Would you rather spend $100,000 on a car designed to run for at least 70 years or $25,000 for a car that you will have to replace every 20 years, but which you know is almost guaranteed to be cheaper to replace?
Just one thing: the $25,000 car runs only 30% of the time, when the weather is bad.
That is the – admittedly oversimplified – debate that is shaping up around the Site C dam.
While there are many diverging opinions on the $8.8 billion project, the debate has largely divided into two main camps: those who say a single large hydro project is the best way to meet the province’s future power needs and those who insist other renewable energy alternatives – particularly wind power – are better, cheaper options.
The BC Utilities Commission (BCUC) is considering the ramifications of completing, cancelling or mothballing the project. It is projected to go over budget, with costs reaching as high as $12.5 billion, if delayed.
BC Hydro estimates the cost of cancelling Site C and obtaining power from alternative sources would be $7.3 billion.
An analysis commissioned by the Peace Valley Landowner Association (PVLA) – which opposes the dam – concludes that cancelling the dam project and building wind farms will save B.C. up to $1.6 billion.
BCUC’s challenge will be deciding whose calculations are most reliable.
BC Hydro has been accused of bias in favour of a megaproject, overestimating its load forecasts and gaming the numbers to make Site C appear to be the least expensive way of adding renewable energy to the grid.
It is also refusing to release confidential material it used to make its own calculations – something that others trying to do their own due diligence say is unfair because BC Hydro is working with numbers no one else – except professional services firm Deloitte – has seen.
But some of Site C’s critics also come from a biased position, either against the dam or in favour of alternatives like wind or geothermal power.
Perhaps the sole arguably neutral analysis was produced by Deloitte, in the form of two reports, at the request of the BCUC.
In a report commissioned by the PVLA, Robert McCullough, a U.S. economist and public policy consultant with extensive experience in energy issues, takes issue with Deloitte’s estimates of alternative energy costs. He says that “Deloitte’s estimates are more favourable to Site C than official estimates from elsewhere in the U.S. and Canada.”
BC Hydro’s estimates for Site C started at $83 per megawatt hour (MW-h) in 2013. But that price was reduced to between $64 and $67 in part by pushing the return-on-investment period out to 70 years.
The policy of zero return on equity it adopted means spreading the costs over a longer period, which makes Site C look cheaper than it really is, according to the Clean Energy Association of BC.
“Such a blatant taxpayer subsidy, while it may be acceptable for political reasons, should never be permitted as part of any fair-minded financial or economic evaluation intended to make rational investment decisions regarding the Site C project as compared to the competing alternatives,” the association says in its submission to the BCUC.
As for wind power, BC Hydro has calculated the average cost at $110 per MW-h. McCullough comes up with higher costs for hydro power and lower costs for wind, but does so based on U.S. projects and calculations, including some by the U.S. Energy Information Administration.
The Canadian Wind Energy Association (CanWEA) used recent Canadian wind project contracts in Ontario and Quebec to come up with what might be a more relevant comparison.
The prices ranged from $64.50 to $105.50 per MW-h in Ontario and $76 per MW-h in Quebec.
CanWEA calculates the levelized cost of building wind power in B.C. at $68 per MW-h, which would be on par with Site C’s costs. It calculates solar power at between $100 and $129 per MW-h.
The problem with both wind and solar, however, is that they are intermittent. Wind turbines produce power only about 30% of the time, when the wind blows, whereas hydro power is “dispatchable” – producing power more reliably.