BC Hydro will phase out two plants that rely on natural gas to generate power as it focuses on hydroelectricity in striving for a greener grid.
The provincial Crown corporation won’t renew a power-purchasing contract with the plant of one supplier on Vancouver Island set to expire next year. A separate arrangement with a much larger facility in northeast British Columbia will be allowed to lapse by 2030.
About 96 per cent of the power in British Columbia already is derived from renewable energy sources, dominated by hydroelectricity.
“By encouraging customers to use clean and reliable electricity instead of higher emitting fuels to power their homes, vehicles and businesses, BC Hydro can help to reduce greenhouse gas emissions and contribute to meeting the government’s climate goals,” BC Hydro said in a 111-page draft of its integrated resource plan.
In shunning fossil fuels as part of its decarbonization efforts, BC Hydro will first end its contract to buy electricity from Capital Power Corp.’s Island Generation plant located in Campbell River on Vancouver Island. Edmonton-based Capital Power bought the facility from Kelson Canada Inc. in 2010.
Island Generation is underutilized, because it mostly serves as a backup during times of peak use of electricity. Still, BC Hydro estimates that in opting to let a 20-year purchasing agreement expire in April, 2022, it will cut the equivalent of 10,000 tonnes a year in emissions of carbon dioxide.
Capital Power said the gas-fired Island Generation site has been a valuable backup over the years. “The facility has been extremely reliable for BC Hydro with a 99 per cent average availability in the last five years, providing critical back-up power and grid reliability for Vancouver Island and Metro Vancouver,” Capital Power chief legal officer Chris Kopecky said in a statement.
Bank of Nova Scotia analyst Robert Hope pointed out that the plant opened in 2002. “Given the age of the facility as well as the nature of the B.C. electricity market, we see limited opportunities to recontract the asset aside from BC Hydro,” Mr. Hope said in a research note on Tuesday.
The second contract with an independent power facility that BC Hydro will let expire is with the McMahon co-generation plant near Fort St. John, B.C.
Brookfield Infrastructure Partners LP (through NorthRiver Midstream Ltd.) co-owns the McMahon facility with Energy Capital Partners LLC (through Heartland Generation Ltd.). “This facility is the single biggest source of greenhouse gas emissions on the system,” BC Hydro said, noting McMahon emits the equivalent of almost 340,000 tonnes of carbon dioxide a year.
The Crown corporation added that it has been “looking for opportunities to reduce commitments with greenhouse gas emitting facilities.”
Future supplies of electricity are scheduled to come on stream in 2025 from BC Hydro’s problem-plagued Site C hydroelectric dam in northeast B.C.
Since the 1970s, Canadian energy companies have promoted natural gas as a clean-burning fuel for heating, compared with users relying on underground oil tanks and dealing with the hazards of oil leaking into soil.
FortisBC, the largest distributor of natural gas to homes in British Columbia, argues that the pathway to achieving net-zero emissions by 2050 must include a transition role for natural gas.
But climate activists have increasingly argued that as energy sources evolve, homeowners should decrease their impact on the climate by rejecting natural gas and switching to electricity. In Canada, that switch makes sense in provinces that generate low-carbon electricity, such as British Columbia, Manitoba, Ontario and Quebec, according to the Canadian Association of Physicians for the Environment.
While the Ontario government said earlier this month it has selected 28 projects across 43 communities under a program to expand the use of natural gas for home heating, BC Hydro said it is committed to reducing its use of gas-fired plants and strengthening hydro storage capacity.
“Capacity is produced by firm, dependable sources of power, like hydroelectric with storage, that can be relied upon whenever needed without the intermittent nature of renewable sources such as wind and solar,” BC Hydro said.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.