BLACK: Wind power looks better than Muskrat Falls
There is a rather stark contrast between two recent announcements about new sources of power generation.
On the one hand, we have the awarding of three wind generation contracts after a competitive bidding process. The winners are said to be providing electricity for a wholesale cost in the mid-$70s per megawatt hour. These will provide construction employment in different parts of rural Nova Scotia.
Even after adding 10 per cent to 20 per cent to compensate for the irregularity of wind power, this is quite cost competitive with other sources. The outcome is green, useful and easy to understand.
On the other hand, we have the Muskrat Falls hydroelectric proposal requiring no fewer than 13 separate agreements between Emera and Nalcor, in addition to many more that will need to be negotiated with the governments of Nova Scotia, Newfoundland and Labrador and Canada. The price for ratepayers, once said to be $1.2 billion, is now some unknown higher number, which in any event will not be guaranteed by Emera.
Electricity consumers might therefore be wondering whether this deal is in their best interests:
1 ) To reduce greenhouse gases and meet federal requirements, our coal generating plants should be phased out when they are 45 years old and near the end of their useful lives. Three quarters of them will thus be gone by 2030. The proposal will force them to be retired much earlier, but ratepayers will continue to pay off the mortgages.
2) The Muskrat Falls project will create far fewer Nova Scotia-based jobs than projects using wind, tides or natural gas. If a commercially viable tidal technology emerges over the next decade the market opportunity in Nova Scotia will have been taken by hydro power from Labrador. (Although hydroelectric power is renewable, the construction phase will involve the destruction of a substantial acreage of trees and therefore have an adverse greenhouse gas impact.)
3) The undersea cable, to be financed by ratepayers, is much bigger than what is needed to bring the power they will receive in order to serve Emera’s and Nalcor’s other commercial interests. Although ratepayers are being asked to accept the construction cost risk, the profits from other commercial interests will all go to Emera and Nalcor.
4) The current cost estimate has not been disclosed and apparently ratepayers will be asked to accept some or all of any cost overruns. The wholesale cost per megawatt hour could be $140 or more, almost double the recent tender for wind. After 35 years, ownership of the cable reverts to Nalcor, so Nova Scotia ratepayers will have no protection against sudden price increases. The provincial government, continuing its weak performance in business dealings, seems to have awarded this contract to Emera untendered.
5) The proponents say that this will cause prices to increase by two per cent to three per cent per year, so that would be 10 per cent to 15 per cent between 2015 and 2020. This is in addition to already planned increases of three per cent in 2013 and 2014, plus $120 million to pay for the paper mill shutdowns. A further increase is anticipated for pension costs.
6) We don’t need the power now and may not for another 20 years.
7) By imposing the 40 per cent renewable requirement, the government is preventing the Nova Scotia Utility and Review Board from telling us how much unnecessary additional cost ratepayers are being asked to suffer.
What’s not to dislike?
The proposed deal may be good for Newfoundland and Labrador, may be good for Nalcor, and may be good for Emera. It is not at all clear that it is good for Nova Scotians. Ratepayers are not interested in reading dozens of agreements. What they want is what we saw in the wind power competition — a firm commitment to a clear price.
Let Emera provide that clear price. Let it be compared with what is available from other sources in Nova Scotia and from other provinces. Let the timing be right for Nova Scotia needs, not those of the supplier. Then an informed decision will be possible.
Bill Black blogs at www.newstartns.ca
Good call, Mr. Black. Do you ref soccer, too?
Submitted by Alan on August 8, 2012 - 8:12am.
Now, why can't we get the same sort of reasoned argument from the government or Emera explaining why the project should go ahead? Mr. Huskilson's piece the other day was mostly notable for what it left out. You can't fault him, though. He's just doing his job. On the other hand, Torquemada could probably have expounded at length about the Quinque Viae, but he was still Torquemada.
Risk vs Reward
Submitted by fargotol on August 8, 2012 - 9:08am.
Sounds like there's not enough reward for Nova Scotia to warrant the huge investment risk.
Let's find our own solutions for clean energy so Nova Scotia is not at the mercy of corporations and other provinces, all of whom seek to serve their own best interests and not the best interests of this province.
On the topic of wind power, Muskrat Falls blows, but...
Submitted by hav2b on August 8, 2012 - 10:44am.
Both Hydro Quebec's power and natural gas fired generating plants look better than both Muskrat Falls and wind power. But don't try to convince any old blockheads of that fact.
Bill Black's # "7) By imposing the 40 per cent renewable requirement" refers to some number dreamed up by Dexter and his government. That can easily be changed to match what the federal government requires, even if it necessitates a change of provincial government. In fact the feds aren't concerned about renewables so much as greenhouse gas emmissions. So reduce the use of coal and greenhouse gas emmissions will become manageable.
Why go with this relatively new wind power generation scenario, when we know Hydro Quebec's record and we understand how to burn natural gas to get cheap, clean and affordable power and without a decades long delay.
Let's Just Get Real
Submitted by daveburris on August 8, 2012 - 11:04am.
I don't think so! The wind energy Mr. Black is referencing "in the mid-$70s per megawatt hour", so they say. So, this is about 7.5 cents/KWH, and is STILL way too expensive. Just out of curiosity, how is it then, that we have been afflicted with wind costs to date, to the producers, of at least 13.9 cents/KWH(In some cases far more), if the cost is only 7.5 cents?
