Sometime early next year or possibly even before Christmas after the earlier B. . C.. . Government Bureaucrat Peter Milburn completes an independent review of the Site C hydropower project. British Columbians should expect a sticker price shock.
And the BC NDP government should prepare for the excoriation of the BC Greens for failing to kill the $ 11 billion project in 2018 if that would have meant a $ 4 billion write-off.
But despite a red light warning from BC Hydro that the project is now exposed to « significant cost pressures », Site C could become a continuation of the Muskrat Falls « Boondoggle » dam, which once again received calls from dam opponents and the Greens to Wenn If the project is halted, Prime Minister John Horgan’s administration may conclude that scrapping Site C is not an option.
« When we [the BC NDP] entered government in 2017, we had a very serious discussion about the project and decided to move on, » B. . C.. . Minister of Energy, Mines and Petroleum Resources Bruce Ralston said Jan.. July when he announced Milburn’s appointment as special adviser. « So I’m not sure [delete Site C] is a realistic alternative. I will wait for the advice of mr. Milburn about it. ”
The decision of whether to continue or stop and cancel the project depends largely on how serious and costly new geotechnical risks are.
The best the Horgan government can do is end the project, regardless of its cost, hold the former British Columbia Liberal government responsible for sanctioning it in the first place, and try to do that Making the most of an overpriced dam by taking advantage of the increased demand for clean electricity that can come from decarbonization.
When the British Columbia Liberal government approved Site C, the budget was $ 8. 6 billion. It was revised to $ 10. 7 billion in 2018. This budget included 858 million. Contains $ 708 million in emergency funding, 71% of which is spent according to BC Hydro. USD in reserves. The project is now about 50% complete and $ 6 billion has been spent.
The most recent quarterly progress report from BC Hydro to the BC Utilities Commission (BCUC) said the main contract for construction work in March 2020 increased by $ 332 million. USD was increased.
A Deloitte review found the project was on time and on budget as of September 2017, but estimated it could cost $ 10-12 billion. 5 billion, depending on how many delays it has suffered.
In 2018, the cost of canceling Location C was $ 4 billion. USD, which would require an interest rate hike of around 10% if the depreciation had to be borne by the interest payers. That included $ 2. 1 billion expenses already made and $ 1. 8 billion in termination costs.
Since then, an additional $ 4 billion has been spent on the project. The sunken cost would now be at least $ 6 billion, and this does not include the cost of restoring it to its original state, or the cost of building new power generation facilities in the future, or buying electricity from other countries if B. . C.. . The demand for electricity increases.
If Site C were canceled, the $ 280 million project to power Peace River would also become a white elephant. It will be integrated in location C to increase the power supply of the peace region and above all to electrify the upstream natural gas industry.
Given Site C’s capital budget of $ 10. $ 7 billion and that $ 6 billion was spent to hit the mid-term mark. The final cost of the project could end up in Deloitte’s high-end estimate: $ 12. 5 billion.
Robert McCullough, a Peace Valley Landowner Association advisor who has long opposed the dam and called for it to be canceled, estimated in October that the project is likely to cost an additional $ 2. 1 billion, which would bring the final price to $ 12. 8 billion.
Like the Lower Churchill Project (Muskrat Falls) in Labrador – which is expected to cost double the original $ 6. 2 billion estimate – Site C is likely too far advanced to be killed unless recent geotechnical challenges prove too costly to warrant completion.
Earlier this year, the government was informed by Horgan that the project is now facing delays and additional cost pressures. A work cut earlier this year as a result of the COVID-19 pandemic is one of the new cost pressures.
« The project is having a significant impact on the schedule from the pandemic and this impact will affect the project completion dates, » explains BC Hydro in its most recent progress report to the BCUC.
The project continues to face legal challenges from West Moberly First Nation, which is seeking an injunction in an infringement suit.
However, a bigger problem in terms of delays and costs is a geotechnical issue that was anticipated as a potential risk.
According to BC Hydro’s BCUC update, “a project risk has arisen on the right bank” that could lead to “considerable cost pressure”. ”
« Based on further technical analysis of the proposed mitigation measures, the foundation improvement costs are expected to be higher than originally expected in January, » warns BC Hydro in a quarterly progress report dated July 2020.
When the NDP government learned of the new geotechnical problems and cost increases this summer, Horgan and Ralston expressed disappointment and surprise and asked Milburn to look into the matter.
Those familiar with the project, including a former government bureaucrat, tell BIV that it shouldn’t be if the government is surprised given geotechnical risks known to be involved in building a dam on site in the Peace River Valley C is typical for decades.
