Site C Would Produce Good Power, but the Timing's Wrong

There are strong arguments both for and against the development of the Site C dam to meet BC Hydro's future electricity requirements. But the key question that must be addressed now is much simpler than whether that project should ever be built.

The key question now is: should the government make an essentially irreversible decision to start construction on Site C potentially years before that decision actually needs to be made?

The only independent review of the need for the dam by the Site C Joint Review Panel concluded that BC Hydro "has not fully demonstrated the need for the project on the timetable set forth."

Specifically, it found that BC Hydro "could provide adequate capacity and energy until at least 2028" without Site C, assuming modest development of liquified natural gas (LNG) resources -- an increasingly likely scenario given the collapse in global energy prices. So what is needed to meet our future electricity needs, and what is the most cost-effective way to proceed?

Harvesting peak power

Energy and Mines Minister Bill Bennett is correct in arguing that Site C is less costly than the mix of run-of-river and wind projects that private power advocates argue for. Site C also provides a much more valuable source of supply.

Unlike run-of-river projects, the electricity from Site C could be produced in seasons and at times of day when most valuable; and unlike wind projects, Site C would provide dependable peak generating capacity -- its ability to produce electricity in the specific hours when needed would not be dependent on wind conditions.

But to say that Site C is better than those resources does not mean it should proceed at this time.

BC Hydro's forecasts indicate that in the short to medium term it will need more peak generating capacity -- the ability to meet all of its system requirements in those specific hours (generally on cold winter days) when the province's total power requirements are at their highest levels. What BC Hydro doesn't need for many years is what it calls "annual energy capability" -- the ability to generate more megawatt hours of electricity over the course of the year.

Put another way, BC Hydro doesn't need more supply per se; it needs greater ability to produce electricity in the specific hours when needed.

The irony of proceeding with Site C at this time is that it won't provide the peak generating capacity as soon as it is needed, since it won't come into service until 2023 or 2024. But when Site C does come into service, it will provide much more annual energy supply than is required.

That surplus energy would be sold at a loss unless the LNG industry takes hold at a scale that no one but the premier is currently expecting, and the LNG plants were to buy electricity from BC Hydro at the full cost of Site C -- double or triple the price of what would most likely be available on the market.

Site C would be too late for what BC Hydro needs and would offer far too much of what it doesn't need. There is a better strategy.

A cost-saving plan

To meet its peak requirements, BC Hydro could very economically add peak generating capacity at the existing Revelstoke and GM Shrum hydroelectric stations. That is what the Review Panel explicitly suggested when it stated BC Hydro's existing facilities could be sufficient to meet all requirements until 2028 or beyond.

In addition, if needed, BC Hydro could install single cycle gas turbine capacity. The gas turbines would not only be available to meet peak requirements, they could serve to back up the hydro system in the event of a severe drought.

Detailed system studies would be required to determine exactly how much BC Hydro would save relative to the government's Site C plan, but rough calculations suggest the savings would be well in excess of $1 billion.

Among energy experts, environmentalists and First Nations -- including those involved with the Canadian Centre for Policy Alternatives -- there is disagreement about whether Site C should ever be built or will ever be needed.

I agree with the minister that Site C is a potentially very cost-effective long-term source of electricity. But building it before it is required and fully justified serves only to reduce the advantage it may offer, and make more difficult the social and legal acceptance it will ultimately need to proceed.