Keith Halliday
Yukonomist
The long-simmering idea of connecting our power grid to bigger outside grids presents two starkly different visions for the future Yukon economy.
If our population keeps growing, and climate policy moves us to heat pumps and electric vehicles, the Yukon will probably need to double (or more) its electrical capacity by the 2040s.
Plan A is for the Yukon government plus First Nation and non-First Nation investors to build a serious number of new wind, solar, small hydro and maybe even nuclear assets. It would be a challenge, but we would get the construction and operating jobs, profits and tax revenues.
The business opportunity is a lot bigger than your typical economic-development project. Doubling electricity production would require another 550 gigawatt-hours of power.
At the revenue-per-gigawatt-hour rate Yukon Energy charged in 2022, that represents more than $80 million a year of revenue opportunity.
Picture a world where a bunch of new First Nations and non-First Nations businesses in the Yukon are designing new projects to grab a chunk of that revenue, building them and deciding where to re-invest the multi-decade stream of profits.
However, the Yukon’s steadily growing fleet of rental diesel generators shows how unsuccessful we have been at building new projects in the last decade.
Which brings up Plan B: connecting our grid to British Columbia or Alaska.
This would mean we never have to build another windmill or micro-hydro facility again. We could keep telling ourselves we could build big things like previous Yukon generations. But with the easy option of importing a bit more electricity always on the table, projects like Atlin or Moon Lake would continue to face the political and regulatory chill that has them frozen solidly in the planning phase today.
Such a grid connection would let us replicate our convenient but costly relationship with fossil energy. In 2022, we imported 200-million litres of gasoline, diesel, home heating fuel and liquefied natural gas, commonly known as LNG. The bill for that would be over $300 million per year. In return we outsourced the jobs, profits, tax revenues and environmental damage.
Most of all that went to Alberta, along with a bit of sneering about our Alberta cousins’ obsession with oil and gas.
So, should we pursue Plan A or Plan B?
Let’s have a look at the numbers. We don’t have a recent public study, so I’ll rely on the 2015 reports commissioned by the Yukon’s now-dead Next Generation Hydro project.
They looked at long transmission lines to the B.C. grid at Iskut and the Fairbanks grid at Delta Junction. The B.C. option cost $1.7 billion for 64-127 megawatts of capacity, roughly the same as the current Yukon grid. The Fairbanks option was cheaper at $1.3 billion for 70-80 megawatts.
As you may have noticed from your credit card statement, prices and interest rates are now quite a bit higher than in 2015. Inflation on large green energy projects has been even worse.
Let’s just guesstimate for now that an interconnect would cost $2 billion, net of the new 15-per-cent federal clean electricity tax credit.
Now we have to remember that this $2 billion doesn’t get us a new power plant. It gets us only the ability to buy power at market prices from B.C. or Alaska. Fairbanks doesn’t have a lot of spare power; their new nuclear reactor may not be online for years. Neither does B.C.
Despite the massive Site C project coming online, B.C. planners think the province and all its new heat pumps and electric cars may run out of power by 2030.
To his credit, B.C. Premier David Eby is trying to get ahead of this. Last year he announced that BC Hydro would be asking First Nations and the private sector for renewable power proposals on a large scale.
If the Yukon shows up to connect to the B.C. grid now, asking for this new power instead of supplying it, you can be sure B.C. will charge a hefty price for the electricity.
There is another challenge about power lines. They cost the same whether you use them a little or a lot. The Next Generation Hydro project was based on the — now laughably quaint — idea that the Yukon would cleverly build surplus power capacity and sell it to B.C. or Alaska. It calculated that for a power line to B.C. to make sense, you would need to use it to the max: the equivalent of six Schwatka Lake power plants 24 hours a day, 365 days a year, for 60 years.
Building such a line to use a week a year when it was forty below, or on the rare occasions Aishihik Dam malfunctions, would be financially bonkers.
All of this assumes you could build something through the contested B.C.-Yukon transboundary zone, which would involve at least 10 First Nations and non-First Nations governments. Talk to the Atlin hydro project team about how quickly their smaller and simpler Atlin-to-Jake’s-Corner plan is moving.
So, to recap, the grid interconnect is hugely expensive, faces massive transboundary political issues, taps into power pools that don’t have much spare capacity and reduces Yukon economic development.
Perhaps the technology fairy, working with savvy engineers, can produce an interconnect that doubles our power capacity but at much cheaper cost. This would be wonderful, but seems improbable.
Ah, you say, but what if we talk the feds into paying for it? You hear Yukon politicians talking about the need for the feds to step up on their obligations to northern infrastructure. After all, what have they done for us lately other than give us $30,976 per Yukoner in transfer payments?
But if our fed whisperers can talk them into giving us an extra $2 billion, it might be better spent building local power capacity. In fact, the biggest favour the feds could do for us is to offer a billion dollars, but on condition we actually build a certain number of megawatts by 2030. A use-it-or-lose-it offer might catalyze Yukon and First Nations governments as well as proponents and the Yukon Environmental and Socio-economic Assessment Board, or YESAB, to get moving.
I would love to see the numbers needed to double the Yukon grid’s renewable capacity over the next 20 years, comparing a Fairbanks-style small modular nuclear reactor to a suite of wind, solar, storage and micro-hydro facilities.
Your guess is as good as mine as to what happens next. We seem to have too much governance and not enough leadership for Plan A. A $2 billion grid connection that operates at a fraction of its capacity makes Plan B a hard sell in Ottawa.
That leaves our current plan, Plan D for diesel, which involves renting even more diesel engines each winter.
Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.