New generation needed quickly, says Hydro report on electricity demand

More electricity production is needed and the clock is ticking to increase generation, according to a new study from Newfoundland and Labrador Hydro.

The Crown corporation's latest analysis on long-term load growth shows that by 2034, demand on the island could increase by 230 megawatts, a nearly 14 per cent increase over current levels. 

Energy needs in Newfoundland could grow by 1.6 terrawatt hours, which equals about 40 per cent of the power produced by the 824-megawatt Muskrat Falls project in 2023.

"As the island-interconnected system is currently capacity-constrained, reliability concerns remain; given the time frame to construct new assets, it is imperative to approve new resource options in a timely manner to maintain a reliable electricity system," said the report, submitted to the Public Utilities Board on March 28.

Hydro is studying a series of options to increase generation, including a new combustion turbine at Holyrood, which would burn diesel, at least in the near term.

It is also considering an eighth unit at the Bay d'Espoir hydroelectric dam.

Both projects would take years to construct and cost north of $500 million, according to the latest estimates.

Three scenarios studied

Hydro's projections are based on several assumptions: 

• That the province's population will continues to climb.
• That efforts to switch from oil heating and gas-powered vehicles continue.
• That large industrial players will seek to electrify their operations.

Three scenarios were studied for Newfoundland, with the reference case — in other words, the most likely scenario — being the middle-ground option.

However, even under what the study calls a "slow decarbonization scenario," with increased electricity prices, a slower shift to electrification and lower population growth, demand for electricity is still expected to climb by 160 megawatts by 2034. Energy needs are also predicted to jump by 1.1 terrawatt hours within the next 10 years.

Under Hydro's accelerated growth scenario for the island, which notably anticipates a surge in industrial demand for electricity, 370 megwatts of additional demand and 2.3 terrawatt hours of new energy would be required by 2034.

Hydro's projections were independently assessed by Massachusetts-based firm Daymark Energy Advisors.

Potential Labrador power needs

Hydro completed similar forecasting for Labrador, where mining giant Rio Tinto-IOC has made no secret of its plans to reach net-zero emissions by 2050 for the massive iron ore mine in Labrador City.

However, under the scenario considered most likely by Hydro, there won't be a major boost to industrial electricity demand in Labrador within the next 10 years. Rather, total demand for the region is expected to increase by just 25 megawatts, with energy needs stagnating.

Hydro's report notes, "The existing transmission system in Labrador is fully maximized and it has been assumed that this constraint will not be resolved at least until 2029," although significant load growth could be possible after that date. 

According to a medium-growth scenario projected by Hydro in which some industrial electrification projects go ahead, demand in Labrador could grow by 310 MW by 2034, a 71 per cent increase.

Under an accelerated growth scenario, where all major projects proposed by Rio Tinto-IOC and Tacora Resources move forward, demand could grow by 750 megawatts, a 173 per cent increase.

Energy needs are projected to grow by 2.0 terrawatt hours under the medium-growth scenario and 5.3 terrawatt hours under the accelerated-growth projection.

"Industrial load growth in Labrador will require additional investment," according to the report, which adds, "Throughout 2022 and early 2023 Hydro progressed a system impact study for one industrial customer that was seeking to significantly expand their operations in Labrador." 

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