BC could develop Geothermal for half the cost of Hydro, report says

By Roy L Hales

Last week the Canadian Geothermal Energy Association (CanGEA) released a report stating BC could develop geothermal for half the cost of hydro. That’s only the first of a series of benefits, that include little environmental impact, more jobs and energy that costs less to produce. CanGEA claims there is a sufficient geothermal potential to meet all of British Columbia’s future power needs. (p 7) Geothermal could supply the 1,100 MW of capacity and 5,100 gigawatt hours per year (GWh/yr) of energy that the proposed Site C dam offers, but an officer of BC Hydro says it is not likely they will switch to Geothermal.

Figure1: Indicative Geothermal Price Curves Updated. (Note the 15 MW plants sitting along the 70/MWh line.)

Provincial Finance Minister Mike de Jong will be flying to Toronto, in December, to reassure bond-rating agencies that the utility can keep its debt under control and build a dam. The province is expected to make a decision after he returns.

Why is British Columbia even considering this project? It has already been rejected in 1983 and again in the 1990‘s. According to the Joint  Review Panel’s report on the Site C energy Project (p 307), ” … the Project would be accompanied by significant environmental and social costs, and the costs would not be borne by those who benefit…. These losses will be borne by the people of the Valley, some of whom say that there is no possible compensation.” Approximately 68 miles of boreal forest would be submerged and 150,000 tonnes of greenhouse-gas emissions released into the atmosphere.

Much of the land that would be submerged is covered by Treaty #8, which guarantees local First Nations they can continue with their traditional way of life “for as long as the sun shines, the grass grows and the rivers flow.” The Panel concluded, “the Project would likely cause significant adverse cumulative effects on current use of lands and resources for traditional purposes.”

Four of the Treaty 8 First Nations have already launched a legal challenge of the Review Panel’s report because they do not believe it adequately considered the infringement of their Treaty rights. Any attempt to proceed with the Site C dam, without reaching an agreement with First Nations, will provoke more legal battles.

Figure7: Comparative Employment from 1,100 MW

None of these problems occur if BC developed geothermal, which also has numerous benefits. Studies of existing facilities in the US (page 9) show that an average of of 1,870 permanent jobs are created when you develop 1,100 MW of geothermal. Neither natural gas or the Site C dam can deliver a tenth of this number. The hot water, and numerous minerals like like silica, lithium, manganese, zinc and sulphur, obtained through this process is used by other businesses. Hydro could minimize, or in some cases eliminate, costly transmission updates by installing geothermal facilities. Two of the transmission lines CanGea said could be deferred were the $1 billion Fort Nelson project and $750 million line between Prince Rupert and Terrace.

Randy Reimann, Director of Resource Planning with BC Hydro, admitted geothermal does not have “a lot of environmental footprint, depending where the location is and where the power line would have to run.”

He also said the idea of using geothermal instead of upgrades ” … is a bit of an interesting question…. I must say that it looks like CanGEA has got quite a number of qualified people who have spent a fair bit of time on this, but my understanding in general is that there is the sedimentary basin that’s up in the Northeast where they do the oil and gas drilling. That is the resource that they know the best, but that is quite a ways from the transmission system and it is expensive to deliver it.  The rest of the resources, that are closer to our transmission system, to my understanding are the ones that are unproven….  some of these sites are close to transmission and wouldn’t have a lot of costs to deliver. That said they are unknown and it could be quite expensive to do the drilling you need to explore … ”

According to the recent Site C Joint Review Panel Report (p 299), BC Hydro was advised to “explore the possibilities of unconventional energy sources, including geothermal energy” when the dam project was first rejected in 1983.  The utility “characterized its present level of effort as ‘under $100,000 [per year]” and said “we don’t really have funding to do R&D … In fact we’re expected not to do that.'” The Panel concluded 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.”

