Editor’s note: We are pleased to announce Keith Halliday has joined our ranks as a weekly columnist. From now on, you can find Halliday’s Yukonomist on Wednesday’s Insight page. Enjoy.
Does $160 million seem like a lot of money for the proposed “Mayo B” dam upgrade and power line?
It’s not if you consider that Yukoners burn around that much cash every year on petroleum products.
In 2007, we flared off 128 million litres of Texas tea according to Statistics Canada. That’s about 10 litres per person per day, and the figure doesn’t even include propane.
Oil prices have been gyrating wildly, so it’s hard to predict what our fossil fuel habit will cost us this year. But it’s likely somewhere between $100 million to $200 million. It’s as if we took a quarter of our transfer payment from Ottawa and mailed it to Big Oil. And there are plenty of analysts fretting that carbon taxes, Chinese demand, coups in Iran or “peak oil” reserve depletions could push this number much higher, despite the recent fall in oil prices.
High energy prices are a big disincentive to investing, working and living here. And, according to Whitehorse’s Vector Research, fossil fuels represent about 80 per cent of our total energy consumption.
So we should be interested in anything that can help us spend less money on oil. That brings up hydroelectricity, which provides most of our remaining 20 per cent of energy (wind is small so far and wood isn’t included in the statistics).
The debate about Mayo B can be boiled down to two questions. First, do we need Mayo B to cope with growing demand within our current 80/20 oil and electricity approach?
Second, and more fundamentally, can Mayo B help us dramatically change 80/20 to 70/30 or even 50/50? Norway, rich in mountains and water like us, has already gone even farther.
The Mayo B project involves roughly doubling the current Mayo dam’s capacity. To put this in context, a brief return to the delights of Physics 12 at FH Collins is in order.
Engineers and Physics 12 students measure electricity two ways: megawatts and megawatt-hours.
A megawatt is how much electricity is going through the system at a given millisecond.
A megawatt hour is how much power you use if you keep up that flow for an hour. Think of electricity as water. A megawatt measures how much water per second is coming out of the hose and a megawatt hour is how much water there is in your hot-tub an hour later.
You need to plan for both, because you need to know how much energy you’ll use in a year as well as the maximum amount you’ll want at peak times.
Mayo B will increase Mayo’s capacity to 13 megawatts from five, thus increasing the total Whitehorse/Mayo grid’s hydro capacity to 83 megawatts from about 75.
Yukon Energy will need to run its diesels less often at peak times. As Yukon Energy pointed out in its 2006 resource plan, residential, business and mining demand is growing toward the system’s current capacity.
Over the year, Mayo B can produce about 40 gigawatt-hours of power (a gigawatt is 1,000 megawatts or 1,000,000 kilowatts). That’s an increase of about 10 per cent to our current power capacity, depending on rainfall, seasons and a lot of technical factors you’ll have to ask a Physics 12 student about.
Some quick back-of-the-envelope calculations indicate that power from the $160-million Mayo B project will likely cost 20-30 cents per kilowatt-hour.
That includes the cost of tying Mayo into the Whitehorse grid and assumes the dam lasts 40 years, or more. This is more than the approximately 12 cents a typical Whitehorse resident pays now (depending on various rate riders and the Rate Stabilization Fund).
The project’s economics depend on a large jolt of federal stimulus money to reduce our share of the cost.
Another way to think of it is to look at construction costs per gigawatt hour; ie., Mayo B costs $160 million and provides 40 gigawatt-hours. In other words, enough dam to generate a gigawatt-hour costs $4 million at Mayo B.
In 2006, the engineers at Yukon Energy identified 10 other sites from Mayo B’s size to 10 times bigger. Most had capital costs per gigawatt-hour of less than half of Mayo B’s, although some also required lengthy new transmission lines.
However, they are all new sites and would require long and arduous permitting processes.
As much as we’d like to, we can’t blame Yukon Energy for all this.
It pointed this out in 2006.
So now we’ve boxed ourselves in: we need the power soon, it takes years to get a new dam approved (assuming it would even be possible) and the federal stimulus money is looking for a project that is “shovel-ready.”
So the verdict on Mayo B?
It usefully augments our hydroelectric system’s capacity. That will help us accommodate a growing number of houses on the grid, as well as more toasters, computers and hot tubs in each one.
It will also help if another small mine or two join the grid. It’s costly power, but if Ottawa has money to burn subsidizing our power costs then the project suits us fine.
But, going back to our second question, Mayo B increases our hydro capacity by about 10 per cent. It won’t allow us to dramatically displace petroleum in our 80/20 energy mix.
If we wanted to get to 70/30, we would need four or five Mayo Bs. And, depending on how high oil prices go and how green we want to be, we may want to go farther than that.
And we will likely want to look at alternatives to giant dams.
But that’s in the long run, and the subject for a future column.
See also Green Spaces on page 42.
Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels. His next book Game On Yukon! appears in May.