IPPs are Cost-Effective

Transcription

1 IPPs are Cost-Effective Presentation to Joint Review Panel of Site C EIS December 10, 2013 (Summary of Written Submission on Nov. 25, 2013)

2 Presenters: Philip K. Barton Lawyer, Entrepreneur and Engineer. Representing several IPP clients developing renewable projects in BC Acted in past for developers, lenders and contractors in $500+ million of IPPs 22 MW ($65 million) Jamie Creek started in my basement: COD expect Q Boughton Law 50 lawyers in Vancouver Focus on finance, mergers & acquisitions and litigation. Steve Davis IPP Consultant, Engineer, MBA Past President of Independent Power Producers association of B.C. and developer of several IPP projects in B.C. 2

3 EIS overlooks Alternatives Alternatives are more cost effective IPPs have identified over 1,000 potential renewable projects in BC: 600 run-of-river projects; 400 wind projects; 40 biomass projects, and 16 geothermal projects. BC Hydro s 2013 Integrated Resource Plan (IRP) lists many projects with Unit Energy Cost (UEC) lower than Site C. With limited time and resources, we have assembled a New Portfolio of projects which is more cost effective. The IPP sector can quickly assemble and propose other new portfolios with lower costs and very small environmental impacts. 3

4 BC Hydro assessed 3 main portfolios: Based on these specific portfolios, BC Hydro asserts that Site C is the most cost-effective for BC s future electricity 1 1 Site C EIS Technical Memo Alternatives to the Project (June 4, 2013) 4

5 BC Hydro Clean Generation Block 1000 MW of Pumped Storage + 11 wind, 1 MSW, 1 ROR, and 1 Biomass 5

6 BC Hydro Clean + Thermal Generation Portfolio 500 MW of Pumped Storage, 588 MW of SCGT 6

7 New Portfolio #1 with Capacity ~ 1,100 MW MW: PROJECT: SOURCE: 488 MW Revelstoke #6 (Upgrade) Table 3-24 of IRP 220 MW GMS #1-5 (Upgrade) Table 3-24 of IRP 320 MW Geothermal Projects in Lower Mainland TR Table 3-15 of IRP 33 MW Municipal Solid Waste Clean Generation Block 80 MW Wood Biomass Clean Generation Block 1141 MW AUEC = $122/MWh All data is strictly from BC Hydro s Documents (IRP & Technical Memo). 7

8 New Portfolio #1 delivers 5,109 GWh of energy AUEC = $122/MWh All data is strictly from BC Hydro s Documents (IRP & Technical Memo). 8

9 Furthermore, we assert: Site C AUEC = $110 $F2013/MWh +$5 Sunk Costs +$11 10% Cost Overrun Revised Site C AUEC = $126 $F2013/MWh BC Hydro does not make these adjustments in its comparison of alternatives 9

10 Site C vs New Portfolio #1: Adjusted Site C AUEC AUEC Portfolio #1 (Rev+GMS+Geothermal) $126 per MWh > $122/MWh (All data from BC Hydro) Not cost effective. 10

11 New Portfolio #2 with SCGT Peaking Gas delivers 1,115 MW MW: PROJECT: SOURCE: 488 MW Revelstoke #6 (Upgrade) Table 3-24 of IRP 220 MW GMS #1-5 (Upgrade) Table 3-24 of IRP 294 MW Simple Cycle Gas Turbine (SCGT) 50% of SCGT from BC Hydro Clean+Thermal 33 MW Municipal Solid Waste Clean Generation Block 80 MW Wood Biomass Clean Generation Block 1115 MW AUEC = $138/MWh All data is strictly from BC Hydro s Documents (IRP & Technical Memo). 11

12 New Porfolio #2 delivers 5,112 GWh of Energy AUEC = $138/ MWh All data is strictly from BC Hydro s Documents (IRP & Technical Memo) 12

13 Site C vs New Portfolio #2: Revised Site C AUEC Portfolio #2 AUEC (Rev+GMS+SCGT) $126 per MWh or $138/MWh (All data from BC Hydro) Still cost effective? Barely Still justify significant environmental impacts? 13

14 Additional Points: 1. Data: New Portfolio is assembled from BC Hydro s IRP. 2. Prices: Bid prices for IPPs will be lower than the UECs by BC Hydro. 3. Asset Lives: Actual for renewable IPPs are longer than the figures BC Hydro uses in their UEC calculations. 4. Cost Adjustments: BC Hydro imposes adjustments on IPPs that are too high or unnecessary: soft costs, freshet, time of delivery, etc. 5. WACC: BC Hydro imposes lower Weighted Average Cost of Capital 6. First Nations: FN oppose Site C; FN support many IPP projects across BC. 7. Construction Risks and Over-runs: FN opposition and construction boom will cause great risk to BC Hydro ratepayers (and BC taxpayers with public debt). 8. New Portfolio: Private sector is ready, willing and able to accept all development risk, financing risk, construction risk and operational risk. 9. Economic Development: Many IPP projects across BC vs. single mega-project. 10.Non-Firm Energy: IPPs average supply is $68/MWh (BCH 2012 Annual Rpt). 14

15 Additional Cost Adjustments (not yet quantified) IPP Cost Reductions vs Site C: Deduct Income Tax payments to government Deduct value of equity given to First Nations in IBAs More efficient EPA contracts with comparable penalties Consider non-firm energy as well as firm energy Site C Cost Adders vs IPPs: Remove Cost of Capital support from Province Include Cost of equity during construction Match Water License Terms (Max 40 years) Total of Additional Adjustments = $20 - $40/MWh (Net Reduction of IPP costs vs Site C costs) 15

16 Conclusion: IPPs are Cost Effective Our Portfolio #1 has an AUEC that is 3% less than Site C. Renewable portfolios can deliver energy and capacity Our pricing analysis used BC Hydro data And included several conservative assumptions Many new alternative portfolios can be created from the 1,000+ IPP projects identified likely cheaper Site C is not the most cost effective Significant adverse environmental impacts are not justified 16

17 APPENDIX 17

18 New Portfolios offer New Balance Bill Bennett, Minister of Energy and Mines stated: Governments make decisions on balance, and the balance in this case leads us to think this is the best available source of a large amount of electricity, and that justifies the environmental impact. Vancouver Sun December 7, 2013 New portfolios offers other sources of electricity at comparable costs that have much smaller environmental impacts. 18