Megawatt: British Columbia Renewable Energy Law Blog : BC Renewable Energy Blog : Clark Wilson Law Firm : Green Power, Natural Energy

In the Draft Integrated Resource Plan released this week, BC Hydro forecasts that "BC's electricity demand is expected to increase by about 50% over the next 20 years."  That is not a small amount. And based on the recommended actions contained in the Draft IRP, it is logical to assume that this increased demand will be supplied, in part, by the development of new clean and renewable energy projects in British Columbia (wind, hydro, biomass, ocean, geothermal and solar). 

So for those looking to undertake the development of clean energy projects in British Columbia, here a link to the new 2011 updated British Columbia Clean Energy Guidebook [pdf] prepared by the BC Ministry of Forest, Lands and Natural Resource Operations specifically for clean energy project proponents in the Province. 

The Guidebook provides excellent information on a variety of key project development matters including: 

• Where to begin?
• Permitting
• Preparing a Development Plan
• Hydro Power
• Wind Power
• Other Power (Bioenergy, ocean and geothermal)
• Environmental Assessment
• Stakeholder Engagement
• First Nations Consultation
• Transmission Interconnection

You will also find some important Q & A's on the Ministry's website.

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Today, BC Hydro released the much anticipated draft Integrated Resource Plan - 2012 (IRP) (Executive Summary and draft IRP Discussion Guide) which is a long-term forecast on supply and demand for electricity in British Columbia.  Essentially, the IRP is to expected to be used as a key document for long-term electricity planning in the Province.

The draft report contains 14 recommended actions and is released to the public today for consultation until July 6, 2012. Then, sometime before December 2012, BC Hydro will submit the final IRP for approval by the BC Cabinet. People are invited to have a say at an IRP consultation event hosted by BC Hydro.

As expected, the draft IRP is long on measures to encourage energy conservation and efficiency but also includes a few recommendations for much needed infrastructure capital investment for both capacity (Revelstoke Dam upgrade) and transmission (Prince George to Terrace upgrade) purposes. The $7.9 Billion Site C Dam is proposed to move ahead with an expected online date of 2020. In the meantimne, the spot electricity market, the Canadian Entitlement and Burrard Thermal are recommended to used as energy supply gap fillers. 

For the BC renewable energy sector, the most noteworthy draft recommendation is:  

RECOMMENDED ACTION #8: Develop energy procurement options to acquire up to 2,000 gigawatt hours per year from clean energy producers for projects that would come into service in the 2016-2018 time period.

The prospect of new BC power calls is of course welcome news to the sector, but there is caution: (a) this is a draft IRP only; and (b) the draft IRP notes that any new electricity procurement decisions would made only when there is more certainty of the demand.  Most of the new power is expected from wind, run-of-river and biomass project as these are proven to be the lowest-cost options, but geothermal and ocean technologies may also be considered. The objective in the BC Clean Energy Act that the Province "generate 93% from clean or renewable sources" effectively prohibits new power from natural gas facilities, which is good news from a greenhouse gas emissions standpoint.

Much of the long term electricity load is contingent on the development of the proposed LNG export projects on BC's Northwest coast. If the LNG export facilities are built, the demand for electricity in the Province could exceed 25% of the existing BC Hydro load (based on an estimated 4 LNG plants at approximate use of 4,000 GWh/year each. For context, the current BC Hydro load is approximately 60,000 GWh/year). Decisions on the LNG export projects are still under consideration by the proponents, with some decisions expected before the end of the year.  

With bi-partisan political and First Nations support for the proposed LNG export projects, the British Columbia Government's $20 billion BC LNG Energy Strategy may yet be realized. And if so, be certain that it will be all hands on deck in British Columbia for the next few years to support this significant new energy intesive economic opportunity.

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Today, the BC Government announced another in a series of many energy plans and strategies. The 2012 Natural Gas Strategy actually puts energy front and centre for economic development in the Province. The policy is big on ideas, but short on details.

According to the Government, liquefied natural gas (LNG) is to be the key driver for the provincial economy for decades to come.  The global demand for liquefied natural gas is strong and BC's estimated natural gas reserves are substantial. Local First Nations have expressed support for LNG facilities and the pipelines that will bring the natural gas from the North. Nominating LNG as a pillar of the BC economy makes good sense. How the new energy plan is implemented is of course, critical.

