British Columbia leads small hydro drive

9 January 2008

Canada is well established as a global hydro super power. Although China has finally overtaken it, the North American country had long boasted the biggest hydro generating capacity in the world. Canada's huge natural resources still provide the fifth biggest national generating capacity on the plant, giving the country a power sector status that exceeds even its economic importance. Now, however, the Canadian hydro industry appears to be entering a new phase, as environmental concerns, technological advances and a variety of financial incentives are encouraging the development of hundreds of small hydro projects.

There is always something of a debate over the distinction between large and small hydro, but a maximum generating capacity of 10MW for small hydro is often accepted. Some Canadian power companies, however, consider the dividing line to be 50MW, 100MW or even 200MW. This distinction is not merely a matter of academic interest, as many organisations – including renewable energy funding bodies – consider that the environmental impact of larger schemes outweighs the reductions in carbon emissions generated by hydroelectric ventures in general.

Wherever the dividing line is drawn, there is no doubt that small hydro power is becoming increasingly popular in Canada. However, the national government recognises three categories: micro hydro (less than 100kW), mini hydro (100kW-1MW) and small hydro (1MW-50MW).

Many of the new small hydro schemes are being developed in British Columbia. After Quebec, the province has the biggest technically viable hydro potential in Canada, with 33,137MW out of national potential of 163,173MW. Some of this comprises large hydro potential but a large proportion could only be tapped through the development of small hydro ventures. It was the provincial government's 2002 Energy Plan that really kick-started efforts to exploit this potential, while the new 2007 Energy Plan has increased the importance of promoting renewables, including hydro.

The government of British Columbia aims to make the province self sufficient in energy by 2016 while 'taking responsibility for the natural environment and climate'. In short, it seeks to improve energy security whilst making more of an effort to cut carbon emissions than the national government. Although Canada signed up to the Kyoto Protocol, its greenhouse gas emissions have increased sharply over the past decade and it stands little chance of meeting its Kyoto obligations. The government of prime minister Stephen Harper still opposes mandatory targets on carbon emissions and considers the Kyoto Protocol targets 'impossible'.

British Columbia's Energy Plan pledges the government to cut its greenhouse gas emissions by 2016 partly through increased investment in the alternative technologies that have been drawn up by its Alternative Energy Task Force. Apart from improving energy efficiency and promoting other forms of renewable energy, such as wind power, solar and geothermal energy, the government is promoting small hydro as a method of minimising the proportion of electricity generated by thermal power plants.

The provincial government has set up a $25M fund to support renewable energy schemes and, perhaps most importantly, promised a renewable energy feed-in tariff that would make renewables more economically viable. In June, the government published its Standing Offer scheme, which will subsidise electricity produced by renewable projects of 50kW to 1MW by between C$0.0.7 and C$0.09. The scheme applies only to 'proven generation technologies', of which at least three projects have been in operation for more than three years.

This was far less financial support than had been offered elsewhere in the country to solar power technologies, for example, and was widely regarded as being aimed at small and micro hydro, plus biomass projects. Many in the renewables sector are therefore keen to see the subsidy increased. Guy Dauncey, the president of the British Columbia Sustainable Energy Association, says: 'We are focusing on a new effort for a feed-in tariff to support small scale renewable energy in [British Columbia]. The current Standing Offer program is more like a bookkeeping measure to enable smaller micro-hydro developments to obtain grid connection more easily.'

Power company BC Hydro, which is owned by the province, was required to award long term power purchase agreements (PPAs) of 20 to 40 years to independent power producers (IPPs) that operated small hydro schemes in the province. By providing a guaranteed market for electricity from new small hydro ventures, it was hoped that investment would pour into the sector. In addition, the new investment framework lifted a great deal of red tape and made it easier for IPPs to apply for operating licences from the Water Stewardship department of the ministry of environment. Finally, water rents are now set in relation to the dependability of the water flow in each particular area. Table 1 highlights the huge range of variation in this dependability, from 0.57 – or 57% reliable flow – on Vancouver Island, to just 0.01 or 1% on the North Coast.

