WINNIPEG — Former NDP energy minister Tim Sale has made a solid case that Manitoba Hydro’s singular focus on new dams is a path not to a bright future but back to the past. That case is strengthened by an examination of a basic assumption that drives Hydro’s plans to build the $6.2-billion Keeyask dam and the $10.2-billion Conawapa.
The assumption is energy demand in Manitoba will grow indefinitely.
Currently, Hydro expects energy usage in the province to grow by 1.6 per cent — about 80 megawatts — annually. But if the utility dropped the assumption and expanded its Power Smart program to the point of cutting energy demand by 1.6 per cent annually, then the demand curve would flatten out and the risky dams would not be needed.
It is worth clarifying that the stated purpose of the dams is not export but meeting future domestic demand. Exports of excess power would play a role in paying for the dams during the period until domestic demand would catch up with their output, but ultimately if we Manitobans didn’t need them, they wouldn’t be built.
But how realistic is it to save as much power — by means of better appliances, better insulation, geothermal heat pumps and the like — as the dams would produce? And how much might such efficiency measures cost compared to new dams?
Energy efficiency is a counterintuitive notion from a business perspective. Most businesses do not seek to reduce demand for their product. But a provincial electric utility is different. In the electricity world, energy that is conserved acts as a resource. A megawatt saved is a “negawatt” produced as some energy gurus like to say. A negawatt has value — it can be exported or used to defer new generation costs.
If a utility needs 80 MW to meet projected demand growth, it can build an 80-MW dam or save 80 MW. Either way, the lights stay on.
And that is the purpose of Manitoba Hydro — to keep the lights on at the lowest financial and environmental cost, not to maximize demand or revenue per se.
Back to the question then: Could efficiency measures keep our lights burning without new dams and would it be cost-effective?
Hydro’s Power Smart programs cost 1.9 cents per kilowatt hour saved (or produced, if you will), while Keeyask would come in at around 10 cents.
To be fair, in addition to the 1.9 cents Hydro spends on Power Smart programs, consumers put in about as much of their own money for insulation, geothermal systems or similar expenses. With that, let’s say the overall cost to ratepayers of efficiency programs is then double the 1.9 cents, or 3.8 cents.
That is still far below the cost of Keeyask. Plus some of what consumers pay for these programs increases their home equity and quality of life.
But would that cost per unit of energy saved increase significantly if Power Smart were ramped up dramatically? That is, has the award-winning Power Smart program already picked the low-hanging efficiency fruit?
Looking back, Hydro has spent about $400 million on a wide range of programs to reduce electricity use in the province since 1989. The achieved savings are 557 MW, which has won them kudos. (Notice the difference between 557 MW for $400 million and Keeyask’s 695 MW for $6.2 billion).
Looking forward, Hydro plans for energy savings of 0.3 per cent annually, well below the 1.6 per cent needed to supplant new dams and far behind the industry leaders.
Montreal-based consultant Philippe Dunsky — who has advised governments and utilities across North America, including Manitoba Hydro — told the Public Utilities Board recently that this marks a dramatic decline in Hydro’s commitment to efficiency.
He said much more could be done, stating he is “confident” Hydro could cost-effectively achieve energy savings in the range of one per cent. Without further study, Dunsky was not prepared to comment on possibilities beyond that.
That further study is essential.
The efficiency field is evolving rapidly and each innovation increases the size of the “resource.” In addition to constant advances in technology and design, “soft infrastructure” improvements make efficiency measures more accessible, affordable and convenient. Hydro’s innovative new Pay as You Save program and the Power Smart Neighbourhood program are excellent examples of soft infrastructure.
Oddly, despite being well-positioned to build on these programs and its strong past, Hydro is turning away from efficiency. Instead of pursuing its least expensive resource option, it has reverted to its cement-in-the-river focus of yesteryear.
Over the next 15 years, Hydro plans to spend only $388 million on electric efficiency, compared to $16.4 billion — 40 times as much — on Keeyask and Conawapa. It plans to produce 2,180 MW from new dams and only 174 MW through efficiency.
The kicker, if one is needed, is that efficiency measures bring advantages beyond cost savings. Unlike dams, they do not require a decade to license and build. They can be introduced on an incremental, continually adapting basis, with no single multibillion-dollar commitments. In most cases, they require no regulatory process. They are not susceptible to drought. They require no transmission. They are not dependent on predictions of interest rates and export prices decades into the future. All this reduces risk dramatically.
Plus, according to Dunsky, numerous studies show efficiency programs create more jobs per million dollars invested than building new generation facilities.
And they do not require Hydro to pour cement into rivers or bulldoze transmission corridors through forests.
Could energy-efficiency measures keep the lights on at a lower cost and risk to Manitobans than Hydro’s northern expansion plan?
If Hydro or government has the answer, let’s see it. If not, there’s work to be done. If the coming public review of the need for and alternatives to Keeyask and Conawapa does not answer this question it will fail.
Hydro’s assumption of indefinite demand growth is a backward-focused, self-fulfilling prophecy. If it rests on that assumption, what will it do once all the rivers are dammed and the landscaped is saturated with wind turbines and transmission lines? At some point, we will need to bend the demand curve down. The sooner, the better.
Ultimately, the future lies in efficiency. We as a province can either lead, or follow, quite possibly dragging $16 billion worth of concrete behind us.
» Will Braun is the energy justice co-ordinator for the Interfaith Task Force on Northern Hydro Development.