An Assessment of Hydroelectric Power Options to Satisfy Oil Sands Electricity Demand
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Study No. 155 January 2016 CANADIAN AN ASSESSMENT OF HYDROELECTRIC ENERGY POWER OPTIONS TO SATISFY OIL SANDS RESEARCH LECTRICITY EMAND INSTITUTE E D Canadian Energy Research Institute | Relevant • Independent • Objective AN ASSESSMENT OF HYDROELECTRIC POWER OPTIONS TO SATISFY OIL SANDS ELECTRICITY DEMAND An Assessment of Hydroelectric Power Options to Satisfy Oil Sands Electricity Demand Author: Ganesh Doluweera ISBN 1-927037-39-3 Copyright © Canadian Energy Research Institute, 2016 Sections of this study may be reproduced in magazines and newspapers with acknowledgement to the Canadian Energy Research Institute January 2016 Printed in Canada Front Photo Courtesy of istockphoto.com Acknowledgements: The author of this report would like to extend his thanks and sincere gratitude to all CERI staff that provided insightful comments and essential data inputs required for the completion of this report, as well as those involved in the production, reviewing, and editing of the material, including but not limited to Allan Fogwill, Dinara Millington and Megan Murphy. The author would also like to personally thank Dr. David Layzell of the University of Calgary for providing helpful insights for this study. ABOUT THE CANADIAN ENERGY RESEARCH INSTITUTE The Canadian Energy Research Institute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in 1975. Our mission is to provide relevant, independent, objective economic research in energy and environmental issues to benefit business, government, academia and the public. We strive to build bridges between scholarship and policy, combining the insights of scientific research, economic analysis, and practical experience. For more information about CERI, visit www.ceri.ca CANADIAN ENERGY RESEARCH INSTITUTE 150, 3512 – 33 Street NW Calgary, Alberta T2L 2A6 Email: [email protected] Phone: 403-282-1231 January 2016 An Assessment of Hydroelectric Power Options to Satisfy iii Oil Sands Electricity Demand Table of Contents LIST OF FIGURES .............................................................................................................. v LIST OF TABLES ................................................................................................................ vii EXECUTIVE SUMMARY ..................................................................................................... ix CHAPTER 1 INTRODUCTION ......................................................................................... 1 Oil Sands Electricity Demand and the Opportunity to Reduce GHG Emissions ................. 3 Hydroelectric Power Generation Options .......................................................................... 7 Transmission Options to Move Hydropower ...................................................................... 11 Scope and Objectives .......................................................................................................... 13 CHAPTER 2 METHODOLOGY ........................................................................................ 15 Hydropower Generation Options ....................................................................................... 15 Hydropower Generation Options in Alberta .................................................................. 16 Hydropower Generation Options in British Columbia ................................................... 17 Hydropower Generation Options in Manitoba .............................................................. 18 Transmission Options.......................................................................................................... 19 Selection of Transmission Line Corridors ....................................................................... 20 Levelized Cost of Delivered Electricity and GHG Emissions Abatement Cost .................... 20 Uncertainty Assessment ..................................................................................................... 22 Estimation of Environmental and Social Impacts ............................................................... 23 Residential and Property Value Impacts ........................................................................ 24 Agricultural Impacts ....................................................................................................... 24 Impacts on Indigenous Populations ............................................................................... 24 Environmental Impacts .................................................................................................. 25 CHAPTER 3 RESULTS .................................................................................................... 27 Hydropower Generation and Transmission Options .......................................................... 27 Alberta-BC Options ......................................................................................................... 27 Alberta-Manitoba Option ............................................................................................... 28 Alberta Slave River Options ............................................................................................ 29 Levelized Cost of Electricity and Cost of Avoided CO2 ........................................................ 30 Sensitivity Analysis against Discount Rate .......................................................................... 37 Economic Assessment of Electrical Extraction Technologies ............................................. 39 Social and Environmental Impacts of Hydropower Options .............................................. 41 Employment and Other Economic Development Benefits ................................................. 48 January 2016 iv Canadian Energy Research Institute CHAPTER 4 DISCUSSION AND CONCLUDING REMARKS ................................................ 49 Implications of the Alberta Electricity Market Structure on Hydropower Project Financing ............................................................................................................ 49 Alberta-British Columbia Hydropower Options .................................................................. 50 Alberta Slave River Hydropower Options ........................................................................... 50 Alberta-Manitoba Hydropower Options............................................................................. 51 Electrical Extraction Technologies as a Carbon Management Option ............................... 52 Long-term Planning ............................................................................................................. 52 APPENDIX A SOCIAL AND ENVIRONMENTAL IMPACTS WITHIN THE STUDY AREA ........... 55 APPENDIX B CALCULATION OF ENERGY COST AND EMISSIONS OF BITUMEN EXTRACTION THROUGH SAGD................................................................................ 59 APPENDIX C UNCERTAINTY ANALYSIS OF LCOE AND CACO2 ........................................... 63 BIBLIOGRAPHY ................................................................................................................ 67 January 2016 An Assessment of Hydroelectric Power Options to Satisfy v Oil Sands Electricity Demand List of Figures E.1 Average Cost of Delivered Electricity of Different Generation and Transmission Options.................................................................................................... xi E.2 Cost of Avoided GHG Emissions .................................................................................... xi E.3 Land Cover within the Direct Impact Area of the Hydropower Generation and Transmission Options.................................................................................................... xiii 1.1 Historic and Forecasted Bitumen Extraction and Upgrading Capacity in Alberta by Operation .................................................................................................... 2 1.2 Historic and Forecasted Electricity Demand in Alberta by Consumption Sector ......... 3 1.3 Electricity Intensity of Oil Sands Operations by Type of Operation ............................. 5 1.4 GHG Emissions Intensity of Average Electricity Supply Mix in Alberta and the Oil Sands Sector ............................................................................................................ 6 1.5 GHG Emissions Intensity of the Oil Sands Industry and Individual Operations ............ 7 1.6 Electric Power Demand of Oil Sands Operations by Type of Operation ...................... 8 1.7 Currently Installed Hydropower Generation Capacity and Technical Potential to Develop New Capacity in Canadian Provinces and Territories ................................ 9 2.1 Overview of Hydropower Generation and Transmission Options ............................... 15 3.1 Alberta-BC Hydropower Generation and Transmission Options.................................. 28 3.2 Alberta-Manitoba Hydropower Generation and Transmission Option ........................ 29 3.3 Alberta Slave River Hydropower Generation and Transmission Options .................... 30 3.4 Levelized Cost of Electricity Delivered to Oil Sands Operations in Alberta under Different Generation and Transmission Options .......................................................... 32 3.5 Cost of Avoided GHG Emissions .................................................................................... 33 3.6 Capital Cost Contribution of Different Transmission System Components ................. 34 3.7