27 July 2012

Demand Forecasts #nlpoli

Yesterday’s offhand reference to Nalcor’s electricity demand forecasts brought home a couple of points to your humble e-scribbler. 

The biggest one is that a great many people still do not know a lot of the basic information on this project despite the fact the provincial government announced it the better part of two years ago.

Well, never let it be said that this wasn’t a space where information was hard to find.

If you want the Nalcor version as Nalcor presented it, check out the documents archive from the public utilities board. During their hearing, Nalcor provided considerable information on demand forecasts and a considerable portion of the PUB hearings and report dealt with the issue of demand.

Nalcor provided much the same information to the earlier federal-provincial review but sadly, pretty well all the documents from the joint federal-provincial review panel on the lower Churchill project have vanished into some sort of Internet void.

On the up side,  you can still find the panel’s final report.  Bear in mind as you read this report that the joint review panel was looking at what was essentially the 1998 proposal for development that the provincial Conservatives initially pursued.  That consisted of two dams (Gull Island and Muskrat Falls) and a line to connect them back to Churchill Falls. The line to the island was not considered by the joint panel directly but it did look at the provincial demand as part of Nalcor’s overall justification for the project.

When it comes to talk about the electricity needs within the province,

Nalcor’s position was that up to 800 MW of energy from the Project would be required to meet provincial demand, and that there are market opportunities for energy export that would exceed the output of the Project by a factor of eight during the Project’s planning horizon. (p. xii)

There’s a more detailed discussion at Section 4.1, which starts on page 16. What you will hit first, though, on page 17 is a reminder that the current version of the project had nothing to do with meeting local energy demands:

The Province’s Energy plan directed Nalcor to consider two options for addressing the environmental problems at the Holyrood Generating Station, either replace the electricity generated at Holyrood with electricity from the Lower Churchill Project or install scrubbers and
electrostatic precipitators to control emissions.

Nalcor never looked at all the alternatives to replace Holyrood and its environmental problems in the most cost-efficient manner.  According to the joint review panel, the provincial energy plan dictated the two alternatives. No surprise which one they picked.

You’ll find another summary of Nalcor’s demand projects on page 26 of the joint review panel report:

At the hearing, Nalcor predicted that the annual growth rate in electrical consumption for the Island portion of the province between 2010 and 2041 would be approximately one percent, but over its entire study period from 2010 to 2067, predicted growth would be 0.8 percent. On this
basis, Island electricity demand would grow from the current level of approximately 1,500 MW to 2,300 MW and consumption would increase from 7 to 8 terawatt hours to 12 terawatt hours between 2010 and 2067. Nalcor also predicted that by 2015, the existing energy capacity on the
Island would not be sufficient to meet established  reliability standards.

Two things stand out.  First, the period they are talking about is 57 years.  Second, the predicted annual growth would be merely 0.8%. When your humble er-scribbler said that Nalcor didn’t predict massive growth, that was a sarcastic way of referring to projected growth of less than one percent per year.

David Vardy is a Princeton-educated economist who, among other things in his long career served as the province top public servant and as head of the public utilities board.  His paper on Muskrat Falls (September 2011) includes a discussion of island electricity demand.

Wade Locke also included a discussion of Nalcor’s demand forecasts in his lecture for the Harris Centre.  Locke has a slide that illustrates Nalcor’s view:

Locke demand slide

Now if you have waded through all that and still want more, you can find it in a detailed assessment submitted to the PUB review by an unnamed analyst. This is 175 pages of detailed commentary that subject’s Nalcor’s proposal to a pretty thorough review. Given that it is so detailed, we’ll devote some time next week to this presentation on its own.