As Table 2 demonstrates, 14 of these hydro IPPs are now up and running but many more are likely to come on stream over the next decade as a result of the 2007 Energy Plan. PPAs have already been signed between more than 60 schemes and BC Hydro that will provide a total of 1500MW and many more are in the pipeline. Until the turn of the millennium, the Water Stewardship department received about four licence applications a year for all forms of hydro projects but as a result of the 2002 Energy Plan and other initiatives, this number has now rocketed to more than 60 a year. The companies that have enjoyed most success in securing licences are listed in Table 3.

The small hydro drive has generated a great deal of business for suppliers. For example, in September va-tech Hydro Canada revealed that it had received a C$50M contract to supply Pelton turbines and other electromechanical equipment for six small run-of-river plants in British Columbia. The deal was awarded by Peter Kiewit Sons for the hydro plants in the Harrison Lake region, which will collectively have generating capacity of about 150MW and will supply electricity to BC Hydro under power supply agreements. The Lamont Creek and Stave River plants are being developed by the Upper Stave Group, while the Kwalsa Group is developing the Fire Creek, Douglas Creek, Tipella Creek and Stokke Creek schemes. As a result of rising demand, va-tech-hydro is to open a new branch in the Greater Vancouver region at the end of this year.

The bigger picture

A Canadian government statement earlier this year laid out Ottawa's position: 'Small hydro is clean and renewable, with zero greenhouse gas emissions during operation. It uses little or no storage in reservoirs, often termed 'run-of-river', and can bring about environmental and socio-economic benefits through integrated design, multipurpose planning and community involvement.' The national government has largely left it up to the provincial authorities to encourage small hydro but it has set up the Canadian Small Hydro Technology Development Program, partly in order to encourage the replacement of diesel fired capacity.

It has also provided funding to the CANMET Energy Technology Centre-Ottawa (CETC-Ottawa) to provide technical support. CETC-Ottawa is advising provinces, utilities, private industry, academic institutions and other organisations on reducing equipment and construction costs, increasing turbine and site efficiencies, and supporting technology demonstrations.

At present, Canada possesses 3300MW of small hydro generating capacity, with around 150MW added each year, but there is certainly an opportunity to greatly increase the contribution to national power requirements. According to the Canadian national government, 5500 small hydro sites have been identified, with combined generating capacity of 11,000MW, most of which are located in British Colombia, Newfound-land, Québec, Ontario, Northwest Territories and Yukon. In addition, 20,000MW of untapped capacity is believed to exist at sites with heads of less than 15m.

Some provinces already depend on small hydro to provide a substantial proportion of their electricity requirements. For instance, New Brunswick's 40 small hydro plants contribute 20% of provincial production, while another 40 in Nova Scotia account for 11% of provincial capacity. In the more populated provinces, the picture is more mixed. While hydro dependent Quebec has very little small hydro capacity, about half of Ontario Power Generation's 67 hydro schemes have less than 10MW of generating capacity and make up 6% of the generation mix. At the end of 2006, the government of Ontario revealed that it had given preliminary permission for four companies – Wesa Group Inc, McGraw Falls Water Power, Wendigo Power Partnership and Woods Power Generation – to develop projects.

Some provincial governments have set their own targets on the production of renewable energy. For instance, Nova Scotia now demands that all power distribution companies source 5% of their electricity requirements from renewable energy sources built after 2001 by 2010, with this level increasing to 10% by 2013. However, whether local power companies turn to wind power or small hydro to reach the various targets depends on the natural resources of each province. Nevertheless, interest in small hydro has been underlined by the success of Algonquin Power Income Fund, a Canadian small hydro niche fund, which recorded a 9.6% increase in operating profits in 2006 to C$31M.


Many of the country's most attractive large hydro schemes have already been developed but others are now under development and yet more are planned over the next few years. These include the 2000W Gull Island venture in Labrador, Quebec's 1500MW La Romaine project and the 1380MW Conawapa scheme in Manitoba. The age of large hydro is therefore far from over and increased interest in small hydro is thus not primarily driven by fears over the impact of the construction of large dams.

