The Economics of the Site C Hydroelectric Project in British Columbia

Abstract

The Site C hydroelectric project is an 1100-Megawatt hydroelectric facility under development on the Peace River in British Columbia. Construction costs for the project are currently estimated to be $10.7 billion. The project has been criticized for its high cost and the impacts it will have on the river system, including the flooding of land to establish the reservoir. Project proponents argue that Site C will provide low-carbon electricity that will help BC and Canada reach their greenhouse gas emission reduction goals. In this paper, we assess the cost-effectiveness of the Site C project using a detailed linear programming capacity expansion and dispatch model of the British Columbia and Alberta electricity systems. Our model includes hourly electricity demand data for sixteen sub-regions within BC and Alberta, hourly wind resource data for 681 grid cells in the two provinces, hourly solar irradiation data from 112 weather stations to characterize the solar resource, and a detailed hydroelectric model that accounts for the chaining of hydroelectric facilities and reservoirs within the Peace River, Columbia River, Kootenay River and Bridge River watersheds. We assess the value of the Site C project by calculating the optimal electricity system for supplying BC and Alberta electricity demand in 2030 both with and without the presence of the Site C project. Our model simulations reveal that under current electricity sector policies, the Site C project is uneconomic. We find that the value created by Site C only exceeds its costs in scenarios where BC and Alberta coordinate electricity markets, build additional transmission capacity, and work to reduce greenhouse gas emissions significantly below baseline levels.