BC is fixing its near-term electricity shortage, but there is potential for a much larger deficit if we want to expand LNG and mining production and also achieve net zero GHG emissions by 2050. Unless this is addressed, the BC government will face some unwanted trade-offs between its environmental and economic goals.
Introduction
BC Hydro is critical to the electricity supply in BC. Not only does it provide electricity for 95 percent of electricity customers in BC, but it also supplies up to 40 percent of the electricity for the second-largest electric utility, FortisBC Inc., and all the electricity for most of the smaller utilities, such as the City of New Westminster. If BC Hydro is short of electricity, we are all at risk.
In March 2024, the BCUC accepted BC Hydro’s Integrated Resource Plan, its 20-year view of how much electricity we will need, and where it will come from. In a previous article, I looked at the disconnect between the plan and BC’s climate policy. In this article I will dig a little deeper into the gap between what BC Hydro can generate today, and what we might need in future – BC’s electricity deficit.
The starting point
In its most recent update (April 2023), BC Hydro provides a forecast for its “Reference scenario” – what it thinks is most likely to happen. Its analysis shows a “near term” deficit starting in F2029 (fiscal year 2029, the period from April 1, 2028 to March 31, 2029), and continuing to grow through F2033, as shown in the chart below:
For the record, BC Hydro also has a short-term deficit in F2024 and F2025 that it is meeting by importing energy (1,130 GWh and 1,577 GWh respectively), most likely a result of the current drought in BC.
Near-term actions
BC Hydro has been aware of this near-term deficit since at least April 2023, when it last updated its forecast. In its June 2023 update to the BCUC, BC Hydro said it plans to procure around 3,000 GWh of new clean or renewable energy from greenfield facilities in the province that can start commercial operations as early as fiscal 2029 (the Clean Power Call). Additionally, it plans to acquire an extra 700 GWh from certain existing facilities.
The good news, then, is that if the Clean Power Call is successful, there will be no near-term electricity deficit, as the following chart shows:
But this is not the whole story.
LNG and mining
The Reference scenario assumes BC Hydro will provide some electricity to new liquefied natural gas (LNG) and mining companies on BC’s north coast. The North Coast scenario goes further, and considers demand from additional customers in the area.
BC Hydro’s Integrated Resource Plan shows that, even after a successful Clean Power Call, it would be short of electricity if there is too much additional demand in the North Coast. It would either need to import extra electricity or use unspecified “future resources”. Adding these figures together shows how large this gap is:
It’s hard to assess how likely this North Coast scenario is to happen, because BC Hydro doesn’t disclose the demand of individual customers. For example, we don’t know whether the electricity needed by the Cedar LNG project, which recently announced its final investment decision to proceed, is already included in the Reference forecast. But it’s quite clear BC Hydro thinks there is a reasonable chance that demand from new LNG and mining projects would cause it to be back in a deficit position.
Net zero goals
The biggest question is the degree to which the BC government will rely on electrification to meet its target of net zero GHG emissions by 2050, something not included in the Reference scenario’s forecast.
BC Hydro only included legislative and policy measures that were in place or close to being enacted by April 2023, when the forecast was published. In other words, any future government decisions that require more electricity will increase the electricity deficit.
It seems fair to think the government might consider doing more to achieve its GHG emissions targets. As I’ve already discussed, we’re making no progress towards the BC government’s GHG emission reductions targets. In fact, as I feared, the most recent figure shows that BC is now back to where it was in 2007 (64 MtCO2e of GHG emissions in 2022, compared to 63.8 MtCO2e in 2007).
There is a wide range of estimates of how much electricity will be needed to achieve the net zero target by 2050. A recent study by the Federal Government estimates that electricity will need to triple its share of the total energy supplied in Canada. As for BC, a recent SFU study calculated that using just electrification to achieve net zero would require four times BC Hydro’s current generating capacity.
BC Hydro’s estimate of the electricity required to achieve net zero by 2050 is the Accelerated Electrification scenario. Based on modelling by Navius Research, it shows a path to achieving net zero by 2050 in which electrification accounts for around one quarter of the GHG emission reductions by 2040, the time horizon of the model presented in the Integrated Resource Plan; the rest would be achieved by “other abatements” (more about that in a future article).
Despite only contributing about a quarter of the GHG emission reductions needed to achieve net zero, BC Hydro would have an electricity deficit by F2033 equal to almost two Site C Dams (one dam would generate 5,100 GWh) if we were to follow the Accelerated Electrification path, as shown below:
And that’s just the near-term picture. By F2041, the time horizon of BC Hydro’s load balance reports, the electricity gap widens to 13,918 GWh – almost three Site C Dams.
Conclusions
In the near term, BC Hydro should be fine. If its Clean Power Call is successful (I’ll address those risks another day), we should have no electricity deficit until at least F2033.
But this assumes we are on the path described by BC Hydro’s Reference scenario, and there are good reasons to think we might need more electricity than that, as the other scenarios demonstrate.
New generation is not cheap and takes time to build – the Site C dam has taken a decade to build and has already cost at least $16 billion. Solar and wind energy can be added more quickly, but even BC Hydro’s current Clean Power Call won’t start delivering results until late 2028, some five years after BC Hydro identified the need for it.
Unless we start to consider a more radical expansion of electricity generation in this province, we are going to face some unwanted trade-offs. Should we use our limited generation to actually start reducing GHG emissions? Or to expand LNG production, from which the government has budgeted $1.4 billion in royalties by F2027? Or to grow BC’s economy with other electricity-intensive industries such as data centres?
We’ve already made one such trade-off recently – the government announced last year it would prevent data centres setting up in BC that supported cryptocurrency operations. Will data centres for artificial intelligence business be next?
It’s pretty clear that BC Hydro won’t be building a Site C Dam every couple of years. But we are going to need a lot more power, especially if the government is serious about reducing GHG emissions. BC Hydro’s Clean Power Call was necessary only in response to an unexpected short-term increase in demand. It’s by no means certain that this is the best or most cost-effective way to add larger amounts of generation.
The BCUC’s review of BC Hydro’s Integrated Resource Plan should have been the opportunity to explore longer-term alternatives. Instead, the BCUC merely stated it was “satisfied” that BC Hydro had identified a set of “placeholder” options for more generation and had not identified “specific portfolios of resources” to meet its future needs. This was a missed opportunity for the BCUC to show that it is capable of regulating BC Hydro, and yet another example for those worried about it “rubber stamping” BC Hydro decisions.
As I was writing this piece, the BC Ministry of Energy published its Clean Energy Strategy. This document says little about how we are going to meet the future demand for electricity, beyond noting that BC Hydro will be conducting more calls for power every two years and expanding its net metering program. This was another missed opportunity.
The Ministry’s new strategy also says that the volume and timing of these acquisitions will “continue to be determined through BC Hydro’s long-term resource-planning process, under the oversight of the BCUC.” BC Hydro’s next long-term plan is due to be filed no later than October 31, 2025 – let’s hope this has a clearer picture of how BC will address its future electricity needs.