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Hydro OverviewThe Resource Hydro Plant Components Yukon Electric Utilities Economic Issues Regulatory Issues Environmental Issues Glossary of Energy Terms Yukon rivers have provided hydro electricity since 1906. Currently, four utility-owned hydro electric facilities provide a total of approximately 76 Megawatts (MW) of power. In addition, there are three privately owned micro hydro facilities in the region, with one more due to be producing power soon. Past studies have shown that numerous sites could support new hydro developments. Facilities smaller than 20 MW are seen as the most likely to succeed; one study has identified thirty-three such sites. The largest single factor influencing electrical demand in the Yukon is the mining industry. For example, when the Faro mine is operating, it accounts for 40% of the Whitehorse-Aishihik-Faro system load. Utilities believe that the risk of mine closures is too high to justify building hydro plants that require pay-back periods, typically, of 50 years. The main competition for new hydro electric developments is diesel electric plants. Hydro plants can have capital costs from three to ten times greater than diesel plants. However, hydro plants have a number of advantages over diesel plants, chief among them, a longer plant life, the fact that they use a local resource, and their non-variable fuel cost. Coal plants could also compete with hydro plants for generating base load power, provided an inexpensive, and steady supply of coal can be maintained. New hydro developments will be required to undergo a more rigorous screening process than existing plants underwent. New projects will have to take into consideration the Canadian Environmental Assessment Act, Yukon First Nations' Final Agreements and the Development Assessment Process. New developments will also have to address environmental issues that were not considered in the past. The biggest environmental issues of concern deal with the impact of hydro developments on fish and wildlife and on the wilderness characteristics of the Yukon's undeveloped rivers and lakes. Yukon Hydrology
The Yukon is a land of rivers. Its five primary rivers drain an area, within the Yukon, of 418,000 km2. The territory's largest river, the Yukon River, drains an area within the Yukon of 264,000 km2. This area is 14% larger than the Fraser River drainage area in British Columbia. Flow volumes in Yukon rivers are less than in British Columbia rivers. Table 1 compares the average flow rate (discharge), drainage area and discharge per one thousand square kilometres (unit discharge) of the five primary Yukon rivers, with the three primary British Columbia rivers. Drainage areas and discharges of rivers describe one element of importance to hydro developers, namely the volume of water available to produce electricity. River flow patterns are another important element as they determine the time of the year a sufficient volume of water is available for producing electricity. The Water Survey of Canada describes river flows in the Yukon as being affected by five main factors: precipitation, long winters, snowmelt, storage, and glaciers. 1. Precipitation 2. Long winters 3. Snowmelt 4. Storage 5. Glaciers A hydro plant requires a combination of several major structures and equipment, to develop the necessary head, to transport the water, and to operate the plant. Reservoir Dams Intakes Spillways Water conveyance Power house Mechanical and electrical auxiliaries
Tail race Transmission system Source: Dougherty, Gale B. Hydroelectric Power. Handbook of Energy Technology and Economics. 1983. Yukon Hydro Development Yukon hydro development began with the construction of the Yukon Gold Company Ltd.'s 2.5 MW hydro plant in 1906. The plant was located on the Little 12 Mile River. It powered the company's dredges from 1906 to 1920. The company's competitor was the Yukon Consolidated Gold Fields Company. Yukon Consolidated operated a 5.4 MW hydro plant on the North Fork of the Klondike River from 1919 to 1935. In 1935 the company added another turbine to bring the plant's capacity up to 8.1 MW. This plant continued to operate until 1966. In 1949 the Yukon Electrical Company Ltd. built its Fish Lake power plant. A second power plant was added in 1955, downstream from the first plant. Both power plants are still in operation. Together, they provide a total of 1.3 MW of capacity to the Whitehorse-Aishihik-Faro (WAF) grid. The Fish Lake development is a run-of-river facility. The variation in flows from Fish Lake is moderated by the natural storage provided by Fish Lake, Franklin Lake and Jackfish Lake drainage basins. This makes the winter capacity of the plant only slightly less than the summer capacity. In 1952, the Northern Canada Power Commission (NCPC) built the Mayo Hydro facility to supply electricity to Mayo and United Keno Hill Mines in Elsa and Keno. Regulated storage developed on Mayo Lake enabled the power plant on the Mayo River to operate at full capacity throughout the year. Five megawatts of capacity were generated by two, 2.5 MW turbines. When United Keno Hill Mines stopped mining in the area in 1989, the demand for power dropped from 4.5 MW to 1.5 MW. The Yukon Energy Corporation, which acquired NCPC's assets in 1987, now needs to run only one turbine most of the time. NCPC built the Yukon's next hydro plant on the Yukon River at Whitehorse Rapids in 1958. This plant was built to supply the rapidly growing demand for electricity in Whitehorse. The original plant had two turbines which generated a total of 11.6 MW. A third turbine was added in 1969, bringing the total capacity to 20 MW. Finally, in 1984, the fourth turbine was added to bring the total capacity to its current level of 40 MW. The Whitehorse Rapids plant is much more affected by seasonal variations in river flows than the Fish Lake and Mayo Lake plants. During the summer high flow months the plant's capacity is approximately 40 MW, but during the winter freeze-up it declines to an average of approximately 24 MW. This seasonal variation does not match the current demand pattern. The demand for electricity is highest during winter when the stream flows are near their minimum. The next hydro development built in the Yukon was the Aishihik Lake plant in 1975. This was the last plant built by NCPC and the last plant built by a utility in the Yukon. The Aishihik Lake facility provides the only multi-year reservoir storage on the WAF grid. Natural storage is provided by Sekulmun, and regulated storage is provided in Aishihik and Canyon Lakes with the use of two dams, one at the outlet of Aishihik Lake and one at the outlet of Canyon Lake. During the winter months, when water flows are low, water is drawn from the reservoir and during the high-flow summer months the reservoir refills to an extent dependent on the inflows for that season. This allows energy to be produced in a pattern that suits Yukon demand. During the 1980s, two micro hydro facilities were built by non-utility generators in the Yukon. These were built to supply power to the developers for their homes and businesses. A third micro hydro facility was built in Northern BC to supply power to the Yukon Government Highway camp in Fraser, BC. One other micro hydro plant was under construction in 1996, again to supply power for the developer's domestic use. Taken together, the utility-owned hydro plants provide a total of approximately 76 MW of the 134 MW capacity provided by all the electrical power facilities in the Yukon. Table 2 summarizes the Yukon's utility-owned hydro facilities. Table 3 summarizes the Yukon's non-utility-owned hydro facilities. BC's Fraser Micro Hydro plant is included, because its customer is the Yukon Government. There are two electric utilities in the Yukon: the Yukon Energy Corporation and the Yukon Electrical Company Ltd. (YECL). Yukon Energy is owned by the Yukon Development Corporation which is, in turn, owned by the Yukon government. Yukon Energy owns and generates most of the electricity in the Yukon and also owns distribution lines in the communities of Dawson, Mayo and Faro. YECL is a private utility owned by Alberta Power Limited, in turn, owned by Canadian Utilities of Alberta. YECL manages the Yukon's electrical system, as well as its own assets under a management agreement. The purpose is to operate as a single integrated system at the lowest possible costs to rate payers. As well, YECL owns some of its own generating facilities and most of the distribution lines. Table 2. Summary of Yukon Utility Hydro Facilities
Table 3. Summary of Yukon Non-Utility Hydro Facilities
Potential Hydro Development The most comprehensive studies of potential hydro sites in the Yukon have been done by the Northern Canada Power Commission and the Yukon's crown owned utility, the Yukon Energy Corporation. The NCPC studies identified 82 potential hydro sites. Thirty-two of the sites were larger than 100 MW, 17 sites were between 20 MW and 100 MW, and 33 sites were under 20 MW. The sites under 20 MW were seen as the most economical alternative to diesel generation. From 1988 to 1992, Yukon Energy undertook four investigations of potential hydro sites in the Yukon. The investigations resulted in Yukon Energy identifying some new potential hydro sites. In 1992 Yukon Energy and YECL undertook a Capital Planning process. After developing load forecasts, the companies analyzed various supply options. The most viable hydro options, as determined by this process, are presented in Table 4. Table 4 also includes some of the factors the utilities considered in their analysis of the various options. Table 4. Potential Hydro Projects Assessed by Yukon Energy/YECL during the 1992 Capital Plan