Remember, this is WHOLESALE, at the wind farm, by the time you add transmission and distribution, overhead and profits, PLUS, don't forget the coal-fired plant that has to be kept idling, for when the wind doesn't blow. Now you have a cost at your meter of about 14 cents/KWH(not 7.5 cents). We pay 13.3 cents now, and that is about 20% at least, too high, driving business and jobs out of the province.
Just look at the Herald, July 17, 2012,...Nancy Rubin, lawyer for other industrial ratepayers testified(At the UARB, re PWCC HEARINGS) that ...“Implicitly, by ensuring that PWCC is not saddled with the UNMANAGEABLE RENEWABLE ENERGY cost consequences, it is other ratepayers who are saddled with the unmanageable renewable energy consequences...."
Look at this item as well - MacLean's July 16, 2012- " the market price on a recent afternoon was 2.06 cents per kilowatt hour."(Ontario). Now that's more like it!
These renewable mandates are an absolute world-class disaster, and Muskrat Falls even more so. Pretty much as bad as Olympic boxing judges, and that's pretty bad.
Black hole
Submitted by Looking for lea... on August 8, 2012 - 11:25am.
It appears that decisions & economic assumptions by all parties (except the risk-takers... i.e. rate/taxpayers) regarding long term, conceivable outcomes have already been taken by those with the most to gain if the project proves successful.That decision-making process may be necessary given the complexity of such a huge project.
However, Mr.Black raises serious & reasoned doubts that the outcomes will ever benefit we "non-intentioned" risk-takers.
Therefore, future agreements should shift the risk burden to the shareholders of the private investing organizations.
That,s normally how life works!!
Kudos Mr. Black
Submitted by henry gondorf on August 8, 2012 - 11:50am.
After listening to Huskilson and Parker last week..this is refreshing......I felt rather empty by the side of the road after listening to Charlie Parker in regards to the Muskrat Falls project, and the 35 year deal with Newfoundland Energy. I am no engineer/economist, but I have grave reservations and many questions that no one seems to be answering regarding the cost to the ratepayers of Nova Scotia. To me it seems to be a creation in tune with “too big to fail” and “the subprime market” where mortgages were back loaded resulting in the debacle we see today.
Given the fact that the Churchill falls deal will end in 2041....about 23 years after we receiving kilowatt hours from Muskrat, why have we not entertained the Churchill Falls option, if not immediately, then at least by 2041. The NS Utility and review Board is required to evaluate other options after they receive the capital costs and evaluate the “power purchase agreement”. This PPA , as I understand it , is like a subprime loan , backend loaded and increasing at 2% a year. This is an obsolete cost of service program designed to make a silk purse out of a sow’s ear. If it were anything else they would not require a guaranteed loan from the federal government....freemarketeers extrordinaire..and that includes Gwyn Morgan of LNC Lavolin , who wrote the transmission study for Emera.
Vermont just signed a 26 year agreement with Quebec Hydro at 6 cents a kilowatt hour. Here we have Hydro Quebec easily dealing with the US Federal Energy Regulatory Commission , where utilities must provide access to their grids to energy producers in an open access, non discriminatory manner, while the Canadian federation can’t even create something similar for our own inter provincial power transmission for the benefit of the ratepayers of the nation. Is it any wonder that our mills can’t compete.
This thing looks like the convention center deal on steroids, and all in the hands of an unelected UARB. We need more answers.
Wind power blows
Submitted by Here on August 8, 2012 - 12:31pm.
I like Mr. Black and sure wish he was running HRM.
I don't like wind power because it costs so much. I don't like Muskrat Falls because it costs so much. But it is a pretty short route from Labrador to NF then from NF to NS.
Churchill Falls was a bad deal for NF. This is an alternative so 2041 doesn't need to be another bad deal for NF. Sure it is a corridor to US markets but it is an alternative. Alternatives beat being held over a barrel.
I wish Mr. Black would run for Mayor of HRM.
Back in Black!
Submitted by Life's a beach... on August 13, 2012 - 10:33am.
Indeed Bill, what will be the impact on future green projects. With the pulling out of Bowater (Brooklyn Energy), NewPage, and with the promise of hydroelectricity from Muskrat Falls, it is my estimation that government will have deemed its renewable energy targets as achieved. Tidal energy holds great promise to many, none more hopeful than the people of Digby and Digby Co. who believe that they play a key, vital role in the economic delivery of tidal energy as a strategic hub for maintenance and refurbishment. And to boot, our Premier is very "supportive" of developing a local tidal industry. It is estimated that Digby could create between 400-600 jobs to service the industry once it is established. And let's not forget about the relief NSPI will feel in knowing that our utility does not have to upgrade the 69kv Valley West Transmission lines that have plagued any chance of adding renewable energy to the grid (reference NSPI's ACE plan for capital investments, none for the Valley West). To top it off, our distribution grid is maximized and has no chance of bringing on larger scale renewable project, spooty at best. So here we are, promoting tidal energy; clean, reliable, efficient and sadly not recieving the pivotal support that it needs to succeed from government, it feels more like lip service. As for the cost of wind vs the life cycle costs of running coal, wind is more expensive sure, but no-one has mentionned that NS is the 2nd largest polluter per capita, behind Alberta. How do we factor this into the equation? Keep harping Bill, maybe one day things will sink in... :-)