Thirty-one years ago, when the Site C dam in B.C.’s Peace Valley was rejected for the first time, BC Hydro was told to investigate alternatives sources of energy, specifically geothermal energy, by the B.C. Utilities Commission.

But the Crown corporation has utterly failed to do so, according to the report of the joint review panel on the Site C project, released last month.

Ken Boon, a Peace Valley farmer whose land would be flooded by the dam, pointed this out to the panel, noting that somehow “we’re back here now 30 years later and still talking about the dam.”

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The panel doesn’t mince words on the province’s failure to investigate alternatives.

“The low level of effort is surprising, especially if it results in a plan that involves large and possibly avoidable environmental and social costs,” it writes.

The $7.9-billion dam would flood 107 kilometres of the Peace River and its tributaries, threatening endangered wildlife and putting farmland under water.

Why haven’t alternatives been researched? The panel points the finger at the government’s lack of funding for geological exploration, while outlining a culture of complacency fuelled by plentiful, low-cost electricity.

But times have changed, the panel says, and failure to ramp up exploration of alternative renewable sources a decade ago is hurting the province now: “The panel concludes that a failure to pursue research over the last 30 years into B.C.’s geothermal resources has left BC Hydro without information about a resource that BC Hydro thinks may offer up to 700 megawatts of firm, economic power with low environmental costs.”

With the largest public expenditure of the next 20 years on the table and a lack of clear demand for the Site C project, a serious look at the alternatives is in order.

Someday, a growing B.C. population will need more energy. “The question is when,” the panel writes. “A second question is what alternatives may be available when that day comes.”

Geothermal offers alternative reliable source of power

Even with next to no research, BC Hydro has estimated geothermal energy could replace two-thirds of Site C’s power.

Canada is currently the only major country located along the Pacific Rim’s Ring of Fire not producing geothermal energy. A Geological Survey of Canada report recently noted that northeast B.C. has the “highest potential for immediate development of geothermal energy” anywhere in the country.

The advantage of geothermal power over other types of renewable energy is that it’s considered a “firm” source of base load power, comparable to a hydro dam. The United States has about 3,400 MW of installed geothermal capacity.

“The wind doesn’t always blow and the sun doesn’t always shine, but the earth is providing heat at a constant rate,” explains Grant Van Hal, a senior policy advisor for the Canadian Geothermal Energy Association (CanGEA).

During the Site C hearings, the association argued geothermal energy offers more jobs spread through B.C. and First Nations, less transmission upgrade costs, fewer environmental impacts and the planning flexibility to follow the actual demand growth in the provincial system.

Despite this potential, the panel noted that BC Hydro reported its current investment in geothermal research as under $100,000 a year.

“We don’t really have funding to do R&D… In fact we’re expected not to do that,” BC Hydro said at the hearings.

However, the Clean Energy Act states it is a provincial objective “to use and foster the development in British Columbia of innovative technologies that support energy conservation and efficiency and the use of clean or renewable resources.”

The panel doesn’t overlook this contradiction and raises several issues with it — chiefly that “if BC Hydro is to continually scan the resource and technology horizon for future supply and conservation possibilities, it must have a budget and a mandate to do so. Without these, long-term planning is seriously uninformed.”

In an effort to prevent future decision-makers from also being “seriously uninformed,” the panel re-iterates what was said in 1983:

The Panel recommends, regardless of the decision taken on Site C, that BC Hydro establish a research and development budget for the resource and engineering characterization of geographically diverse renewable resources.

Next, in one of the panel’s more pointed remarks, the report reads: “If the senior governments were doing their job, there would be no need for this recommendation.”

Building new supply bit by bit reduces costs

Despite the lack of detailed information for B.C., based on costs in other jurisdiction, the panel is able to say that geothermal power is available at a similar cost to Site C — and is more flexible.

“These sources, being individually smaller than Site C, would allow supply to better follow demand, obviating most of the early-year losses of Site C,” the report says.

That’s a point re-iterated by Paul Kariya, the executive director of trade association Clean Energy BC.

“Times have changed. We’ve been through an era of building big dams,” he told DeSmog Canada. “When you build a dam, you get this one massive lump of power and that’s not the way that energy is planned for anymore.”

This part of the Peace Valley would be flooded if the Site C dam is built. Credit: Graham Osborne.

While much has changed, some things haven’t.