Notes: 1. Dependable capacity is the average capacity available during system peak. System peak occurs in the winter in the Yukon, except in Dawson City where it occurs in the summer. Each of the hydro facilities analyzed by the utilities had a number of other issues considered, apart from the factors shown in Table 4. These issues are not necessarily unique to the projects studied and may be of interest to potential investors in other projects as well as those studied by Yukon Energy and YECL. They are summarized in the nine questions that follow. Hydro facility development issues for Yukon plants:
Market Potential The main markets for hydro developers in the Yukon are the utilities. Additional hydro capacity could offset diesel generation on the Yukon Energy Corporation's WAF grid, where diesel is used to meet peaking demand. It could do the same for both Yukon Energy and the Yukon Electrical Company Ltd., off-grid in the isolated communities, where diesel is used to supply all demand. The opportunity on the WAF system may be better now than it has been in the past, because the utilities have a number of diesel generators that will be decommissioned in the next several years. This means that unless the demand decreases, new energy sources will be required to replace the old diesel generators. Based on the 1992 Yukon Energy/YECL Capital Plan's "low case" forecast, at least 13 MW of new supply may be required by 2000. A further 12 MW may be required by 2011. This forecast assumed the Faro mine would close in 1995 and no new mines would come on line. Under the utilities' "high case" scenario, 35 MW of new capacity may be required by 2001 with new capacity continuing to be required after that year. In this scenario, the Faro mine was assumed to remain open beyond the forecast period and new mines were forecast to open in Dawson and Mayo. As well the Sa Dena Hes mining project in Watson Lake was assumed to continue until 2010. Whether or not these forecasts are accurate, they show that there will most likely be some increase in electrical demand, beyond what can be met with existing facilities. They also show how demand varies in the Yukon, based on mining activity. Another potential market for hydro developers is mining companies. In the past, new mines located off-grid generated their own power using oil or diesel. Exceptions to this were the hydro plants operated by the Yukon Gold Company Ltd. and the Yukon Consolidated Gold Fields Company. Table 5 shows operating and potential mines for the Yukon and how much power they require, as well as the expected mine life. Government highway maintenance camps and remote tourist lodges offer a smaller market potential for hydro developers. An expansion of the existing transmission grid could improve the market potential for hydro development. A grid expansion to more communities and mines within the Yukon would make more customers accessible to hydro developers. A grid expansion which connects the territory's grid to grids outside the Yukon would give Yukon developers the potential to export hydro electric power. Table 5. Potential Yukon Mineral Projects
Notes: * Estimate based on 85% load factor. ** Estimate based on 75% load factor The Competition Yukon utilities measure the viability of hydro electric generation against diesel electric generation. Diesel plants have been seen by Yukon utilities as the lowest cost and lowest risk way of providing for load growth incrementally, in an environment of fluctuating loads. Diesel generators are less capital intensive than other options, easier to size to meet the load, and reliable. They are also removable and transferable, when no longer required to generate power for a particular use. Diesel generators' main disadvantage is their variable fuel costs. Base load diesel generators typically have a capital cost of approximately $1000 per kilowatt. The capital cost for hydro plants can range from three to ten times as much. On the other hand, hydro plants have a number of advantages that allow them to compete with diesel plants:
