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HomeMy WebLinkAbout5.1.1B RPT3-2015-03-20-SE Alaska Yukon Ec Dev Exec Summ_fkp-5140420 EXECUTIVE SUMMARY The Southeast Alaska and Yukon Economic Development Corridor has existed primarily as a transportation corridor between the two regions for over a century: initially as a First Nations’ trade route; then as a railway; and most recently as a public highway, providing access from the coast to the Yukon interior. It was determined at the outset of the current study that the particular focus would be the addition of an electrical transmission interconnection and telecommunication link to this economic development corridor. This electrical transmission interconnection is referred to as the “Project” in the current study. The telecommunication link has been assessed previously as a fibre optic link study prepared for Yukon Government (Planetworks 2014.) The scope of the telecommunication assessment in the current study was to determine if synergies existed with respect to the co-development of the transmission line and fibre optic link The objective of the viability analysis for the Project is to assess: 1. Under what conditions does an electrical interconnection make sense? 2. If such conditions exist, does an interconnection of the systems make sense in the near future? There is a wide array of options both in terms of energy supply and demand that could be considered in the viability analysis of the transmission interconnection. A set of “Development Scenarios” were prepared in order to conduct a defensible and reasonable assessment of the transmission interconnection in the foreseeable future. These Development Scenarios were developed jointly at the outset of the study by the project team members consisting of: · Alaska and Yukon government representatives, · Representatives of the three electrical utilities (Alaska Power & Telephone, ATCO Electric Yukon and Yukon Energy Corporation), and · The technical consulting team. The two Development Scenarios used in the viability analysis are: Scenario 1: Development of a transmission line to supply hydropower from the proposed West Creek hydroelectric site near Dyea, Alaska in winter months. Scenario 2: Development of a transmission line (independent of West Creek hydro) to supply Yukon hydroelectric surplus to Skagway cruise ship loads in summer months. Based on the Development Scenarios prepared for this study, it is concluded that: Technical Feasibility 1. Construction and operation of a transmission line over the rugged White Pass is technically feasible using existing and proven transmission line designs from Yukon and Alaska. 2. Capital cost for a new transmission line, without a fibre optic underbuild, is estimated at between $109 million and $123 million [CAD, 2014$] ($94 to $106 million US$20141) depending to the specific alignment selected. 1 Based on US-CAN dollar conversion at $1 US=$1.16 CAD as of January 2, 2015. 3. Combining the fibre optic link with the transmission project is more costly than burying the fibre optic cable separately from the transmission line. As there appears to be no economic benefit to combining the projects, this indicates that both projects can proceed independently of each other without raising concerns about missed opportunities. West Creek Hydro 1. A high-level review of the West Creek hydroelectric site was conducted and it appears to be a reasonably attractive hydropower scheme. It was studied extensively in the early 1980’s but until recently has received little further study. The review of the site conducted as part of the current study was to inform the investigation of the transmission corridor based on public power availability from West Creek. 2. There has been no contemporary feasibility-level assessment of the capital cost for West Creek hydro development. For the purposes of the current study, the 1983 cost estimate for a 20MW project was inflated to 2014 dollars using the US Consumer Price Index (a sensitivity analysis was also conducted using the US GDP deflator as an alternative). Financial Feasibility 1. Supply of cruise ship port electrification power, or “shore-side power,” is fundamental to the viability of a southeast Alaska-Yukon electrical transmission interconnection under all reasonably foreseeable development scenarios. It is estimated that the cruise ships could consume up to 30 GWh/yr (during May to September) if all cruise ships utilized shore-side power. 2. Development of the transmission interconnection is financially viable in the near-future, without external financial support (subsidy) under Scenario 2. This is based on supply of the cruise ships with 30 GWh/yr of electricity during summer months primarily from surplus Yukon hydroelectricity. Economic, Social and Environmental Benefits There are substantive local economic development, social and environmental benefits from a transmission interconnection project beyond that which was monetized in this current study. Some of the key additional benefits include: 1. This study identifies that there is a reasonable, currently available and potentially financially viable energy supply option with the transmission line Project for the electrification of the Skagway cruise ship port. 2. Development of the transmission line could facilitate the development of additional hydropower projects in the region. There are at least 280 GWh/yr of known hydropower schemes (including West Creek) in the region that could utilize the transmission line. For some projects, such as Moon Lake hydro in northern BC, pre-development of the transmission line could reduce the previously estimated levelized cost of energy for the project by up to 25%. 3. Significant greenhouse gas emission reductions could be realized by the development of the electrical interconnection. These reductions could be on the order of 44,500 and 21,400 tonnes of CO2e / year for Scenario 1 and 2 respectively. It is recommended that: 1. Continued work on the assessment and development of the electrical transmission interconnection component of the Southeast Alaska and Yukon Economic Development Corridor is pursued. Given the international benefits of this project and multi-jurisdictional considerations, various levels of government leadership are warranted to advance the Project. 2. A business case for the electrification of the Skagway cruise ship port be prepared to confirm the business case for the transmission project under Scenario 2. This business case should include, but not be limited to: a) Engineering and costs estimates for shore-side power infrastructure; b) Arrangements as needed for adequate cruise ship purchase power volumes and rates to supply shore power by 2020 and for a reasonable period thereafter. 3. Other financial feasibility conditions for the Project(assuming Scenario 2) be confirmed, including: a) Arrangements as needed to define basic provisions for securing Yukon Energy surplus summer hydro and backup LNG generation. The future capacity of such generation to supply the potential cruise ship loads (taking into account capacity related requirements for multiple concurrent cruise ship loads) needs to be determined; and b) Arrangements as needed to define basic provisions for the Project regarding ownership, financing, basis for rate charges for interconnection use (and how these may change as conditions change), and extent if any of external (government) funding to support. 4. Permitting and development requirements and timelines for the Project be confirmed for preparation of the required assessment and regulatory submissions. This would also require the preparation of engineering designs and feasibility-level cost estimates for the Project to support such submissions. 5. Future engineering work should also include further assessment of additional equipment required for the relatively low-capacity and exposed transmission system. This is to ensure the system reliability is acceptable, economies are realized, and operational coordination is achieved. 6. Future work on the transmission line assessment should include potential synergies with other power development opportunities (ie. Moon Lake) and system benefits such as grid redundancy and/or reinforcement in the Southern Lakes region. Future assessment should also consider a phased approach to development of the transmission line. 7. A contemporary feasibility-level cost estimate be prepared for West Creek hydro in order to re-evaluate the assumptions utilized in this current analysis.