BC Hydro's Clean Power Call
The Clean Power Call Request for Proposals (RFP) is the first major call for power since 2006, and the first major green power call in five years. The new call is for “proven technologies, such as hydro, wind, solar and geothermal energy, among others,” Hydro said in a news release. The acquisition target is 5,000 GWh per year of guaranteed available energy from renewable sources.
Independent Power Producers Association of B.C. president Steve Davis said IPPs were delighted by the call. “There are 50 to 100 projects ready to bid, so I think it will be a very competitive call,” Davis said. “I think it’s going to be dominated by wind and medium-sized run-of-river hydro projects.”
“We welcome BC Hydro’s Clean Power Call, as it will allow our company to move closer to developing our offshore wind energy project,” said Paul Taylor, President of NaiKun Wind Energy Group. “BC Hydro has reframed the Clean Power Call as a RFP, which will provide us even greater flexibility to reflect the unique attributes of our clean energy project.”
NaiKun, Vancouver-based renewable energy company, is proposing to build Canada’s first offshore wind project in Hecate Strait off the north coast of British Columbia. The project would produce enough energy to power 120,000 homes, nearly one quarter of the power called for in BC Hydro’s RFP. NaiKun’s project is in line with many of the priorities identified in BC Hydro’s Clean Power Call RFP, including the need for clean, renewable energy using proven technologies.
Finavera Renewables is preparing bids for up to five projects totaling approximately 300 megawatts of renewable electricity. The projects are located in the British Columbia Peace Region and have several attributes that will contribute to strong proposals: high wind speeds resulting in high energy yields, close proximity to transmission lines, and 12-18 months of wind data from meteorological towers.
“We are excited the BC Hydro Clean Power Call has been issued and we are moving forward with the preparation of bids for several of our wind projects,” said Finavera Renewables CEO Jason Bak. “The projects we plan to bid have high wind speeds, good access to transmission, and they have completed detailed design work. These factors will allow us to enter several competitive bids that will provide a return for investors and also provide clean electricity at a reasonable cost to electricity users in British Columbia.”
Energy sector commentator David Austin said it was important for B.C. to continue to acquire electricity from domestic sources to meet increasing demand within the province “and to eliminate reliance on the volatile electricity spot [trading] market.”
However, Austin questioned Hydro’s timing on the call. Final proposals are due in November, and Hydro won’t make a final announcement on successful bids until June 2009.
Austin said that gap is “far too long” given rising material costs and labour demand in the Western Canada construction market and suggested some independent power producers could shy away because of the financial risks.
There are other investor related concerns that may kill many potential projects. As Patrick Brethour, a Globe and Mail writer noted on June 13th buried in the depths of the document asking for proposals is a paragraph that gives B.C. Hydro the ability to buy the “residual rights” to a power project once the term of the initial electricity-purchase agreement expires.
In other words, after the private company has spent millions to develop a project in a capital-hungry, high construction cost environment, just when the venture may begin to prove profitable, BC Hydro can buy the residual rights. Brethour quotes Bruce Ripley, president of Plutonic Power Corp., on one practical difficulty: “How exactly do you price a power plant for a sale in, say, 2048, a period in which climate change, greenhouse gas policies and energy technology are going to warp the economics of electricity.”
Other industry commentators are less subtle in their criticism. Jeffrey Ciachurski, CEO of Coquitlam-based Western Wind Energy Corp., North America’s largest publicly traded non-income trust producer of wind energy, is quoted in a Business in Vancouver article “So if you’re a company … building a $250 million cap-ex project in B.C. with a [power purchase agreement] of $0.083, the only person who gets paid is the banker. There’s no money that’s ever going to flow to the corporate parent.”
Certain renewable energy projects in BC also face considerable public opposition, as hydro projects may divert entire creeks and place access roads in protected areas.
For example, in early 2008 eight run-of-the-river projects on the Upper Pitt River were scuttled by public concerns over their environmental impacts. Project developer, Run of River Power Ltd., submitted a proposal to build a transmission line through a provincial park, stating the $350 million project wouldn’t compromise existing wilderness.
Local residents argued the project would harm the wetlands and surrounding area of the Park as well as a resurgent wolf population. Based on the outcry, B.C. Minister of Environment Barry Penner stated he would not approve the independent power project proposal for the Upper Pitt River, effectively killing the project after millions had already been invested.
More recently proposed wind farms in East Kootenay BC are receiving negative attention. The wind farms will require new access roads and power lines built through wilderness areas already protected for endangered Mountain caribou.
With mounting scrutiny from the public, each project may be subject to a detailed and open environmental assessment increasing the time and money spent on each project. “While some of these proposed power projects may indeed be green,” said Dave Quinn, a program manager with Wildsight, a not-for-profit organization, “the public has a right to learn about them first-and choose which projects make sense before permits are issued.”
The simple fact of the matter is that future energy demand in BC will rise by almost 50% over the next 20 years. No matter where this energy growth comes from, apart from conservation, it is likely to impact on prized ecosystems, wildlife habitats and community well being. This may be the price we will all have to pay for energy self sufficiency.
This isn’t to say that renewable energy has no future in BC, according to Quinn; they just have to be done right. Small projects that are done well and located close to a power demand are very likely supportable by citizens, stakeholders and Environmental Groups, he says.