Although there are currently no coal power plants in the Yukon, coal plants could also compete with hydro plants for generating base load power, provided an inexpensive, and steady supply of coal can be maintained. The capital costs for coal plants are less than for hydro plants - typically from two to five times that of a base load diesel plant. Coal plants have a life time that is comparable with hydro plants. The Yukon hosts considerable coal reserves and various mines have used coal for process heat. The Energy Resources Branch has included a publication on Coal, in this series on the Yukon's Energy Resources. Market Stability Hydro plants are long-term, capital intensive projects. Therefore, the size and long-term stability of the market are key concerns for developers. Customers such as highway maintenance camps or travel lodges may require relatively small amounts of power (under 1 MW) for long periods of time. This may make a micro hydro development attractive. Mines, on the other hand, may require large amounts of power (the Faro mine accounts for 40% of the WAF system load when it is fully operating) for shorter time periods. Utilities in the Yukon are reluctant to build hydro facilities to meet load growth based on a cyclical mining industry. The reason is that the Yukon's electrical system is isolated from the North American grid because there is no cross-border transmission line connection. As a result, a hydro facility that becomes surplus to system needs due to mine shut-downs remains surplus until new mining loads come on line. This results in the remaining customers being required to pay significantly higher power rates to cover the costs of maintaining the facility. There is no opportunity to sell the surplus on the open market. Utilities see the risk of mine shut-downs as too high for them to build plants that require the long pay-back periods of 40 - 60 years required for hydro plants. In 1993, soon after the Yukon Energy/YECL Capital Plan was developed, the Faro mine closed. This event reduced the demand for electricity to the extent that the impetus for developing new power was temporarily gone. With the reopening of the mine in 1995, the demand increased to the point where the electrical system was again operating at full capacity. A "Supply Option Review" process was initiated by the utilities in 1996. Like the 1993 Capital Plan, this review will be greatly influenced by mining operations in the territory. It will be particularly affected, once again by the Faro mine, which announced a reduction in operations in November 1996. Non Utility Generation Up until 1995, only franchised utilities could generate electricity for sale in the Yukon. The Public Utilities Act-1986 was amended in 1995 so that non-utility generators (NUGs) could also sell power. They may sell power to a single customer or a franchised utility. The Act states that a transmission line is allowable only if it "does not duplicate any existing or planned facilities of any public utility." For NUGs wishing to connect to the existing grid, the main customer will likely be the utility that owns that grid. Market stability may not be as big a concern for NUGs, if they can negotiate a "take-or-pay" arrangement with the utility. In such an arrangement, the utility would agree to buy power from the NUG at a levelized price, regardless of end-user demand. Currently, neither Yukon Energy nor YECL has entered into take-or-pay arrangements. However, Yukon Energy issued a request for "expressions of interest" from non-utility generators in September 1996. The utility is interested in using NUG power as a supply option in its Supply Option Review. Yukon Energy's preference will be for NUGs with a proven ability to produce power reliably, at a cost less than diesel generation. The utilities' operation and maintenance costs to generate power with existing diesel plants is approximately $0.09 - $0.11 per kWh. If a new diesel generator needs to be installed, then the costs rise to approximately $0.11-$0.13 per kWh. Regulatory Regime In the early years of hydro development in the Yukon, there was no requirement for formal feasibility studies, nor environmental assessments. One of the original developers of the Fish Lake Hydro plant, John Scott, wrote in his memoirs:
None of the existing utility hydro developments were built under the current regulatory regime. The last project to be built by a utility was the Aishihik plant. NCPC began building the Aishihik Lake project before the Federal Government's Environmental Assessment Review Process (EARP) was enacted in 1974. This process was replaced by the Canadian Environmental Assessment Act in 1992. In 1994 the Yukon First Nations Umbrella Final Agreement became effective, and the Yukon Development Assessment Process is currently being developed. These three initiatives will affect future hydro-electric developments in the Yukon and may affect existing developments undergoing relicensing. Canadian Environmental Assessment Act (CEAA) CEAA enables the Federal Government to assess the environmental, and to a lesser extent, the social and economic impacts of resource development on Federal lands. CEAA is also used when the Federal Government proposes a project, financially supports a project, or regulates a project (such as by issuing a water license). CEAA attempts to document the environmental effects of a proposed project and determine the need to mitigate