The dam at Site C was designed in an L-shape to avoid building structures such as overflows and power plants on slate-prone slate. The design allows these structures to be built on firmer bedrock on the right bank. But now there seems to be a problem with the bedrock.
John Clague, a geologist at Simon Fraser University, says geotechnical problems were expected on the left bank of the valley. The last red flag is over the right bank, where the power plant, overflow channel and other dam infrastructure will be built.
« They just assumed the bedrock there was stable and firm, » said Clague. “It seems that [rock material] is not as stable as they thought. It won’t slide into the reservoir, but it can contract and expand a little.
« If you want to build a power plant and a dam over it, you cannot tolerate expansion or contraction as it will ultimately damage or even destroy the foundation of the dam. « . They have to be perfectly stable. ”
« The cost of improving the foundation is expected to be higher than originally expected in January, » he wrote in his last progress report.
Dwayne Tannant, professor at the Engineering School on the Okanagan campus of the University of British Columbia, did his thesis on Site C and the landslides that occur there.
He said a number of hydropower plants have been built in regions of similar shale geology in western Canada, including the Gardner Dam in Saskatchewan. Once the dam is built, he said the entire structure could easily move downstream if it settled.
« But it’s not like the dam breaks and fails, » said Tannant. “The chances of this are very slim. ”
He also denied concerns that hydraulic fracturing in the region’s natural gas sector posed a risk to the dam because of the « noise ». ”
If a dam can be built to withstand a major subduction earthquake, it can withstand the smaller mini-quakes that hydraulic fractures can sometimes cause, he said.
« The tough questions are well worth asking, and BC Hydro should have the answers to those questions. ”
If so, they are not offered. BC Hydro replied to an interview request from BIV that no one was available to answer questions.
Even the BCUC has a hard time getting answers out of BC Hydro. BC Hydro has been grilled because of recent cost overruns and geotechnical issues. But BC Hydro recently told the BCUC that it would have to wait for Milburn’s review to complete to get responses.
« BC Hydro believes there should be no responses until the independent review is completed and the government has received the consultant’s final report on the findings and recommendations, » the utility writes in a letter to the BCUC.
BC Hydro also has no plans to submit its customary quarterly progress report to the BCUC until Milburn’s final report is submitted. It was originally due in October, but early election delayed it.
Site C was selected as the best option among a number of sites along the Peace River for a third dam on the Peace River. The other two that were built upstream are the W. . ONE. C.. . Bennett and Peace Canyon dams.
A third hydropower dam on the Peace River – even an overpriced one – may not be that bad in a decade if the decarbonization of the economy means an ever-increasing need for clean electricity. Of course, its foundation does not fail.
Marvin Shaffer, Professor of Public Order at Simon Fraser University (SFU), has followed the Site C saga over the years. He says those who oppose the project often overlook one important point: cost versus value. He doubts the NDP government would cancel the project now.
« It is possible, but highly unlikely, that the geotechnical problems and escalation of costs for Site C would warrant terminating the project at this point, » Shaffer recently wrote in a blog post.
« If you gave up on that, not only would you have the costs you’ve already spent, but the costs you would have to incur to clean up the site and get out of contracts – it would be huge, huge Cost you would face, ”he told BIV.
As a clean source of energy, dams offer significant advantages over wind, solar, river and other renewable energy sources because they can store water and use it to generate electricity when needed.
Hydroelectric power plants are more expensive to build than wind or solar dams, but they can have a lifespan of 70 to 100 years and, in contrast to renewable energies, deliver solid, shippable electricity that can meet peak demand. This ability to ship makes dam power more valuable. There are jurisdictions that act with power, an arbitrage advantage – they can buy cheap and sell high.
Mark Jaccard, economist for energy sustainability at SFU, asked the BCUC to check the dispatchability if it is commissioned with the review of site C in 2017. In a statement by Vancouver Sun, he wrote: “It makes no sense to comment that wind and sun will be cheaper than Location C because their costs are going down. These costs have to be compared to the value of the electricity. ”
In a post he wrote to the BCUC for the BC Sustainable Energy Association, Jaccard wrote, “The BCUC panel must take into account the value differences between non-shipping and shipping generators when evaluating the claim that the cost does not fall -distributable renewable energies affect the relative economic situation of location C. . The effect may well turn out to be the opposite. ”
Shaffer added that Site C dam should not be viewed as a competitor to wind power. Eventually B. . C.. . More electricity may need to be generated as the economy moves towards greater electrification, and dams can provide a storage solution for intermittent wind power.
« You shouldn’t think of Site C and Wind as a substitute, » Shaffer said. « They are additions. Location C allows more wind to be absorbed efficiently in your system. ”•
Site C Dam, BC Hydro, Hydropower, British Columbia, John Horgan, Project
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