In December 2015 world leaders passed the Paris Agreement at the end of the United Nations Framework Convention on Climate Change 21st Conference of the Parties (COP21).
In Paris, Canada agreed to drop our greenhouse gas emissions to 30 per cent below 2005 levels by 2030. To achieve this goal Canada will need to cut fossil fuels out of our transportation and home heating energy budgets by the middle of this century.
As I describe in my article "Dispelling Some Myths About British Columbia's Energy Picture": fossil fuels represent 60 per cent of B.C.'s current energy needs. To replace that energy will require a lot of new electricity and we have already exploited almost all of the easily accessible hydro. To put the numbers into perspective I created a new unit of power a "Site C Dam equivalent".
As I calculated at my personal blog, the Site C Dam is expected to generate 5,100 GWh of electricity. To replace the energy currently provided by gasoline and diesel fuels only, and considering the gains associated with electrification, we would need to find the energy equivalent to almost nine Site C Dams. To replace natural gas would represent another 16 Site C Dam equivalents.
Given that we are approximately 25 Site C Dam equivalents away from our goal, it is clear that any observer who claims that B.C. does not need the power to be generated by the Site C Dam is either being disingenuous or simply does not understand B.C.'s energy needs.
Let's make something else perfectly clear, there are some legitimate complaints about how First Nations have been consulted in the Site C Dam decision. But that is not the topic of this blog post. I am only dealing with B.C.'s energy needs in this post.
BC Hydro has evaluated various energy generation and storage technologies including establishing approximate costs for the various options. These documents make it abundantly clear that BC Hydro cannot do all the work on its own. There are hundreds of billions of dollars of infrastructure (including transmission lines) needed to meet our Paris Agreement commitments. This is where the Independent Power Producers (IPPs) come into the story.
Canada has pledged to reduce our dependence on fossil fuels.
B.C., like many constituencies, has recognized that the public sector cannot pay for all the power projects we need right away. That is why the province has championed the public private partnership (P3) approach. A P3 is a method of paying for infrastructure where a private partner takes on the risk of building infrastructure in exchange for guarantees that they can recoup their costs through sales or tariffs over a set period of time. As BC Hydro puts it:
BC Hydro acquires power from Independent Power Producers (IPPs) to help meet electricity needs. IPPs develop and operate projects such as wind, water and biomass. IPPs include power production companies, municipalities, First Nations and customers. IPPs provide approximately 18,902 GWh electricity each year.
BC Hydro has a detailed document explaining their procurement practices with respect to IPPs. To ensure the cost-certainty necessary to finance investments, IPPs are generally provided with long-term contracts. Long-term contracts provide cost certainty for the producer; while providing BC Hydro with an understanding of their future expenses. Because the contracts are written for the long-term, they do not follow the ebb and flow of the day-to-day energy market. This means that some days BC Hydro gets a better deal and others the IPPs get the benefit.
B.C. is doing well, at the moment, with respect to energy demand. While we meet most of our electrical energy needs using large-reservoir hydro, the majority of our energy needs are being met by using fossil fuels. Canada has pledged to reduce our dependence on fossil fuels. This can only be accomplished by substantially increasing our supply of electricity. To do so we will need to develop alternative energy supplies as most of our readily-available, large-reservoir hydro has already been tapped. Given our future energy needs we also cannot ignore readily available large energy sources like the Site C Dam project.
Given the extent of our future energy needs we need to start planning and funding future energy projects as soon as possible. Our national and provincial governments do not have the financial or professional resources to manage this transition alone. This means that they need to access the vast financial and intellectual resources of the private sector. The only way to involve them is to provide the private sector with guarantees that we will buy the energy they produce at a fair price and we need to provide those guarantees in the form of enforceable contracts.
Canada has made a commitment in the Paris Agreement that was praised by the environmental movement. Now it is incumbent on the environmental community to help us meet that commitment. That means making compromises with respect to IPPs and energy generation. It is time we worked together to meet our future energy needs.
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