Manitoba Hydro doesn't get it

During the last number of years, Manitoba Hydro, a government owned utility, has been proposing the construction of a number of large hydro-electric dams. Wuskwatim was completed in 2012 at a cost of $1.3 billion, produces 200 mW of power. Keeyask will cost $6.95 billion, will produce 695 mW at peak power and 4,400 gWh annually, and is slated for completion in 2019. Conawapa is larger. It is projected to cost $10.2 billion. will produce 1,485 mW at peak power, 7,000 gWh annually and is to be completed by 2025. To get the power to where it is needed, the 1,384 km Bipole III is to be built at a cost of about $3.8 billion. Total projected cost: over $22 billion...a cost of about $9,250 per kW, or $9.25 per W

To pay for the dams and transmission lines, MB Hydro has proposed a rate increase of 3.95% per year for at least the next 20 years. How necessary is all the proposed construction? Let's consider a couple of facts. MB Hydro has experienced an increase in electricity demand of about 1.6% annually for the last number of years...about 80 mW per year from within the province. The utility is projecting a similar demand increase for the next 20 years. So if the Provincial economy is growing and demanding more power every year, the residents will simply have to suck it up and pay for the power they use, right? Maybe not. Maybe it's possible to reduce electricity demand and consumption enough to avoid having to spend $22 billion building dams?

The energy efficiency alternative: According to M Hydro, there are over 127,000 homes across the Province heated with electric furnaces or electric baseboards. If we assume:

• A typical electrically heated home has a peak heat loss of 37,500 Btu/hr (approximately 11 kW)
• A typical GCHP system operates at a COP of 3.0

A GCHP will draw 11 kW / 3.0 = 3.7 kW. A reduction of 11.0 kW - 3.7 kW = 7.3 kW. That's 7.3 kW that MB Hydro does not have to deliver to a typical electrically heated home. Convert enough electrically heated homes to GCHP systems and the projected load growth increase projected by MB Hydro disappears. If approximately 10,500 of the electrically heated homes were retrofitted with a GCHP system, the projected increase in electricity demand goes away. 

It's possible to retrofit a typical electrically heated home with a GCHP system in Manitoba for approximately $20,000 to $30,000, depending on the type of GHX. The cost to retrofit 10,500 homes and reduce electricity demand by 80 mW is estimated at $262.5 million, or about $3,280 per kW...about 65% less than the cost of building the dams and infrastructure needed to get the power to Southern Manitoba. 

Economics of production versus reduction: What is even more interesting, however, is how the investment in the two alternatives is repaid. MB Hydro has proposed the expenditure of $22 billion to build the Wuskwatim, Keeyask and Conawapa dams and the construction of the transmission lines to the southern part of the Province. It proposes to repay the investment in part with income from export sales to Minnesota and Wisconsin plus increases to the cost of electricity to rate payers in Manitoba, with annual price increases of 3.95% per year for the next 20 years. 

How would the cost of installing 127,000 GCHP systems be paid for? Well, MB Hydro already has in place a program called "Pay As You Save". It was introduced in 2013. The program is designed to assist homeowners with energy efficiency measures in their homes and businesses with low interest, long term loans that are repaid on the monthly utility bills. A homeowner replacing an electric furnace would be able to have a GCHP system installed in their home and be eligible for a loan from the utility for a significant portion of the total cost and repay the loan over 20 years on the monthly bill from MB Hydro. In fact, MB Hydro even has a calculator on their website to calculate the loan they are eligible for and what the monthly payments would be. 

MB Hydro would not even have to pay for the cost of retrofitting electrically heated homes to free up the same amount of power that would be produced by building the dams. So let's think for a moment: 80 mW of power at no cost versus 80 mW of power at a cost of $740 million!! 

The end result is the same: 80 mW of power that can be exported to the U.S. at a profit. Free versus $9,250 per kW. 

Employment: Manitoba Hydro and the Province both put forward the employment created by the construction of the dams and transmission lines as a great benefit to the Provincial economy. Let's look at how this compares to the geothermal alternative. If the decision were made to encourage homeowners of electrically heated homes, how much employment would be created compared to the employment created by building the dams. 

Manitoba Hydro has developed a fairly detailed business plan for the construction of the Keeyask Dam project. The proposed Keeyask Dam will produce approximately 695 mW of power...about the same amount of power reduction created by retrofitting 95,205 electrically heated homes. It is projected to create 54,000 person-months of employment between 2014 and 2021. 

To install a typical GCHP system in Manitoba requires approximately 100 hours of labor...about 0.6 person months of employment. To install 95,205 GCHP systems would create approximately 57,123 person-months of employment...almost the same amount of employment created with the construction of the dam. 

The Environment:  The environmental impact of damming rivers has been extensively studied. In fact, in some regions, dams that were built years ago are being removed because of the impact on fish habitat, wildlife, flooding of forested areas, etc. Fortunately or unfortunately, much of the flooding damage in Northern Manitoba was done when some of the first dams on the Nelson and Churchill Rivers, and the flooding of South Indian Lake in the 1970's. The dams proposed now...Keeyask and Conawapa...will create minimal flooding in comparison, but there will still be some impact. There has, however, been much controversy about the construction of Bipole III... the 1,384 km high-voltage direct current transmission line needed to transmit the power to the population in the South. 

In fact, the Provincial Government has insisted that the power line be routed through Western Manitoba rather than the much shorter route through the Boreal forest of Eastern Manitoba. The longer route increases both the cost of construction and the amount of power lost because of the longer transmission lines. 

Again, not using the power in the first place, is a much better option for the environment. 

Impact on the Provincial Economy:  First of all, I don't pretend to be an economist...but there are some questions we should all consider before the Provincial government and the Provincially owned electric utility rush headlong into these expensive projects without considering the alternatives. 

Each homeowner that converts their electric heating system to a GCHP system will save, even according to Manitoba Hydro's conservative estimates, approximately $850 per year...at today's power rates. If Manitoba Hydro does go ahead with the construction of the proposed projects, those homeowners will save about $1,250 per year after 10 years, and about $1,850 per year after 20 years. That's a lot of additional disposable income that the homeowners can inject into the Provincial economy every year. If 95,205 homes were retrofitted, that would be approximately $119 million per year going into the provincial economy. 

Don't get me wrong. I'm not against building the power dams if and when they are needed and if there is a significant benefit to the Provincial economy. But that doesn't mean we should rush headlong into something that is not necessarily and is going to hurt our economy.