For the BC renewable energy industry, growing the demand for electricity in the Province is a good thing. The important decision is how much of the new LNG development will be powered by renewable energy and how much will be from natural gas. The Gas Strategy seems to state that the first two LNG facilities in Kitimat, BC will be required to be fueled by renewable energy. The problem right now is the Province is short on renewable energy generation and even shorter on transmission.  Much needs to happen on both fronts before the Government's LNG objectives can be met.

Not to be forgotten are the Province's climate change goals.  Extracting and exporting more natural gas will put increased pressure on the Province's greenhouse gas emission objectives.

British Columbia is at a cross-road with respect to climate change policy and economic growth. The Province is blessed with an abundance of natural gas and buyers in Asia are willing to pay for it. At the same time, to its credit, the Province has laws which restrict GHG emissions. A clear and obvious hedge against GHG emissions is renewable energy. The challenge for the Province is to balance economic growth with a GHG intensive industry with its climate change laws.

Renewable energy will play an important role in the development of the Provincial economy. New electricity infrastructure, both generation and transmission, is critical to meet the opportunity presented to the Province.  Both mining for minerals and turning natural gas into liquefied form (LNG) for export, require massive amounts of energy. Meeting this new demand with renewable electricity with natural gas as a possible backup is smart fiscal and environmental policy.  GHG emissions are lower when electricity from renewable resources is used rather than natural gas to power the Province. 

In the coming days or months, we expect to see further details on the following issues:

• The Province's definition of "clean".  Does this mean renewables only?
• The BC Hydro grid. Is there sufficient electricity on the existing transmission grid for Apache Phase 1, Apache Phase 2 and Douglas Channel LNG facilities?
• Carbon capture and storage. Really? Where?
• Infrastructure Royalty Program Credits. Will this be available for electricity infrastructure (ie, new or upgraded transmission lines) ?
• Self-sufficiency changes. Drought insurance is gone. What now? Increase in imports?  

Provided development of the natural gas fields and the mines in the North are in compliance with world class environmental practices, in cooperation and participation with First Nations and local communities, British Columbia is well positioned to be a major player in the new world economy. Some new thinking on old ideas is needed. But let's get it done while the opportunity is there.

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Further to our April blog post, today, BC Hydro released some updated information regarding the supply of electricity from BC independent power producers (BC IPPs).

Included in the release is the following: 

1. A map of current and future BC IPP projects;

2. A list of current BC IPPs supplying BC Hydro; and

3. A list of IPP projects currently under development in British Columbia,

(each current to October 1, 2011).

This excellent information shows the broad range of the existing BC IPPs facilities and the significant number of projects still in development in the Province.

According to the BC Hydro information, 70 BC IPPs (non-BC Hydro) are currently operating and supplying BC Hydro with 12,599 GWh of annual supply and 3,209 MW of capacity, from a wide variety of power facilities. The first BC IPP listed is from 1985 - Coats IPP, a small run-of-river hydro project on Gabriola Island.

Projects under development by BC IPPs in the Province (each with a power purchase agreement from BC Hydro) comprise of 7,697 GWh of annual supply and 2,132 MW of capacity. The 39 development projects are derived from the 2003 Green Power Generation Call (1), the 2006 Open Power Call (13), the 2008 Bioenergy Call (1), the 2008 Standing Offer Program (2) and the 2008 Clean Power Call (22).

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Today, the British Columbia government released its report on its review of BC Hydro [pdf]. The comprehensive Report is written by a government appointed review panel which was devised in response to BC Hydro's proposed 32% electricity rate increase over three years.

The Report provides 56 recommendations to BC Hydro and mostly addresses the internal operations of BC Hydro, but also touches on current and past BC energy policy and the impact on BC Hydro operations.

The Report does not directly address the future of the BC clean energy industry, but if you read between the lines, the Report does offer some nuggets of information that could impact independent power producers and clean energy enthusiasts. For instance, there is a recommendation that government and BC Hydro review the Clean Energy Act's self-sufficiency requirement considering the current market price of electricity (see pages 92-93).  This would certainly be a worthwhile exercise, but there are no easy answers as to how to best address this issue.

