Unlocking Alberta’s Hydro Potential to Generate Clean Dependable Electricity for Alberta

Earlier this month the National Energy Board (NEB) released a report on Canada’s renewable power called Canada’s Adoption of Renewable Power Sources – Energy Market AnalysisThe NEB report revealed that Canada is a world leader in renewable electricity that generates 66 per cent of its electricity from renewable sources. More particularly, the NEB pointed out that hydro is the dominant source of Canada’s renewable electricity, accounting for 55 per cent of the country’s total installed capacity and almost 60 per cent of its generation. Canada was second only to China in total hydroelectricity production in 2015.   The NEB pointed out that the big provincial players in hydroelectricity are Quebec, British Columbia, Ontario, Newfoundland and Labrador, and Manitoba, in that order.  Alberta was not even mentioned in the hydro section of the NEB report, and that got AlbertaPowerMarket.com thinking about the lack of hydroelectricity development in Alberta.  Well, it was the NEB report, plus more talk this month out of Manitoba and British Columbia, and their provincial utilities, about the need for a reinforced “East-West Grid” so that their new multi-billion dollar hydro projects under construction (Keeyask in Manitoba and Site C in British Columbia) could displace some of Alberta’s thermal generation and also firm Alberta’s variable wind and solar power projects.

The question we asked ourselves at AlbertaPowerMarket.com was whether unlocking Alberta’s hydro potential was an alternative to generate clean dependable electricity for Alberta.  After all hydroelectricity is one of Alberta’s oldest sources of energy. In the early 1950s about half of Alberta’s installed capacity was hydroelectric. Today, because Alberta’s generation mix changed since then to capitalize on the Province’s low-cost coal and natural gas resources, the installed Alberta hydro capacity has fallen to about 6 per cent, and that capacity generates only about 2 per cent of our electricity. This current hydro capacity is provided by about 23 Alberta plants with a combined capacity of approximately 900 MW.

An outsider might think that Alberta lacks hydro resources, but that is not actually the case. In fact, a 2010 report prepared for the Alberta Utilities Commission (AUC) by Hatch estimated that only four per cent of Alberta’s total hydro energy potential of 53,000 gigawatt hours (GWh) per year was being used in the Province.  The Hatch report is a great starting point for anyone considering siting a new hydro project in Alberta. Further, the Canadian Hydro Association ranks Alberta fourth in Canada for undeveloped hydroelectric potential.  The Association estimates that Alberta has more than 11,500 MW of remaining economic hydro potential, including both reservoir and run-of-the-river projects.  Similarly, late last year Terry Boston, the coal facilitator who advised Alberta on its proposed shutdown of coal plants, encouraged Alberta’s Premier to pursue hydroelectric power development as a low-carbon flexible renewable alternative to generate dependable power in Alberta using Alberta workers and materials.

Yes, new hydroelectric projects have long construction periods, significant upfront capital costs, location challenges and some hydrologic risk, but they also have no fuel cost, low operating costs, and very long and reliable service lives. Hydroelectric facilities can generate electricity for a hundred years or longer, and hydro is readily dispatchable, making it an excellent renewable baseload power source.  It is also useful in levelling surges or imbalances in electricity supply and demand, and very valuable in supporting/firming variable sources of renewable energy such as wind and solar. As a result, in our view developing new hydroelectricity needs to receive serious consideration in Alberta given the goal of phasing out coal-fired generation and generating 30 per cent of all electricity in Alberta from renewable sources by 2030.

Some power developers are taking note, and are pursuing new hydro development in Alberta.  For example, TransAlta is pursuing a 600 to 900 MW large pumped hydro storage expansion project at its existing Brazeau Hydro facility – this will increase that hydro plant’s capacity from its current 355 MW output. The Amisk Hydroelectric Project is a 330 MW run-of-river hydroelectric project proposed to be located on the Peace River that is being developed by AHP Development Corporation on behalf of a number of partners, including Concord Green Energy.  The AESO Project List also contains the 125 MW Canyon Creed Pumped Hydro Energy Storage Project that is proposed to be built by Turning Point Generation.   ATCO is also interested in Alberta’s hydroelectric generation potential, and in the past has referenced large hydro development (greater than 1000 MW) on each of the Slave, Athabasca and Peace Rivers in Alberta.

Unfortunately, these developers will be faced with a somewhat complex approval and regulatory process, though one that is not insurmountable. In fact, the Hydroelectric Power Generation Development Inquiry held by the AUC in 2011 was intended to make the regulatory process more efficient.  We were legal counsel in that inquiry and helped to define the regulatory processes applicable for new hydro projects. Though a complete analysis of these processes is beyond the scope of this article, any new hydro developer in Alberta should be prepared to:

  1. Deal with multiple agencies, including Alberta Environment and Parks (AEP), the AUC, the Natural Resources Conservation Board (NRCB), and the Canadian Environmental Assessment Agency (CEAA), plus other provincial and federal regulatory authorities like Fisheries and Oceans Canada and Transport Canada.
  1. Complete a five step regulatory process that incorporates: (i) preliminary processes, (ii) an initial public consultation, including with municipalities and landowners plus a detailed consultation with First Nations and Métis communities, (iii) environmental assessment (federal and provincial) and that is mandatory in Alberta for any hydro project greater than 100 MW, (iv) regulatory approvals (federal and provincial), including a decision by the AUC and by the NRCB that the proposed hydro development is in the public interest, and (v) the requirements for an act of the Alberta legislature or an order-in-council or lieutenant-governor-in-council approval.

Interestingly, it is usually only after the AUC and the NRCB have issued their public interest determinations that the developer obtains approval from AEP for dam safety assessments, water licences, and public land dispositions and other land rights needed to access and use the river bed, shore and neighbouring lands. To avoid further delays, applicants should apply for these approvals upon completion of the environmental assessment, at the same time as the AUC and NRCB applications are made.  The water license application to AEP must include dam design and operational details and a hydrologic analysis indicating potential adverse effects on neighboring lands and the water supply source and the aquatic environment. Licenses typically include conditions that require the applicant to submit ongoing water monitoring data and information on the quantities of water diverted to AEP. The license identifies the location of the diversion, water sources, rate and timing of water diversion, priority of the water right established by the license, and any other conditions specified by AEP.

Ultimately the AUC, NRCB and CEAA each have legislation that requires a further approval by the legislature, lieutenant-governor in council or a federal minister to ratify the agency’s recommendation.   For example, even after finding that a hydro project is in the public interest the AUC will not issue an order permitting a developer to construct a hydroelectric project until the Alberta legislature has passed into law a statute approving the new hydro project.

Unlocking Alberta’s hydro potential would provide Alberta with a low-carbon flexible renewable alternative to generate dependable power for Alberta.  It would assist Alberta to achieve its ‘30 by 30’ renewable target.  It needs to be in the conversation, in the same way that reinforcing the East-West Grid to use hydroelectricity from other provinces and coal-to-gas conversion are in the conversation. It may require support from the federal government – certainly it will require active First Nations support and encouragement from the Province.  While there may be some hurdles, just like with every other large energy project development, the hurdles are navigable with appropriate guidance, especially once the capacity market design work is completed and the future structure of Alberta’s electricity market becomes clearer for project developers and other market participants.

Chidinma Thompson (PhD)

Chidinma Thompson practices law in the Electricity Markets Group at the Calgary, Alberta office of the national law firm Borden Ladner Gervais LLP.  She is a contributor to the electricity postings made each Monday morning to AlbertaPowerMarket.com.

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