Money the “key” to unlocking Iqaluit’s hydro project: Nunavut power corp.

The Qulliq Energy Corp. could save money in the long run by building a power-producing hydro dam at Jaynes Inlet, but it lacks the cash to build the dam, part of a larger Iqaluit hydroelectric project. (FILE PHOTO)

While reading the latest update from the Qulliq Energy Corp. about its stalled Iqaluit hydroelectric project, the line that comes to mind is the wistful refrain “wouldn’t it be nice” from the 1966 Beach Boys hit.

In the case of the Iqaluit hydro project, it would be nice if Nunavut wasn’t so reliant on polluting and expensive diesel and could tap into money, some big money—more than $350 million to build two power-generating dams near Iqaluit, and $6.6 million to complete the remaining final feasibility studies.

These two amounts of money, which may have risen to as much as $500 million since the 2013 estimates, are the “key” to moving the mega-project along, the QEC said in the report on the Iqaluit hydroelectric project tabled during the recent sitting of the Nunavut Legislature.

The two dams—one at Jaynes Inlet 60 kilometres southwest of Iqaluit and a second one at nearby Armshow South—would save on long-term costs, the QEC report shows.

As it stands now, Nunavut spends $54 million a year on diesel, the largest item in the QEC budget. To pay for renovations to 13 of its 25 power plants, which are now operating “beyond their useful lifespan,” the QEC has to borrow money.

So, the QEC appears to be in a vicious circle that would be nice to break: the Iqaluit hydroelectric project would cost less to operate over time and reduce money spent on diesel, however, the QEC has no money to build it because its existing plants siphon all its money for diesel purchases.

Started in 2005, the Iqaluit hydro project was designed to supply a sustainable, affordable and reliable source of energy for Nunavut’s capital, with construction to take place in two phases: Jaynes Inlet first, for about $211 million, and Armshow South later, for about $133 million.

The project would, among other things, provide lasting financial, environmental and social benefits as well as jobs, training and business opportunities. The dams would also help cut diesel consumption by at least 33 million litres, the QEC report notes—and that could lead to cheaper diesel prices elsewhere in Nunavut, not to mention a reduction in climate-warming polluting emissions.

But in 2014, the Iqaluit hydro project was shelved after $10 million had been spent on baseline studies and research, because the QEC couldn’t generate or receive enough money to build it on its own.

And Nunavut’s finance minister Keith Peterson has said “as a government, we simply cannot afford mega-projects here in Nunavut.”

The QEC report suggests that the impasse could change if the Government of Nunavut’s debt cap was increased to finance the project, or Canada gave money directly to the project, or private investors became involved in the kind of “transformational investment” that Iqaluit Mayor Madeline Redfern has spoken about.