Geothermal could save BC Hydro 2.5 billion: geothermal association

By Korie Marshall

Canada’s geothermal energy association is asking BC Hydro to remove geothermal power from its list of “Currently Unavailable Options” arguing that geothermal can provide BC power by 2020, saving BC Hydro $2.5 billion in transmission lines and deferring the construction of the Site C dam.

The Canadian Geothermal Energy Association (CanGEA) is pushing hard to see geothermal included in BC’s slate of clean energy options as BC Hydro completes the latest consultations on its 20-year plan.

But the company with the Canoe Reach geothermal exploration permits south of Valemount still faces bureaucratic hurdles to bring their power to market should they develop.

Unlocking the country’s “tremendous geothermal energy potential” is a goal of the non-profit industry association. CanGEA’s current efforts include a crowdfunding campaign to hire a lobbyist in Ottawa and provincial capitals. Allison Thompson, Chair of CanGEA and Director of the International Geothermal Association, recently released an open letter to Canada’s geothermal community with some recent statistics on federal funding for solar and wind projects – which is far beyond what the geothermal industry has ever received.

Thompson also submitted comments on BC Hydro’s proposed Integrated Resource Plan (IRP). BC Hydro’s Integrated Resource Plan is a 20-year plan that describes how BC Hydro proposes “to meet future growth in demand for electricity through energy conservation and clean energy generation.”

BC’s Clean Energy Act requires BC Hydro to stop importing power from outside BC by 2016; to generate at least 93 per cent of all electricity from clean or renewable sources in BC; and to foster the development of First Nations and rural communities through the use and development of clean or renewable resources.

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Research site for the Canoe Reach geothermal project. Courtesy Borealis GeoPower Inc

But in the challenge to meet these needs, BC Hydro’s plan still does not include geothermal energy.

BC Hydro submitted a second draft of its 20-year plan to the Ministry of Energy and Mines and the plan was open for comments until Oct. 18th. Following the consultations, BC Hydro will re-submit its 20-year plan to the Province by Nov. 15th. BC Hydro must then submit an updated plan every five years.

In her submission to BC Hydro, Thompson says BC Hydro’s need for capacity – that is having enough energy to meet peak demands – can be met by geothermal, which provides a constant source of energy, unlike solar, wind or hydro. She says geothermal energy has the highest “Dependable Generation Capacity” of any fuel. BC Hydro lists it as 100 per cent of installed capacity, whereas even natural gas fired generation, the next most efficient fuel, is only 88 – 100 per cent.

Thompson says geothermal potential is also located at the three areas where new major load growth is forecasted – near the LNG terminals on the North Coast, the new mines in northeastern BC, and gas projects around the Horn River Basin near Fort Nelson. All three of these areas show high potential for geothermal power on BC Hydro’s own map.

But in BC, electricity for plants that liquefy natural gas (LNG) for export by ship does not have to be clean or renewable. A provincial regulation in 2012 removes LNG plants from the requirement to provide 93 per cent of BC Hydro’s electricity from renewable or clean sources. Thompson’s submission to BC Hydro’s plan says geothermal can help provide power for those plants without introducing more noxious emissions, especially around Kitimat, where there is already a large amount of emissions from Alcan’s recently modernized smelter.

BC Hydro’s 20-year plan lists the Unit Energy Cost for geothermal as low as $90 per megawatt-hour, while Site C’s cost is listed at $88, and Combined Cycle Gas Turbine’s cost is listed from $57 to $86. Thompson argues that the cost of gas powered electricity is tied to the price of gas, which fluctuates, and may be much higher, if more carbon costs are enacted. It also argues that the price for geothermal would be lower than Site C if both were evaluated using “the same asset life and the same weighted average cost of capital.”

BC Hydro concedes that “geothermal appears to be a low-cost resource option,” but it is listed as a “Currently Unavailable Option,” in their 20-year plan, with the reasoning that there are no commercial geothermal electricity projects in BC at this time, and because no geothermal power company has ever bid into BC Hydro’s power acquisition process.

Thompson says the reason no Independent Power Producer has bid a geothermal project to a BC Hydro power acquisition process is because BC Hydro’s Commercial Operating Dates were too short. Past calls from BC Hydro have required an IPP to be operating within 3-4 years from the bid being submitted. But BC Hydro forecasts a need for capacity in 2020 – seven years away. Thompson contends that geothermal IPP’s would bid if the call to power had a seven year commercial operating deadline.

BC Hydro spokesperson Jen Walker-Larsen says that BC Hydro understands there are significant challenges associated with geothermal, including the high costs associated with confirming the resource potential. But she says this step – confirming the resource – occurs well before a project applies to a call for power. The commercial operating dates for their power calls are intended to allow a reasonable amount of time for a project to be developed.

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Geothermal powers much of Iceland. Photo: Dan Košťál

Walker-Larsen explained that BC Hydro’s Standing Offer Program offers certainty in purchase price, and as a result, projects applying under this program typically are well advanced, and only need a three-year commercial operating date. Walker-Larsen explained that BC Hydro did offer a “Clean Power Call” in 2008, which was a competitive process, and allowed projects to be completed up to eight years from when the call was issued. Geothermal projects were eligible for this call, she says.

However the Ministry of Energy, Mines and Petroleum Resources only announced in 2008 that they would begin offering tenures on crown land for geothermal exploration with the intent of developing the resource. The first public tenure in BC was offered in 2010, and according to a ministry spokesperson, there have only been three geothermal permit sales since.

Borealis Geopower is proposing a five to 10 megawatt geothermal plant in the Canoe Reach, and is a member of CanGEA. Chief Operating Officer Craig Dunn says his company is proud to say it is not funded by grants, but after looking at the open letter from CanGEA and seeing the statistics on the federal support other energy industries have gotten, he is starting to think differently.

Dunn says BC Hydro’s power acquisition system is “broken” for geothermal companies. He says you take significant risk by signing into BC Hydro’s power acquisition contract because of some of the uncertainties, and if the time scale is not right, “you could basically kill your project.”

Dunn believes that at the end of the day, it is about education; he says people need to understand the “straight-forward stuff.”

“What is the cost of Site C? Does it provide baseload capacity? What timeframe would it take to improve the infrastructure in the province of British Columbia? How old are transmission lines currently in British Columbia? How much infrastructure needs upgrading?” Dunn asks.

“Now if people are worried about the price of their electricity, is natural gas going to solve that?” Dunn continues. “And if it does, are you willing to have the rest of the implications of having natural gas systems for the next 20 years – in a climate crisis?”

“Is Site C cheaper than other IPP resources? In the case of Canoe Reach – no, it isn’t” says Dunn.

Thompson contends that geothermal can strengthen key parts of the transmission grid. She says plugging a strong generator like geothermal into the end of existing transmission lines would substantially improve the grid’s reliability, and would allow BC Hydro to forego the construction of at least two high voltage transmission lines, currently estimated to cost $2.5 billion.

“It is notable that the $2.5 billion saved, from foregoing the construction of transmission lines, would build 500 MW worth of geothermal power and heat,” she says in her submission.

CanGEA’s submission to BC Hydro concludes with some recommendations to include exploring geothermal in a number of the 20-year plan’s recommended actions, and to remove geothermal from the list of “Currently Unavailable Options.”

Walker-Larsen says BC Hydro’s long term planning process considers a wide range of resource options, and will continue to consider what geothermal has to offer.