Site C and LNG: a tenuous relationship

Site C would be BC’s most expensive infrastructure project ever. Its debt funding will be loaded onto the shoulders of our children. It needs a convincing business case and, so far, that case is anything but convincing.

by Eoin Finn B.Sc., Ph.D., MBA

The relationship between the LNG industry and the Site C’s power is tenuous at best. To date, four LNG plants – LNG Canada, Kitimat LNG, Woodfibre LNG and now Pacific NorthWest LNG – have received export licenses and environmental certificates from Canada’s Governments. Only one – the small-scale Woodfibre plant in Vancouver’s Howe Sound – will use grid electricity to power its liquefaction process. All the much-larger plants will each burn about 10 percent of their gas intake to power the minus 162oC refrigeration process. If built, they would together add about 30 million tonnes to BC’s annual carbon emissions – a 50 percent increase. Upstream emissions would at least double that.

When I first settled in Vancouver in 1978, I went to a Canadian Club lunch. The guest speaker was BC Hydro’s CEO, who sternly warned the audience that, unless he got the OK to build three nuclear plants, the coal-fired Hat Creek and the Site C dam, we would in future have to munch on sushi in the dark. That was my introduction to “hydronomics”, and the engineers who want to keep on building dams – proving that, if all you have is a hammer, everything looks like a nail.

Of course, none of these plants were ever built. Surprise – the lights are still on. Indeed, demand for electric power in BC has flat-lined for the past 10 years. While adding a quarter million new residential accounts, heavy industry’s demand has steadily fallen, largely as a result of the precipitous decline of our pulp and paper industry. That doubling of rates in those 10 years has only encouraged greater conservation efforts, much to BCHydro’s chagrin.

Can we be any more sure of BCHydro’s demand projections now, in light of those gushy ‘70s pronouncements? That seems unlikely. The Review Panel examining the project was not convinced. In its efforts to justify spending $9 billion of ratepayers money on a Site C gamble, BCHydro didn’t come up with anything resembling a convincing argument. Small wonder. BC’s 1.8 Million Residential customers won’t need Site C’s power.

Neither will those LNG plants. Stretched by thin world markets and even thinner LNG prices, they will generate their own electricity. Lacking any serious price on carbon emissions, local gas-powered electricity generation is half the current price of grid electricity, and maybe a third that of Site C’s. Even if these plants did use grid electricity, they have been promised a rate of $83/MWh – lower than BCHydro’s optimistic $88/MWh cost for Site C power.

The gas fracking pads in NorthEast BC will not use the power either. And following those transients around the regions’s boreal forest with high-voltage lines would be prohibitively expensive, as would powering the compressor stations along the pipelines delivering gas to coastal LNG plants.

Exporting Site C power has its own issues. Independent estimates of the delivered cost of Site C power to Alberta are in the range of $120-$140/MWh – double the cost of local production. Both wholesale and retail prices of electricity in Alberta are lower than Site C’s, so adding a $1 billion-plus high-voltage line through the Rockies would be difficult to justify as good business. In any case, Alberta’s near-neighbour Manitoba has the lowest-cost hydroelectricity in North America, and constructing connecting power lines across the Prairies is way easier than from BC.

B.C. Hydro’s only option for Site C power may be to sell it to the U.S. NorthWest grid at spot market prices around $40/MWh. Selling power at that rate for forty years might net up to $7.5 billion. Add maintenance and debt-service costs (at a 3.5% rate) of around $18 billion, and the project looks decidedly unattractive. In that event, BC ratepayers would be on the hook for a debt of over $20 billion, for which they will get nothing but rapidly-escalating local power rates.

Another argument trotted out is that, if all of BC’s passenger cars become electric, our power needs would mushroom to the level of needing a Site C. The physics on that is unhelpful. Powering all or most of BC’s automobile fleet can be done with existing electrical capacity – though many laneway transformers will need a step-up. And, in case of surprises, we will always have the power from the Columbia River Treaty as a fall-back, at rates well below Site C’s.

Though it is reasonable to assume BC’s energy future will be heavily electric, the plummeting cost of solar, wind, geothermal, and tidal assure the place of renewables in BC’s future energy portfolio. We are one significant breakthrough in battery technology away from solving the key problem for these intermittent sources: their unreliability for continuous baseload power. For that, we have BCHydro’s existing dams and reservoirs.

Site C would be BC’s most expensive infrastructure project ever. Its debt funding will be loaded onto the shoulders of our children. It needs a convincing business case and, so far, that case is anything but convincing.

3 thoughts on “Site C and LNG: a tenuous relationship

  1. A comprehensive review of the disastrous financial burden of Site C for generations to come . Every BC resident who is and will pay the enormous costs should read it . Future generations will be shaking their heads with justifiable scorn for this needless megadam .

  2. I cannot believe that the conservative party of B.C. , also known as the B.C.Liberals , are pushing this financial burden on the people who elected them into power as well as the rest of the populace . It makes no sense . The only economic gain must be lining the pockets of a few of the upper echelon in control of this site C dam project . I feel that our incombent government does not have our best interests in mind as they push onward , blatantly disregarding all the reasons to forgo the project . May the Lord strike them to down with lightning , I pray .

  3. But how do we stop a powermad, neoliberal, Premier, bent on bankrupting the province for a personal vanity project? Especially if she closes the peoples house, and sends the politicians on holiday!

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