Figure8: Comparison of the Generation Capacity of Various Energy Sources

CanGEA claims their projects could be developed for $3.3 billion and geothermal would produce for $73/MWh. This is less than half than the $7.9 billion estimate for building the Site C dam and also lower than the energy cost ($83/MWh). On page 22 of CanGEA’s report it says,

“Site C will inevitably have a high transmission cost, while the strategic dispersion of geothermal projects will be able to minimize transmission costs. Thus, there is every reason to believe that given the thoughtful and methodological development of BCs geothermal potential, geothermal power could provide all of BC’s future power requirements at a lower cost to ratepayers than the proposed Site C project.”

“Hydro needs to spend some time to see the (CanGEA) report and see what they’ve done in it, to see how they came to their numbers” said Reimann. “On the face of it, that’s a fair clip lower than the assessment we had done for those geothermal resources.”

Reimann said BC Hydro’s calculations for geothermal ranged from between $91/MWh and ” couple of hundred dollars a megawatt hour,” depending on the site. This would appear to be the estimate used during the joint panel review, where it says (p 303) “BC Hydro estimates in Chapter 3 of its current Integrated Resources Plan that 4 TWh of geothermal power and about 700 MW of capacity could be available within a range of $91 to $105 per MWh.”

CanGEA Chair Alison Thompson said the utility put forward what appears to be a catalog of all the geothermal properties in the province.   

“That does not make sense from a business point of view, to go after absolutely everything” said Thompson. “We should be going after the low cost, low hanging fruit, easy ones to do.”

CanGEA looked for favourable sites that are close to roads, transmission lines and areas where there already are surface impacts. Their calculations show (p 22) it would cost $3.3 billion to build an infrastructure “using only the binary plants, which includes the 8  conventional binary plants from the RODAT with 28 HSA plants.”

Thompson said they have tried to explain their calculations to Hydro on a number of occasions. They had hoped to present them at a meeting in July, but the agenda was changed. There have been a number of false starts since then, including a scheduled meeting at the Ministry office in Victoria that the key Ministry of Energy and Mines people failed to attend last week. (She said Reimann from BC Hydro was on the phone for 15 minutes of the hour long meeting.)

“I’ve met with Alison Thompson a number of times, we’re in discussions with them and we have not seen this report prior to its release the other day,” said Reimann. “We’ve never seen a geothermal project bid into one of our acquisition processes. It seems unlikely to me that we’d be able to turn around and have enough Geothermal bought that you wouldn’t need a project or resources the size of what Site C is providing.”

“Hydro will come to an understanding of what’s different in that report and what our studies to date have shown…. That’s one part of it, to show what might be able to be done. The other side is you actually have to have people developing the resources and bidding to Hydro and that’s the part that we haven’t seen ….”

Figure 6: An Example of Cascading for Direct Use and Power

CanGEA said they have been negotiating since 2007. There are three provincial ministries involved: Natural Gas, Energy & Mines and BC Hydro.

“The three of them are not all coordinated,” Thompson said. “When BC Hydro put out calls for power in the past, the Ministry of Mines and Petroleum had not yet permitted projects to go forward…. We’ve heard from our membership that there has been over 100 permits requested and very few of those have been processed.”

Most geothermal developers move on to countries where there isn’t so much red tape. 

Twenty-five nations use geothermal energy to produce electricity. According to the US Energy Information Administration, for example, geothermal produced produced 12.1 million MWh for the US during the first eight months of 2014.

Canada has yet to develop a single project.

“I’ve heard a lot of analogies between us and the LNG industry this past week,” said Thompson. “When you sincerely want to move forward, you create a whole new ministry, you create public hearings, you create a panel, you create a real discussion around what needs to happen. None of this has happened for the Geothermal industry (in BC).”

It does not make sense to proceed with the proposed Site C dam project, given the negative impact on the area and probability it involves breaking Treaty #8,  without first exploring what appears to be a lower cost, more environmentally friendly geothermal option. CanGEA is proposing that the province

The podcast of my interviews with Reimann and Thompson which will be broadcast on CKTZ and  CJMP, in British Columbia,  on Dec 2 (schedules are posted on the ECOreport), but you may listen below.

All illustrations above were take from the Canadian Geothermal Energy Association report Geothermal Energy: The Renewable and
Cost Effective Alternative to Site C

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