these effects, to modify the project plan, or to recommend further assessment. CEAA does not apply on First Nations Settlement Energy. Yukon First Nations Final Agreements Individual First Nation Agreements flow from the Yukon First Nations Umbrella Final Agreement. Among other items, these agreements detail how resources may be developed on land that is owned by each First Nation. For example, members of a First Nation may require a share in a hydro-electric development on their traditional territory. The details differ for each agreement, and not all First Nations have their Final Agreements completed. Therefore developers must become familiar with the First Nation having a claim in the territory where they propose a development. Development Assessment Process (DAP) The Development Assessment Process was negotiated and agreed to as part of the Yukon First Nations Umbrella Final Agreement. It is intended to provide a comprehensive and integrated way to assess resource development in the Yukon. DAP will consider social, economic, and environmental impacts, as well as the impacts on the heritage and culture of Yukon First Nations people. Unlike CEAA, it will apply to developments on Territorial (Commissioner's) lands and settlement lands, as well as Federal (Crown) land. DAP is intended to replace CEAA for development assessment in the Yukon. When passed, DAP will become law in the Yukon. NUGs Generating for Private Use Non Utility Generators (NUGs) may generate power to supply their own demand, or they may generate power for sale. Micro Hydro in Yukon Volume II: A Guide to the Regulatory Process was prepared for the Department of Economic Development in 1985. It gives a detailed description of what is involved for NUGs developing a micro hydro facility for their own use. A summary is provided below. For those wishing more detail, a copy of the guide can be obtained through the Energy Resources Branch of the Yukon Government. The guide covers the following steps.
Step 1. Preparation of background information The first step of the process helps determine the feasibility of the project. If this step is done thoroughly, it minimizes delays later in the process. This step includes a search of potential property ownership conflicts through a land title search, mineral claim search, Yukon First Nations Land Claims area search and registered trapline search. If no land title conflicts are found then this step can be continued with an assessment of the site's suitability for development. The data collected from the assessment is also necessary to obtain water use and land use licenses. The site assessment should include a site reconnaissance, site data collection, project planning and consultation with affected parties. Step 2. Water use licensing application process The second step is required for anyone using inland waters in the Yukon. The Yukon Territory Water Board issues water use licenses after a formal review process has been successfully completed. This step involves filing an application along with the data gathered in the first step. The site will be inspected during construction and operation to ensure that the license conditions are met. Step 3. Land tenure application process The third step is necessary if the project is to be developed on Crown Land or Commissioner's land. Crown land is administered by the Department of Indian Affairs and Northern Development and Commissioner's land is administered by the Yukon Government's Energy Branch. This step involves filing an application, followed by a full review process. Step 4. Land use permit application process A Land Use Permit is necessary before construction can begin. A land use permit authorizes a person to carry out a specific land use operation at a specified place, during a stated period of time, and subject to conditions designed to protect the environment. It is issued by the Department of Indian Affairs and Northern Development. Again, an application must be filed, along with the relevant background information gathered during step one. Land use inspections will be done by DIAND during construction and operation to ensure that the permit conditions are being met. Step 5. Other government agencies Other government agencies that may need to be contacted are as follows:
