B.C. faces soaring power demand, seeks to scrap large dam project

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After the political fallout over the $16 billion Site C dam, B.C.’s NDP government has shown no desire to build another hydropower megaproject.

Building another big dam is always a possibility, but for the past eight years the NDP has looked in all directions for new sources of power. The clean, reliable hydropower that British Columbia enjoys from its large dam system comes at no cost to the environment, Indigenous rights, or agriculture, and the NDP paid a heavy price for those downsides when it built Site C.

But the state’s Crown-owned electricity company faces an urgent need for cleaner energy. Energy and Climate Change Minister Adrian Dix is ​​asking BC Hydro to consider new sources of power with non-controversial ideas, including potentially reviving a 50-year-old plan for another major dam on the Peace River, marked as Site E on old maps.

“Mentioning Site E is going to cause a huge stir,” Dix said in an interview.

“The goal is not to make a ripple. The goal is to look at everything BC Hydro can do with the two rivers and everywhere else, and that’s what we’re doing.” Those two rivers are the Columbia River and the Peace River, and under provincial policy dating back 60 years, the rivers are destined to bear the brunt of the province’s hydropower plans.

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British Columbia is rolling out the red carpet to attract new energy-intensive resource projects, with demand expected to outstrip supply. If electricity cannot be supplied as promised, the state’s economy will be hit hard and it will not be able to afford it. The search for new power sources using expensive new power distribution systems has begun.

One of the first big challenges for the new NDP government in 2017 was the decision to move forward with Site C, the most expensive public infrastructure project in B.C.’s history.

“We do this with a heavy heart,” said John Horgan, then prime minister. The NDP, including Mr. Hogan himself, opposed the project, joining forces with First Nations communities, Peace River ranchers and environmentalists in their opposition. The decision to continue the project started by the previous Liberal government divided opinion in Mr Hogan’s caucus and cabinet. He said at the time it wasn’t a project the NDP would start, but the government was forced to end it because the Liberals pushed it to the point of no return.

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Instead of building more dams, NDP-owned BC Hydro dramatically increased private power contracts, primarily for wind power.

Site C was completed in good time and went fully online last summer. At the time, there was a growing appetite in Canada to fast-track new energy-intensive resource projects. British Columbia is using its tariff war with the U.S. to push forward with new liquefied natural gas and significant mineral mines proposed as nation-building projects, and a reliable supply of cheap electricity is a natural advantage.

When construction began, there were questions about whether Site C was needed. They are now indisputable. The question is, how much more power supply does the BC need?

BC Hydro has twice issued large-scale appeals to private power producers for new electricity production, and there was no shortage of supporters. Dix suggests another call is imminent.

Asked at a September resources meeting if the last large dam had been built in the state, Dix said “no.”

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In addition to BC Hydro’s dusty plans for Site E, Dix said he is also interested in a major private project that would rival the output of Site C, known as Butte Bay. When the project, which would link 17 run-of-the-river hydropower facilities in remote areas of B.C.’s midcoast, was proposed more than a decade ago, environmentalists raised concerns about the potential for damage to sensitive ecosystems. The environmental assessment was put on hold in 2016 because BC Hydro was not interested in purchasing the power at the time.

The sense of crisis is explained in a document embedded in the compliance letter. BC Hydro made the submission to the BC Public Utilities Commission on March 2.

In it, Crown revealed that its electricity demand forecasts have changed, increasing the near-term need for new energy and capacity resources. Four years from now, electricity demand is expected to be 2,700 gigawatt-hours higher than projected in the medium-term plan, equivalent to about half of Site C dam’s annual production.

The push forward of several natural gas and LNG terminal projects, as well as increased loads from new data centers and AI-related loads, means British Columbia faces supply shortage challenges.

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“This is great news for B.C.,” Dix said in an interview this week. “This is B.C. growing in a way we haven’t seen in recent years.” But the good news of economic development means Crown corporations have to compete to provide more supply.

In its latest integrated resource plan, BC Hydro acknowledged that “the risk of electricity shortages in the province is a greater threat than the risk of oversupply, as shortages can harm economic growth,” according to a report by McCarthy Tetrault LLP’s National Energy Group.

Sven Mirelli, a law firm partner who specializes in energy mergers and acquisitions, is not surprised that BC Hydro’s leaders are more open to new ideas and old ones.

“I think they’re really struggling as an organization to get to this moment,” he said in an interview. “They originally predicted that under the high-growth scenario they would be in an energy shortage as early as 2029. If they are now saying they are at a higher level, that means they will be in a pinch at the end of this decade.”

Werner Antweiler, an environmental economics expert at the University of British Columbia’s Sauder School of Business, predicts BC Hydro will be able to scale up as needed through additional private power contracts. “We believe we have the capacity to weather even a high-growth scenario,” he said.

BC Hydro could require more power if large new projects such as LNG Canada Phase 2 move forward. Wind power is cheaper and relatively faster to build than expensive new dams, he noted.

“It all comes down to what we can do in a cost-effective way.”

The bottleneck, he said, is getting power where it’s needed. The government is working on the North Coast Transmission Line (NCTL), which will begin construction this summer, to facilitate the development of new mines and liquefied natural gas plants in the northwestern corner of the state.

Despite strong political support for the project, details are still unclear.

Last fall, the NDP government passed the Energy Act Amendment Act exempting NCTL from the regulatory review process, signaling the government’s desire to move construction forward quickly. And this project is deemed to be of national importance by the federal government and has been referred to the Major Projects Office to help move the project forward.

BC Hydro has begun site preparation for camping areas along the transmission line route, including the relocation of worker accommodation no longer needed at Site C, but negotiations with First Nations along the route are still ongoing and despite all political support, there is no formal budget.

Based on early estimates, Phases 1 and 2 of the project are expected to cost $6 billion. An updated budget based on detailed planning and design is expected to be released when the BC Hydro board makes final investment decisions later this year.

Editor’s note: A previous version of this article incorrectly stated that construction of the Site C dam would cost $12 billion. The amount rose to $16 billion.