While in agreement with certain points made by Tom Fletcher in his assessment of the run-of-the-river debate, I can’t help but notice one major gap. This gap has to do with basic economics that seem to evade the proponents of private run-of-the-river projects. Undoubtedly, there is a reason.
So could it be the fact that the overwhelming majority of such projects is completely uneconomic, and exist solely due to the fiat issued by the Liberal government? Let’s recall that seven years ago the newly elected provincial government came out with its landmark Energy Plan that explicitly forbid BC Hydro (with few exceptions) from engaging in the development of new resources while mandating that any new energy and capacity had to be a work of the private sector.
Following the decree, the economics obliged and BC Hydro busily got down to the brass tasks of undertaking numerous calls for private power in the years to come. Alas, there was a flaw. Constrained by financial, logistical and public relations capacity, private proponents aren’t capable of producing anything much beyond the-run-of-the-river projects. This is contrast to BC Hydro’s ability to advance valuable Site C and other potential projects.
The main issue with run-of-the-river projects is that the bulk of their power is delivered during the freshet period between the months of April and June. During this period it is not only BC that is awash in water to the point of spilling at such facilities as GMS, it is also the entire Pacific Northwest with the large facilities on the Columbia River. As the result, the prices during this period typically plunge down to the $20 per MWH range. BC Hydro however, as dictated by the government, has been able to acquire such power at prices ranging from $70 to $90 per MWH from private developers. Even on the annual average basis this is still much too high compared with $50 that BC Hydro can routinely contract either in Alberta or south of the border. It is even higher than the current Site C estimate in the high $60s. And please don’t forget that Site C is immeasurably more valuable since it delivers power year around and provides additional reservoir capacity.
In conclusion, I agree that regional development in some parts of the province is welcome. However it is not necessary to undertake with such dismal economics that will cost many millions to the BC rate-payers in the years to come. Why don’t we learn how to grow our domestic bananas instead? It might be way more economical and…tasty.
So could it be the fact that the overwhelming majority of such projects is completely uneconomic, and exist solely due to the fiat issued by the Liberal government? Let’s recall that seven years ago the newly elected provincial government came out with its landmark Energy Plan that explicitly forbid BC Hydro (with few exceptions) from engaging in the development of new resources while mandating that any new energy and capacity had to be a work of the private sector.
Following the decree, the economics obliged and BC Hydro busily got down to the brass tasks of undertaking numerous calls for private power in the years to come. Alas, there was a flaw. Constrained by financial, logistical and public relations capacity, private proponents aren’t capable of producing anything much beyond the-run-of-the-river projects. This is contrast to BC Hydro’s ability to advance valuable Site C and other potential projects.
The main issue with run-of-the-river projects is that the bulk of their power is delivered during the freshet period between the months of April and June. During this period it is not only BC that is awash in water to the point of spilling at such facilities as GMS, it is also the entire Pacific Northwest with the large facilities on the Columbia River. As the result, the prices during this period typically plunge down to the $20 per MWH range. BC Hydro however, as dictated by the government, has been able to acquire such power at prices ranging from $70 to $90 per MWH from private developers. Even on the annual average basis this is still much too high compared with $50 that BC Hydro can routinely contract either in Alberta or south of the border. It is even higher than the current Site C estimate in the high $60s. And please don’t forget that Site C is immeasurably more valuable since it delivers power year around and provides additional reservoir capacity.
In conclusion, I agree that regional development in some parts of the province is welcome. However it is not necessary to undertake with such dismal economics that will cost many millions to the BC rate-payers in the years to come. Why don’t we learn how to grow our domestic bananas instead? It might be way more economical and…tasty.
