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.