Economics of Site-C

Site-C Hydroelectric Dam

Proposed Peace River (Site-C) Hydroelectric Dam ©BC Hydro

I recently read a Facebook article that noted that the cost of wind-generated electricity in Alberta has dropped to 3.7 cents/KWh.

To this, the poster commented “So tell me again why we need Site-C?”

Let’s do the math:

  • When completed, Site-C is expected to harvest 5.1 x 109 KWh of energy per year, for (at least) one hundred years.

    That’s 510 x 109 KWh, in total energy.

  • The current cost estimate for construction is around $10 billion, and if it costs, say, $30 million/year to operate and maintain it after that, that’s another $3 billion, and, well, let’s throw in another couple billion, just for because, which brings us to total lifetime cost (in today’s terms) on the order of $15 billion, or $15 x 109.

  • Conservatively, then, the Site-C energy cost is:

    $15 x 109 / 510 x 109 KWh = $15 / 510 KWh = $0.029/KWh, or 2.9 cents/KWh.

  • In this scenario, wind generation costs ((3.7-2.9)/2.9) x 100 = 27.6% more.

That’s why Site-C still makes economic sense.

While wind generation is becoming cheaper (though we don’t know whether replacement and maintenance costs were considered in that cited 3.7 cents/KWh), Site-C still comes in at a substantial bargain.

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