“One of the things that hasn’t changed is governments of all stripes like mega projects,” Kariya says. “Site C is potentially the last mega hydro dam project in B.C. They’ll want it there as a potential.”

Matt Horne of the Pembina Institute, a sustainable energy think tank, says predicting future power demand is an uncertain game.

“One of the uncomfortable parts of Site C, is that you’re saying, ‘This is where demand is going to be at in 15 years,’ whereas other options … are much more scalable and can be matched to demand over time,” he says.

“That way, if we end up in a scenario where demand doesn’t increase as fast as BC Hydro is predicting, we don’t have to overbuild, whereas with Site C it’s one big block.”

A study commissioned by the Treaty 8 First Nations, “Need for, Purpose of and Alternatives to the Site C Hydroelectric Project,” found Site C is not a cost-effective solution to meeting BC Hydro’s forecast needs for additional energy and capacity. Study author Philip Raphals of the Helios Centre found that when compared to alternative portfolios built as needed to meet demand, the dam comes out as the most expensive of alternatives.

But what about natural gas plans?

Some of the bigger uncertainties in terms of electricity demand are around the scale of resource development, particularly the liquefied natural gas (LNG) industry. That’s because each large LNG terminal, if run entirely by electricity, would require an entire Site C dam to power it.

However, the panel found large LNG plants are likely to be powered by natural gas directly (because they’ve been given an exemption from the Clean Energy Act) and, even if they did use electricity, the power would be required before Site C became operational.

The panel seemed unimpressed by B.C.’s double-standard on the topic of burning natural gas for electricity (much more on that coming later in this series).

“LNG developers have been promised a free hand to burn their gas here for their own purposes, but BC Hydro has been denied the same privilege,” the panel wrote.

Cost of renewables dropping rapidly, cost of dams increasing

Merran Smith, executive director of Clean Energy Canada, says the cost of renewables has gone down rapidly in the past five years, with solar costs dropping 80 per cent and wind costs dropping 35 per cent.

“And we only see those lines continuing down, so a decade from now, the cost one will assume will be lower,” Smith told DeSmog Canada. “Whereas the cost for building large dams is only going up.”

After conserving as much as possible, it makes most sense to build new electricity supply where it’s needed, Smith says.

“There’s renewable potential all over this province, so rather than having one large dam in the north with a huge transmission line, we can create renewable energy in the regions where it’s needed,” she says.

Given this, Smith questions whether Site C is the best path forward for British Columbians.

“Why would we lock ourselves into a very expensive large dam when we could build units in clean, efficient renewable energy as we need it and where we need it?”

Photo: “Geothermal borehole house” by Lydur Skulason via Flickr

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Every day British Columbians flick on light switches, power up their computers and cook dinner, confidently expecting the power supply will not fail them.

The expectation that reliable electric power will be available is emphasized by BC Hydro as it touts benefits of the proposed Site C dam on the Peace River and the resulting “clean” energy that could theoretically power 450,000 homes each year.

“Our forecasts show the demand for electricity will increase by approximately 40 per cent during the next 20 years,” said Charles Reid, BC Hydro president.

“And an emerging liquefied natural gas sector could further increase the demand for electricity.”

But, looking into the future is an unreliable art and, while BC Hydro insists that the power will be needed by the time the $8-billion project is completed in 2024, opponents say that, especially at a time when the energy market is undergoing rapid change, the mega-dam will end up as a costly white elephant.

The unknowns include changes in demand because of economic development, the cost of electricity, public policy changes and development of alternative energy sources.

Need for Site C dam not proven: joint review panel

The joint review panel assessing the Site C dam concluded that, although there will be an increasing need for power in the future and Site C is likely to be the most cost-effective option, BC Hydro failed to prove that the new energy would be needed within the timeframe set out in the proposal. [view:in_this_series=block_1]

“The panel concludes that the proponent has not fully demonstrated the need for the projects on the timetable set forth,” says the report submitted this month to the federal and provincial governments.

The panel makes it clear that federal and provincial government decision-makers need to be sure the power is needed before giving the go-ahead.

Justification for Site C “must rest on an unambiguous need for the power and analysis showing its financial costs being sufficiently attractive as to make tolerable the bearing of substantial social and other costs,” the report says.

The findings have sparked more questions about the need for Site C power, especially as annual figures show B.C. is usually a net exporter of energy

“This opens the door for us to have conversations about alternatives – local projects with benefits for local people – projects like smaller hydro, wind, natural gas and even geothermal,” said Treaty 8 Tribal Chief Liz Logan.