However, there is no doubt that the construction of small schemes is more acceptable to more people than larger projects. Many previously proposed schemes had not been developed because they were not considered economically viable but the relatively modest incentives on offer in British Columbia indicate that small hydro is one of the most competitive forms of renewable energy in the entire country. The current Canadian national government may oppose mandatory targets on greenhouse gas emissions but some provincial governments are taking a stronger stand on the issue.

In addition, year by year and international conference by conference, the global consensus is moving in favour of more stringent action on global warming and it is likely that Canada will be forced to change its position over the next few years. With such a large established hydro sector and many small hydro schemes still to be developed, it would be surprising if the role of small hydro in the generation mix did not increase markedly over the decade to come.

CHA champions hydro

The Canadian Hydropower Association (CHA), which represents hydro project operators responsible for 95% of total national hydro capacity, made its submission to the Canadian Council of Energy Ministers on 25 September 2007 on the benefits of hydro. Its main tenets were:
â€Â¢ Hydro power can contribute to a strong economy and meet electricity needs without mortgaging our environment.
â€Â¢ Greenhouse gas emissions from hydro power projects in Canada are about 60 times less than those from coal fired plants and 18 to 30 times less than natural gas power plants. They are comparable, under a life cycle assessment, to those of other renewable sources of electricity, such as wind power.
â€Â¢ Canada exports significant amounts of electricity to the US. Most of the exported electricity comes from clean, renewable hydro power. These exports primarily serve markets in the US that rely on coal fired electricity plants. In this way, hydro power improves air quality and reduces continental greenhouse gas emissions.
â€Â¢ As it is clean and renewable, as well as uniquely flexible (it responds immediately to power demand fluctuations), hydro is the best source to support the development of other renewable but intermittent sources such as wind and solar. As the production of electricity from intermittent sources of renewable energy increases, the need for complementary energy storage systems will also increase.
â€Â¢ The current environmental assessment process puts excessive emphasis on local impacts and fails to take into consideration large scale negative impacts on the environment, such as acid rain, smog or global warming, which have serious detrimental effects on the health of Canadians as well as fisheries and forests. That it does not do so privileges fossil fuel power plants over hydro power plants.
â€Â¢ The Canadian hydro power industry supports the principle of environmental assessment of development projects; assessment is a critical aspect of good environmental practices. The industry also supports the principle of reasonable legislation to protect the countryâ€â„¢s fisheries.
â€Â¢Since Canada signed the Kyoto Protocol in 1997, electricity sector emissions have increased by 30%. This alarming increase is explained by the fact that in recent years new growth in demand has in great part been met by coal and natural gas fired plants, which are much quicker and less expensive to build than hydro power projects, and face less costly and shorter environmental permitting processes.
â€Â¢ By displacing more polluting sources of electricity, hydro power can play a key role in improving the air and fighting climate change. For the hydro power industry to be able to maximise hydroâ€â„¢s role, there must be an improvement in the regulatory environment.
â€Â¢ Hydro power projects must receive adequate incentives creating a strong price signal in any clean air, climate change program. The recently released Regulatory Framework for Air Emission, with its greenhouse gas and air pollutants targets and its emission trading mechanisms, could serve as the basis for the establishment of such incentives.
â€Â¢ In order for the price signal in favour of clean power such as hydro power to be sufficient, the future electricity sector regulation should provide for one single clean fuel standard for all new electricity generation. This single standard should be based on the emission intensity of a state-of-the-art natural gas combined cycle power plant (360kg CO2/MWh) and new hydro power facilities and other renewable power facilities should be allocated credits on the basis of this standard.
â€Â¢ Hydro power provides greater ecological, economic and social advantages than any other energy source. This clean, renewable and exceptionally efficient, reliable, and affordable technology is the solution to meet our electricity needs, reduce greenhouse gas emissions, and control air pollution.


Table 1: Canadian hydro potential (2006)
Table 2: Operational small hydro schemes supplying BC Hydro (end 2006)
Table 3: Canadian IPPs with most water licences (end 2006)

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