Cancellation of BC power deals by BC Hydro: Cleaning house or policy shift?

5 septembre 2013

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The challenges of bringing smaller-scale energy projects to fruition are not in debate.  But the BC Government’s August 30 announcement that BC Hydro will cancel as many as 10 electricity purchase contracts (and defer up to nine more) is raising eyebrows in the BC energy sector. 
An optimistic take on this news is that the endangered projects are those least likely to prove viable.  If true, then this move by BC Hydro to jettison “dead weight” can be viewed as efficient, sensible, and potentially to the benefit of projects with hallmarks of feasibility:  credible management, sound financing/ownership and good prospects for overcoming environmental, First Nations and other approval hurdles.  Moreover, BC Energy and Mines Minister Bill Bennett confirmed that the 19 projects in question have not met their contractual obligations and none are yet in “serious construction mode”. 

The other view is that this announcement heralds a shift away from the goals of the BC Clean Energy Act, which requires 93% of BC’s energy to come from clean or renewable resources.  Criticism of governmental support for independent power producers is nothing new: many projects fail to reach operation and they are significantly more costly sources of energy.  This criticism has extended to BC Hydro’s IPP-friendly initiatives (2006 and 2008 Clean Energy Calls and the Standing Offer Program that facilitates 15MW-and-under projects).
It remains to be seen whether we are witnessing cooling of affection for IPP projects, or just a sensible house-cleaning.  Both the identification of the cancelled/deferred projects and a close look at BC Hydro’s recently-released draft Integrated Resource Plan will permit more insight as to where BC energy policy is headed.

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