LNG argument has cracks

Even the LNG argument — used by Premier Christy Clark in last year’s election campaign as a major reason for building Site C — is losing traction as most companies indicate that, for compression and liquefaction of the gas (which takes vast amounts of electricity), they will generate their own power by burning natural gas already flowing through their pipes.

In order to burn natural gas, the LNG industry has been handed a blanket exemption from the Clean Energy Act, raising concerns about the government’s commitment to cutting greenhouse gas emissions.

The Pembina Institute estimates that if five LNG facilities are built, the industry would more than double B.C.’s carbon pollution, single-handedly emitting nearly three-quarters as many greenhouse gases as Alberta’s oilsands.

However, even those who argue that LNG plants should be powered using renewable electricity, don’t necessarily point to a need for the Site C dam. Clean Energy Canada, for instance, argues that the LNG industry can power itself on regionally produced clean electricity, mostly wind power on B.C.’s north coast.

Even under that scenario, LNG plants will need power from BC Hydro for ancillary needs, such as running the site, said Dave Conway, BC Hydro spokesman.

Initial estimates said increased capacity would be needed by 2027/28, but, with taking LNG plans into account, even a “low LNG load forecast” moves the need for energy up to 2024.

“Mining is also one of the big drivers so, with or without LNG, new capacity and new power is needed by 2024,” Conway told DeSmog Canada.

In B.C., about one-third of electricity is used by residential customers, another third is used by commercial customers and another third goes to industrial customers, he said.

“The need for this project comes from growing demand,” Conway said. “Economic development is the primary driver.”

BC Hydro overestimates demand for power: retired federal economist

That need continues despite residential customers reducing power use because of conservation and BC Hydro’s own documents showing it plans to meet 70 per cent of future demand growth through conservation. It is essential that BC Hydro is able to meet peak load requirements, Conway said, even though peak demand may come only one day a year.

However, retired federal economist Erik Andersen said BC Hydro has a chronic problem with over-estimating the demand for power.

“Over the course of the past four decades, the need for a Site C generation facility has been part of the larger and exaggerated demand narrative BC Hydro has been telling,” he told DeSmog Canada..

Andersen crunched the numbers and is questioning Hydro’s estimates of a population growth of one million people in the next 20 years, which he says doesn’t fit with B.C Statistics forecasts.

“There has been one heck of a rollback in population growth, but BC Hydro seems to want to ignore that,” he said.

Future demand analysis based on "serious market failure"

Energy economics expert Marvin Shaffer, adjunct professor in the school of public policy at Simon Fraser University, said BC Hydro’s analysis of future demand is based on a “very serious market failure” in the pricing of electricity.

“The only reason Site C is ‘needed’ is because the government is preventing BC Hydro from using gas-fired thermal units to back up its hydro system when needed,” he told DeSmog Canada.

“If the project is built as planned, it will be surplus to forecast requirements for many years and sold in the export spot market at a significant financial loss.”

Even if some power was sold to LNG plants, which would otherwise use gas-fired thermal power to meet their energy needs, it wouldn’t be at a price that would begin to recover Site C’s full cost, Shaffer said.

It is unlikely that surplus power could be exported because energy produced at Site C would be too expensive, agreed NDP opposition leader John Horgan.

“With the advent of shale gas everywhere in North America, the price of electricity has plummeted because people can get gas and turn it into electricity at a relatively low price,” he told DeSmog Canada.

Is the era of building big dams over?

Government will decide this fall whether to proceed with Site C, but Energy Minister Bill Bennett already seems convinced of the need for more power.

“We don’t need the electricity today or tomorrow or the next year, but we are pretty darn sure we are going to need it 10 years from now,” he told reporters after the release of the joint review panel report.

However, Paul Kariya, executive director of Clean Energy BC — an industry trade association that represents independent power producers, including gas generators —told DeSmog Canada that predicting power demand is a “mug’s game” and there is a way to meet power needs incrementally.

“Times have changed. We’ve been through an era of building big dams,” Kariya said. “When you build a dam, you get this one massive lump of power and that’s not the way that energy is planned for anymore. What we offer is a more incremental approach.”

Up next: Part 3 of our Site C series will explore the alternatives to building the Site C dam.

Photo: "LNG Canada joint venture agreement signing" by Province of British Columbia

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.