Canada panel urges alternatives to 3,074-MW Lower Churchill

A joint panel of the Canadian and Newfoundland governments urges more study of energy alternatives to the 3,074-MW Lower Churchill hydroelectric project. It said if viable alternatives are found, the first-phase 824-MW Muskrat Falls hydro plant should not be built.

The environment ministers of Canada and the province of Newfoundland and Labrador released an environmental assessment Aug. 25 drafted by the Joint Review Panel for the proposed Lower Churchill project. The project includes the 824-MW Muskrat Falls and 2,250-MW Gull Island hydro plants to be built on mainland Labrador with transmission lines to deliver power to Newfoundland Island and to export markets.

The Joint Review Panel said Nalcor Energy, parent of province utility Newfoundland and Labrador Hydro, failed to justify the C$6.4 billion (US$6.5 billion) project in either energy or economic terms. It said there were outstanding questions about both hydro plants' ability to deliver long-term financial benefits to the province.

Nalcor President Ed Martin met with reporters following the release of the report, saying he was surprised and disappointed that the environmental assessment concluded Nalcor failed to prove the need for the project. However, Martin was quoted saying Nalcor is open to other ideas and that two independent reviews of the project are under way.

The Joint Review Panel also found the project would have several significant adverse effects on environment, culture, and land and resource uses.

Panel rejects 'need' for Lower Churchill hydro development

"For the purposes of this review, the panel did not accept that developing the hydroelectric potential of the lower Churchill River was a 'need,' and that therefore the project should be compared to reasonable alternatives that addressed the future demand for electricity, and delivered a renewable energy future and long-term revenues for the province," the panel said.

The panel recommended that, before the governments make a decision whether to proceed with the hydro project, the province and Nalcor should commission an independent analysis to address what would be the best way to meet domestic electricity demand under a "no project" option.

It said such a study should include issues such as power from the existing 5,428-MW Churchill Falls project that is to become available to Newfoundland contractually in 2041; review of Nalcor assumptions about oil prices, electricity demand, and developing technologies; a proposal for an 800-MW wind project on the Avalon Peninsula; using natural gas for power generation; and the potential for renewable energy on Newfoundland Island such as wind, small hydro, and tidal power.

Panel: If alternatives found, Muskrat Falls should not proceed

"The panel concluded that if the recommended economic and alternatives studies show that there are alternative ways of meeting the electricity demands of the Island over the medium term in an manner that is economically viable and environmentally and socially responsible, the Muskrat Falls portion of the project should likely not be permitted to proceed for purposes of meeting island demand," the panel said.

Nalcor's preferred option is to construct Muskrat Falls first with transmission lines linking it to Newfoundland Island, followed later by the Gull Island plant.

However, the Joint Review Panel found Gull Island would produce more power at a lower unit cost and would offer a greater potential than Muskrat Falls to provide lower cost power to Newfoundland and to generate revenue for the province. The panel recommended that, if the Lower Churchill project is approved by the governments, they should review projected cash flow for each plant to determine which to advance.

Nalcor and the governments of Canada and of Newfoundland and Labrador plan to review the findings and develop formal responses. The Joint Review Panel's executive summary is available on the Canadian Environmental Assessment Agency's Internet site at http://www.ceaa.gc.ca/050/documents/51706/51706E.pdf.

The government of Canada said this month that it would provide or purchase a loan guarantee for the Lower Churchill project to help reduce up to 4.5 megatons of carbon dioxide emissions in the country and generate up to C$3.5 billion (US$3.58 billion) in economic benefits.

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