There is also some discussion about the Report which states (on page 107) that "IPPs in F2010 provided 16% of the total domestic electricity requirements, while representing 49% of the domestic energy cost." This may or may not be true, but it is a misleading statement if taken out of context. The majority of British Columbia's generating facilities (large-scale dams) were built in the 1960s, 70s and 80s, so naturally, the cost of power from these facilities is substantially lower than from facilities built more recently. As the BC economy has grown, new generation facilities (some by IPPs, some by BC Hydro) were built at market rates. The cost of old power and new power are blended together to form today's rates. Therefore, it categorically misleading (though perhaps self-serving) to characterize IPPs built today as expensive compared to inexpensive power coming from the dams built decades ago. I am not always certain people are aware of this basic difference. Power from facilities built more recently is of course more expensive than power from dams built years ago.  BC Hydro, or anyone for that matter, can build power facilities today, at 1960s rates. But in growing economies, new electricity generation is needed to support the demand, and in BC, we are blessed with the legacy of cheap power from dams, so when it is mixed with new generation, BC is able to enjoy some of the lowest electricity rates in the world. But for how long? That still remains to be seen.

If we have learned anything over the past few years, is that a fluid energy policy is crucial for British Columbia - an energy policy which can adapt to market forces, provide optimal balance between private, public and first nations enterprise, and protect the environment for future generations of British Columbians.

As the Province moves forward in the 21st century, partnerships among power purchasers, producers, first nations and other key stakeholders are critical.  The government Report on BC Hydro adds valuable insight to the ongoing discussion and debate on how British Columbia can best meet the economic, environmental and community goals in building a clean energy future in the Province of British Columbia.

Here are media reports from the Globe and Mail; Vancouver Sun; and Vancouver Sun editorial board.

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Today, the British Columbia Utilities Commission (BCUC) released proposed new Rules for Electricity Energy Supply Contracts, which will affect all future electricity supply contracts (or electricity purchase agreements) to a public utility in British Columbia, unless otherwise exempted by law, regulation or order.

These new Rules will update the 1993 Rules on account of changes to the BC Utilities Commission Act and the Clean Energy Act.

The BCUC is seeking public comments on the new Rules, up to August 26, 2011.

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According to information released today from BC Hydro, as of April 1, 2011, BC Hydro has 68 electricity purchase agreements (EPAs) with independent power producers (IPPs) [ie, non-BC Hydro] whose projects are delivering power to BC Hydro. 

The projects are located all over British Columbia and generate 12,524 GWh annually of mostly clean electrictiy. This represents 3,183 MWs of capacity and comes from the following fuel sources:

• non-storage hydro (run-of-river)
• gas-fired thermal
• biomass
• storage hydro  (dams)
• biogas
• municipal solid waste
• energy recovery generation
• wind

Here is the IPP Supply Map (current to April 1, 2011) for project locations.

For more information on each of the projects, check out the IPP Supplier List  (current to April 1, 2011).

By way of background, BC Hydro supplies British Columbia with anywhere between 42,000 and 52,000 GWh of electricity annually and has a generating capacity of approximately 11,345 MWs from its various hydroelectric, gas-fired thermal and diesel generating facilities. 

By these numbers, IPPs provide approximately a quarter of British Columbia's electricity and add an additional five clean fuel technologies to the system.  But it's important to keep in mind that the IPP supply list includes such generating facilities as the Rio Tinto Alcan dam in Kitimat (896 MW), the Brilliant dams (120MW), the Arrow Lakes dam (185MW) and the Vancouver Island gas generation facility (275 MW), and not all IPPs on the list would properly be considered clean and renewable.

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BC Hydro provided a welcomed boost to the British Columbia clean energy industry by announcing today that it has now completed its two year review and implemented a new standing offer program for clean, renewable energy projects in British Columbia.

Similar to a feed-in-tariff, eligible clean energy projects, 15 MW or under, can prescribe to a set price for delivered electricity and other key project terms.  Specific eligibility requirements and the program rules for BC Hydro's Standing Offer Program can be found here (pdf).

This is a good start to the year for BC Hydro and the clean energy industry in British Columbia.

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