost of your friends in Pirate Power;. Remember the same engineering companies (SNC Lavelin, Bechtel) that build for Pirate also build for BCHydro on lowest bid contracts so construction costs are the same.

      With solar boiler technology coming on stream at 3 cents a kwh , current and new generation nuclear at 2 cents, and pulse fusion at .5 cents , it is likely that most of the entire 60 billion in taxpayer commitments at 9 to 12 cents a kwh will be wasted. Makes the fast ferries look like a rainy saturday at a schoolgirls lemonade stand.

      Really the only reason Pirate Power exists is to fuel El Gordo's insatiable lust for campaign donations and his gangs dreams of lucrative post election consulting contracts and board of directors appointments.

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      Mar 5, 2009 at 7:55pm

      Seth - you are so wrong. Royal Bank charges 7% for an IPP project and not 15%.

      BC Hydro construction costs are way higher due to mismanagement and waste and hiring foreign multinationals like ABB to do the work. Their Aberfeldie project (run of river) was 60% higher than IPPs -- and the ratepayer pays for this while the unions at BC Hydro take $100,000 a year salaries.

      You say Nuclear at 2 cents? What have you been smoking? Nuclear is no less than 15 cents, and is polluting.
      Fusion at 0.5 cents ?? Obviously you dont know science that you think Fusion is even commercially possible.

      $60 billion at 9 to 12 cents? Do you have a source for this nonsense?

      Fusion? heh the smoke must be good. Pass it around please!


      Apr 7, 2009 at 6:36pm

      Independent Power Producer (IPP) Run-of-the-River Technology FACTs:

      Independent Power Producers pay 3 times more social benefits to government than BC Hydro does.

      Private power IPPs pay $25 per MWh in taxes, water license rental fees, and community benefits to the government. About half of that is paid to the local government as property tax (while BC Hydro pays no local property taxes for 25 billion dollars of assets that it owns).

      BC Hydro, on the other hand, pays only $8 per MWh as dividend and taxes to the government (2008) while most of that power is produced by dams that have permanently altered the Columbia River and Peace River basins with cumulative environmental impacts. To meet our current energy shortage, BC Hydro wants to build yet another dam (Site C) at 3 times the cost per MW, compared to low-cost low-impact private run-of-the-river technology.

      A small 10 MW run of river IPP plant pays about $1,400,000 a year to various levels of government, most of it to the local government. BC Hydro pays only $420,000 for the same amount of power to the Province, and none of it to the local government.

      No IPP run-of-the-river project is on a salmon bearing reach of a stream, and the environmental impact is minor if any. Run-of-the-river technology can co-exist and share the habitat with fish and other wildlife. IPPs do not build dams – but low weirs or taps on generally a steep stream that has little or no resident fish. The impact is far less than dams built by BC Hydro, logging, mining, oil and gas, coal, real estate development, transportation, pulp and paper, pipelines, utility telephone and cable poles, etc. And unlike mining, oil and gas, coal, transportation and real estate – run of river technology is sustainable, renewable, clean and significantly reduces greenhouse gas emissions.

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