Nova Scotia Power and Muskrat Falls: The story without an end?

This column isby Larry Hughes, a professor at Dalhousie University in Halifax. For more information aboutCBC's Opinion section, please see theFAQ.

Earlier this month, Emera, the parent company of Nova Scotia Power, released its management's discussion andanalysisin its second quarter results for 2022.

Buried deep in in the report is a brief paragraph describing Nova Scotia Power's "alternative compliance plan."

The alternative compliance plan gives Nova Scotia Power a degree of flexibility in meeting its minimum annual renewable energy targets.

Nova Scotia's renewable energy regulations specify the minimum volume of renewable power Nova Scotia Power is to produce for its customers. It began at five per cent for 2011 and 2012, increased to 10 per cent in 2013 and 2014, and then to 25 per cent for the 2015 to 2019 period.

Nova Scotia Power met the targets comfortably with an increasing supply of renewables generated in the province from independent power producers and other groups.

Most of the supply came from renewable sources, such as wind, which vary their output over time. This required Nova Scotia Power to balance the variability with dispatchable sources of generation such as natural gas and hydroelectricity.

By 2019, 30 per cent of the power supplied by Nova Scotia Power to its customers came from renewable sources, as the figure below illustrates.

The next set of renewable targets came into effect in 2020 and are in effect until 2029. During this period, Nova Scotia Power is expected to supply its customers with 40 per cent of their power from renewable sources.

However, Nova Scotia Power only has sufficient dispatchable natural gas and hydroelectricity to support 30 per cent of its power supply coming from variable renewables.

In 2010, Nova Scotia Power realized this would happen and began looking for an alternative source of power to back up its variable renewables.

A solution identified in Labrador

About this time, Newfoundland and Labrador was contemplating the development of hydroelectric projects on the Lower Churchill River in Labrador.

The site chosen was Muskrat Falls. Nalcor Energy was made responsible for the hydroelectric project.

In 2010, it seemed like a perfect match.

Nova Scotia Power needed a source of power that could be used to back up the planned growth in variable renewables. The fact that the source was renewable meant that the company could reduce its use of emissions-intensive sources such as coal and natural gas.

And Nalcor needed an out-of-province market forsome of the power. No one in the province wanted a repeat of the Churchill Falls contract with Hydro-Qubec, in which power was sold for about a quarter-cent a kilowatt-hour.

Nova Scotia Power and Nalcorreached an agreement in 2012. The project was to be completed before 2020, giving Nova Scotia Power a seamless transition from 30 to 40 per cent renewables in 2020.

The project is intended to ship power through Labrador to the Strait of Belle Isle, then by the Labrador-Island Link submarine cable to Newfoundland, across the island, and finally by a second subsea cable, the Maritime Link, to Nova Scotia.

The subsea cable between the island of Newfoundland and Nova Scotia was completed in 2017.

Delays, delays, delays

As the years passed, it became increasingly obvious that Muskrat Falls would not be completed on time or on budget. Construction delays and software faults pushed the date of first power from Muskrat Falls well past its projected completion date.

Realizing that it would not be able to meet its 2020 renewables obligation, Nova Scotia Power asked the Nova Scotia government to relax the 40 per cent target while Muskrat Falls was being completed. The result was the "alternative compliance plan."

The plan still requires Nova Scotia Power to supply its customers with 40 per cent of their power from renewable sources. However, unlike the requirements in the provincial Renewable Energy Regulations, Nova Scotia Power must ensure that 40 per cent of all the power it supplies between 2020 and 2022 must be renewable.

In late September 2020, Muskrat Falls produced first power. However, software problems with the Labrador-Island Link meant that only 29.1 per cent of the power supplied to Nova Scotia Power's customers was renewable in 2020.

In late November 2021, Muskrat Falls was integrated into Newfoundland and Labrador's electricity system. However, software problems with the Labrador-Island Link again meant that only 30.2 per cent of the power supplied by Nova Scotia Power to its customers came from renewable sources in 2021.

At the end of the first two years of the alternative compliance plan, Nova Scotia Power's customers had received just 29.6 per cent of their power from renewables.

In May of this year, a consultants' report found that the software problems with the Labrador-Island Link were at least a year away from being resolved.

In the first six months of 2022, Nova Scotia Power supplied its customers with almost 39 per cent of their power from renewable sources, with some coming from Muskrat Falls.

However, after two and a half years of the alternative compliance plan, only 31.6 per cent of the power supplied in Nova Scotia has come from renewable sources.

To reach the plan's 40 per cent requirement, Nova Scotia Power will need to double its production of renewables in the second half of 2022.

One can only hope that the problems associated with Muskrat Falls are resolved long before 2029.

The reason?

In 2030, Nova Scotia Power is required to supply its customers with 80 per cent of their power from renewable sources.

These include new variable renewablesin Nova Scotia, backed up by power from Muskrat Falls and from Newfoundland and Labrador's nemesis, Hydro-Qubec.

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