Canada’s Commitment of $220 Million to Transition Remote Communities Off Diesel a Mere ‘Drop in the Bucket’

There have been delays, exemptions, backtracking and threats of lawsuits — but the Pan-Canadian Framework is ever so slowly inching the country towards a low-carbon future.

Unfortunately, the same can’t exactly be said about the country’s 292 off-grid communities, most of which are Indigenous. Roughly 86 per cent of off-grid communities are primarily dependent on diesel for generating electricity.

The federal government recently allocated $220 million over six years to help such communities transition to renewables, a marked increase from the $9 million doled out over the past decade. But calculations indicate that it’s not nearly enough to deal with the 450 megawatts of installed diesel in Canada.

“It’s really a drop in the bucket,” said Nicholas Mercer, PhD candidate at the University of Waterloo and expert on off-grid diesel-reliant communities. “Over six years, that works out to less than five megawatts per year, and that’s only if you’re investing in infrastructure.”

Mercer said the current trajectory will only address around six per cent of annual demand, potentially leaving hundreds of communities dependent on diesel. And that’s a hugely concerning possibility for environmental, social and economic reasons.

Nunavut pays $60 million a year in diesel subsidies

The one and only upside to diesel generation is that it has extremely cheap upfront costs.

Mercer said that diesel in an off-grid community costs around $1,500 per installed kilowatt, whereas a solar or wind installation ranges between $7,000 and $8,000. That means that a 100-kilowatt diesel generator comes at about $150,000, compared to $700,000 or $800,000 for the same capacity from renewables.

That can be a significant benefit in a cash-strapped community — but it’s the only one, and it dooms communities to a string of downsides.

Diesel fuel costs a ton of money for communities. While the average Canadian consumer pays between seven and 17 cents per kilowatt-hour, the unsubsidized cost of diesel is about $1.30. As a result, governments have to heavily subsidize communities. A recently published report from the World Wildlife Fund Canada found that the Government of Nunavut pays $60.5 million every year in diesel subsidies.

The Pembina Institute reports that Canada’s off-grid communities collectively consume between 90 million and 120 million litres of diesel on an annual basis. That’s enough diesel to run all of Toronto’s Go Train system for five and a half years.

While related greenhouse emissions aren’t huge — after all, the communities and electricity demands are fairly small — the use of diesel results in a per-capita electricity carbon footprint that’s over double the national average.

There’s also enormous risk of diesel spills. Recent investigative work by Christopher Pollon indicated that 2015 saw 830 diesel spills in five provinces — and those are only the ones we know about. Attawapiskat First Nation in Northern Ontario is still cleaning up a spill of almost 30,000 litres of diesel from 1979. These can lead to a wide range of human health effects, including cancer.

Finally, there are the social impacts. Diesel generators tend to be old and unreliable, leading to frequent power outages; Mercer said that Pikangikum First Nation in Northern Ontario loses about 20 per cent of classroom education time because of outages. Many are also faced with “load restriction,” which occurs when peak demand reaches 75 per cent of generation capacity and severely restricts potential jobs and growth.

“You can’t build new homes and connect them to the grid, you can’t add new businesses to create opportunity for the community, you can’t invest in infrastructure upgrades,” Mercer said. “You can’t do anything that will increase load. This is a major issue in Canada.”

Capacity training key for remote communities

Dave Lovekin, senior analyst for Pembina Institute specializing in renewable policies for remote communities, said the design of the new funding is also important because it specifically carves out money for capacity training, something which had previously only been lumped together with the overall program. This means that communities will be able to receive money specifically for training and education so that local residents can fix, maintain and order spare parts themselves.

Judith Sayers, president of the Nuu-chah-nulth Tribal Council, said that Tla-o-qui-aht First Nations near Tofino serve as a great example of this in action — they built two small-scale hydro projects in partnership with the Barkley Group and are now working on a third on their own.

“They’ve built enough capacity that they have enough confidence to do this one on their own,” she said in an interview. “That’s what we want to see, right?”

As chief of Hupacasath First Nation, Sayers oversaw the construction of the 6.5 megawatt China Creek run-of-river hydro project. Unlike many First Nations which were only accepting royalty agreements, Hupacasath retained a majority ownership stake in the project and sell excess electricity to BC Hydro.

Approval of Site C dampens potential for Indigenous-owned renewables

Experts said that kind of Indigenous participation and ownership of renewable projects is a crucial part of success.

But Mercer noted that both the state and private sector can often view Indigenous communities as “testing grounds” for technologies or the “low-hanging fruit” of greenhouse gas reductions, which can come across as forcing projects on a community and undermining political self-determination.

“Often, communities are bombarded with consultants and companies that come and say ‘hey, have we got the technology solution for you,’” Lovekin added. “Communities are often over capacity and have a tough time getting past the sales pitch and determining which technology will actually work. It’s a valid concern and communities need more support in this regard to lead instead of dealing with consultation fatigue.”

In British Columbia, there’s yet another obstacle. Sayers said that since the provincial NDP government gave the go-ahead to the Site C dam, BC Hydro has quit taking any applications for new renewable projects that would sell power to the grid. So while First Nations can still build projects that help them transition away from diesel and become grid-independent, they’ll lose out on a lot of potential jobs and revenue due to not being able to sell excess electricity.

“There are so many First Nations that want to develop clean energy,” Sayers said. “Because the government has started to build Site C, they no longer need clean energy. It’s a barrier right now to do anything in an economic way. There’s none. There’s no opportunity.”

The BC Utilities Commission’s final report on Site C concluded that a mixture of alternative energy sources such as wind, geothermal and solar could generate the sufficient amounts of electricity at lower rates for residents.

Still need policy support and new funding

As with many of the government’s climate policies, experts are taking a wait-and-see approach.

Lovekin said he’ll be watching to see what other funding announcements come, noting that more money for projects may be available via the Arctic Energy Fund and Canada Infrastructure Bank.

But he suggests that policies are generally missing to support the funding.

“Actual policy to mandate a certain target of renewables or a production incentive is something we’d like to see,” he said. “Right now, what the federal government has announced are programs to support diesel transition, but no specific policy. We’d like to see a combination of both.”

Contrary to what many people might think, there’s really no major technological challenges impeding the ability for remote communities to transition to renewables: solutions are all available and can be tweaked to particular locations. The only issues are lack of upfront capital and community capacity — both of which could be resolved with far more federal investments.

“When you start looking at some of the other countries and their challenges, we should be able to do this with the kind of technology and money we have available in our country,” Sayers said.