Each project will be different; however, a general time frame for the whole process to be completed is approximately two years. NUGs Generating for Sale For NUGs that wish to sell the power they generate, the process is similar to the one described above. However, there are a few more issues that they must consider, beginning with the first step: as with any commercial venture, the feasibility study should include a market analysis. This analysis should consider the economic issues described earlier in the paper. If a NUG sells its power to a utility, the Yukon Utilities Board will be involved, through review of the contract cost. The YUB is the body that approves the rates utilities charge for their service to Yukon customers. Since a utility's rates may be affected by buying power from a NUG, the YUB has the mandate to review the contract's financial effects and decide whether the cost should be passed on to rate payers. Utilities When utilities decide to develop a hydro site, they follow a similar process to a NUG in developing the facility. They do a detailed feasibility study, and go through the water use, land tenure and land use permitting processes. The study costs and the development will also have to be approved by the YUB, at an appropriate time, to assess its impact on electrical rates. The Yukon Perspective Hydro electric facilities can have a significant impact on the watershed in which they are placed. Storage facilities, in particular, can affect the hydrology, geomorphology, wildlife, and aquatic life of the lakes, rivers and shore lands. In the Yukon, these impacts raise a number of issues - some which offer opportunities for hydro development and others that present challenges. Hydro developments provide the opportunity to generate energy using a local, renewable resource. This means that a smaller amount of petroleum product may need to be imported, so more money stays in the Yukon. Displacing imported fuels with local resources has consistently been a goal of Yukon Governments. Hydro electric energy is also seen by many as a "clean" source of power, in that it does not involve the air pollution associated with burning fuel. When a hydro plant displaces diesel generators, or other forms of power production involving hydrocarbon combustion, it also displaces the greenhouse gas emissions and other air contaminants that come from that combustion. The main greenhouse gas it displaces is carbon dioxide. However, biogas from organic decay in new reservoirs contains methane, which is a more potent greenhouse gas than carbon dioxide. The biggest challenge to new hydro developments in the Yukon could come from the fact that so many of Yukon rivers are wilderness rivers, because so little of the Yukon has been developed by humans. This was not much of a concern for past developers in the Yukon, but the public's concern for wilderness areas has been rising. This affects both storage and run-of-river hydro developers. According to the 1995 Yukon State of the Environment Report, approximately 80% of the Yukon is wilderness, compared to 41% of all of North and Central America and 3% of Europe. Thus, the Yukon is viewed internationally as an important wilderness area. As well, 9% of the territory has some form of protected status, such as a park, wildlife area, managed resource protected area, or has Canadian Heritage River Status. Opposition to developing an otherwise undeveloped river can come from conservation groups, First Nations people who have traditionally used and continue to use the area, recreational groups and the tourism industry. Another challenge faced by hydro developers in the Yukon comes from the impacts of hydro facilities on fish and wetlands. The impacts include blocking fish migration routes, flooding or drying shallow spawning waters and flooding or drying wetlands important to migrating water fowl and aquatic mammals. Impact on fish The following impacts have been documented in the 1995 Yukon State of the Environment Report, for each of the Yukon's utility-owned hydro facilities.
As can be seen, mitigation measures, such as fish ladders, fishways and fish hatcheries have been taken at some of the facilities. New developments will be much more likely to proceed , when a careful assessment of the potential impacts has been made and well-planned mitigation measures have been proposed. Impact on wetlands According to the 1995 Yukon State of the Environment Report,
The report goes on to note that this has also had a detrimental effect on muskrats, an important species for local trappers. In recent years, the Aishihik Hydro facility has received considerable attention due to its potential effects on species that rely on the drainage basin's wetlands. Yukon Energy, with technical advice from the Champaign and Aishihik First Nations, the Territorial and Federal Governments, and other stakeholders is currently undertaking a series of studies on the affected area. The goal of the studies is to improve understanding of the effects of the facility so that it can be relicensed in a manner which considers all project benefits and consequences. The experience gained from this facility may be useful for planning future developments.
For more information on energy in the Yukon, contact us.
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Last Updated 16-01-2006