Take a look around the energy markets right at the moment and anyone with half a clue will be wondering why Kathy Dunderdale and her provincial government are hell-bent on building Muskrat Falls.
The dam is the smaller of two always looked on before now as being the Lower Churchill project and it was always the optional dam. The Gull Island power station was always considered the most cost effective. The 2,000 or so megawatts from Gull Island would give enough cash in power sales to justify the cost of building it.
But the generator is only part of the equation. Look at a globe and see where Gull Island and Muskrat are.
Then look at likely markets.
The Lower Churchill is pretty much as far as you can get from markets other than Quebec without leaving the continent.
As a result, the power lines to get from the dam to the market will be long.
And those long lines will be costly.
In fact, the power lines to get Muskrat Falls power to Newfoundland - where we have cheaper alternatives the province’s energy company ignores in order to justify a financial pig of a project – and to Nova Scotia is actually more expensive than building the dam and the generators themselves at Muskrat Falls.
Try stringing the power to New York and you get power that is hideously overpriced for any market.
This is something Kathy Dunderdale has already acknowledged, by the way.
But even if all that were not true, any development on the Lower Churchill is going to run headlong into the competition.
Not Hydro-Quebec and its 8,000 megawatts of wind and new hydro, although that is a big enough competitor.
Natural gas.
The price is cheap.
There’s lots of it.
Natural gas is a relatively cheap and relatively clean way to make electricity from fossil fuels.
There are about 10 trillion cubic feet of natural gas offshore Newfoundland and Labrador. Recent discoveries in Quebec and prospects along the Gulf of St. Lawrence basin will only add more natural gas to the pool that’s available in North America. The Quebec provincial government is already looking to attract international investment in natural gas, mining and other development.
West coast Newfoundland could wind up being a major source of natural gas within the next decade if prospects along the eastern edge of the Gulf and onshore pan out.
But for that to happen, the provincial government might well have to abandon its obsession with incredibly expensive power from Muskrat Falls.
- srbp -