As much as we Yukoners like to mock Outside experts, when the big brains visit it is wise to consider their advice.
David Hughes falls into this category. He is an energy expert with three decades of experience at the Geological Survey of Canada, after which he founded Global Sustainability Research, a consultancy. His work has been cited in The Economist and other august publications.
In his Whitehorse talk, organized by the Yukon Conservation Society, he gave us some advice on the Yukon’s energy future.
He also shared his perspectives on the broader North American shale gas phenomenon. Aficionados of data-rich PowerPoint slides, like myself, should tune into the YCS Youtube channel and watch the presentation. I’ll avoid too many spoilers, but watch what Hughes thinks the collapse in Asian natural gas prices means for our friends in Fort Saint John. Natural gas prices in many parts of Asia are tied to oil prices, and having gas fall from over $15 per unit to under $10 won’t help the business case of B.C. export terminals.
But why talk about the planet when we can talk about ourselves? Let’s focus on what Hughes had to say about the Yukon.
Hughes’ first recommendation is to think long-term, which means not letting our energy strategy be too swayed by the current low gas prices caused by the shale glut. He told me afterwards that energy prices are likely headed ever upwards in the long run, and that it’s sensible to start building renewables into our energy system earlier rather than later.
He makes the point that once these facilities are built, the power they generate is free (well, not totally free since there are some maintenance costs, but certainly without the big ongoing fuel bills a diesel or liquefied natural gas plant has to pay).
Hughes recommends demand-side management, where investments in things like low-energy light bulbs or better insulation reduce energy demand. This reduces the need to build more expensive generation.
He also recommended “aggressively” pursuing renewable additions to the grid.
This makes a lot of sense to me, especially since Yukoners pay tens of millions every year to heat their homes with home heating fuel. This is money that could be switched over to help pay for local electricity generation that would heat our homes with baseboard heaters, heat pumps or similar gadgets.
Every month or two, we read in the paper that the government is spending $5-10 million on some new building, paving project or similar piece of infrastructure.
I recommend that the government take $10 million out of the billion-dollar transfer payment every year, and set it aside to build one renewable energy project. They would put this money on the table in a reverse auction, and ask First Nations development corporations or other investors to come forward with ideas. The one that generated the most power for the lowest cost (while being able to pass an environmental assessment) would get the cash.
Part of the deal would be that the new facilities sell their electricity to Yukon Energy at a low wholesale price, say five cents per kilowatt hour, over a guaranteed 10- or 20-year period. Yukon Energy would be getting cheap power, which it could use instead of LNG or running down its large but finite hydro reservoirs, while proponents would have a guaranteed revenue stream.
A price of five cents wouldn’t be enough to make a micro hydro or wind project economic, but that’s where the $10 million subsidy comes in.
Such a scheme would migrate Yukoners off oil-heating, generate jobs and business opportunities for First Nations and other businesses, and keep our retail electricity price low. That would help keep Yukon businesses competitive and lower the cost of living for most Yukoners. Another benefit is that our cabinet ministers would get to fly around the world talking about what environmental leaders they were (this of course is a key part of any cabinet submission).
One thing I find attractive about this idea is that we could just do it. No research into unproven energy technologies is required. We don’t have to install smart meters in every Yukon home at great expense. We don’t need permission from the feds. And if the First Nations were involved in the projects from the start, the chances are better of getting through the increasingly complicated aboriginal title and consultation issues the courts have given us.
Furthermore, these projects are faster to build than the big hydro project currently being considered. While this big chunk of hydro capacity would be very useful someday, assuming it can be built at a reasonable cost and with manageable environmental impacts, it won’t be coming on grid for a decade or more.
Some might object that this is subsidizing energy use. Indeed it is. But I don’t think renewable energy projects should be asked to jump a higher project-justification bar than, say, re-paving the Alaska highway or building a new government building. Renewable energy projects feeding five-cent power into our grid would also benefit nearly all Yukoners, unlike a few other government projects you could think of.
Hughes also pointed out that our existing hydro is good backup for wind or other renewables, since it is “dispatchable.” This means it can quickly be ramped up or down by the grid operators as wind power ebbs and flows. He also pointed out a number of downsides about having LNG instead of diesel as our backup fossil fuel, but that husky has already found the hole in the fence and is long gone. The LNG plant is now complete.
He added, however, that if we have enough renewable energy on the grid, we don’t have to use LNG very often.
Building one renewable energy project a year sounds like a lot of work. It is. But it’s the good kind of work that employs Yukoners and benefits Yukoners. And if we do nothing, we are doomed to burn an increasing amount of LNG every year and see our power bills go up steadily.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won this year’s Ma Murray award for best columnist. You can follow him on Channel 9’s “Yukonomist” show or Twitter @hallidaykeith