Nunavut spends $60M annually to subsidize diesel

This three-megawatt wind turbine helps power Nunavik’s Raglan nickel mine. WWF-Canada says if Nunavut built more renewable energy projects, it wouldn’t have to spend so much money subsidizing the cost of burning dirty diesel fuel. (FILE PHOTO)

The Government of Nunavut spends on average $60.5 million annually on subsidizing diesel fuel, according to a recent report released by the World Wildlife Fund-Canada.

Paul Crowley, the organization’s vice president of Arctic conservation and a longtime resident of Iqaluit, acknowledges a good chunk of this money goes towards offsetting the electrical bills of low-income public housing tenants.

But he said that the territory would ultimately save money by building wind and solar installations to help power its communities—and would significantly reduce its carbon emissions in the process.

“The investment will save money in the long run,” he said. “If you can bring down that $60 million per year on average in subsidies to $40 million, you’ve got $20 million to work with every year. And that allows you to invest in the other things that we need.”

An earlier report prepared for WWF-Canada by the Waterloo Institute for Sustainable Energy makes a business case for switching five Nunavut communities over to renewables, using hybrid systems that would, depending on the community, use some combination of wind turbines, solar panels and storage batteries, with a diesel generator offering backup power.

Such systems have been used with success for nearly 20 years in some remote communities in Alaska, said Crowley. “There’s a well-worn path to getting it right,” he said.

Another success story for northern renewable energy can be found in northern Quebec, where a wind turbine helps power Nunavik’s Raglan nickel mine.

“It’s run in winds up to 140 km/hr, in temperatures down to -40 C,” said Crowley. “That kind of reliability—you can’t get much better than that.”

Still, the upfront costs to build the proposed diesel-hybrid systems aren’t cheap.

“The estimates we have are between $10-15 million per megawatt. A typical project in a community would be one to three megawatts, so you’d be looking at $30-50 million projects, typically,” said Crowley. Iqaluit, which consumes nine megawatts, is “potentially different because it’s so much larger.”

Baker Lake and Sanikiluaq stood out in Waterloo’s report as the best candidates for renewable-energy pilot projects. It’s estimated that these communities could reduce carbon emissions by 74 per cent, by relying on renewable energy much of the time.

Baker Lake’s preferred setup would use a wind turbine, backup battery and diesel generator, while Sanikiluaq would also have solar panels thrown into the mix. Over 20 years, it’s reckoned that Baker Lake would ultimately save $13.4 million and Sanikiluaq would save $10.3 million, compared to carrying on exclusively burning diesel to produce power.

Iqaluit did not fare so well. The report suggests a hybrid system for Nunavut’s capital, using a combination of wind, solar and batteries, would ultimately save $29.7 million over the course of 20 years.

But upfront capital costs would be considerably higher than elsewhere, and Iqaluit would still depend a lot on burning diesel, curtailing the drop in greenhouse gas emissions to 26 per cent.

Others are also studying the viability of clean energy for Iqaluit. Qikiqtani Inuit Association’s business arm is halfway through a two-year feasibility study for wind power. Under their proposal, three turbines with backup batteries could displace one-quarter of the city’s diesel consumption.

Last year the Nunavut government scrapped plans to further examine hydroelectric power for Iqaluit, after concluding it could never afford to build the two proposed dams. Initial estimates put the project’s cost at $255 million, but later grew to $500 million.

It’s not unusual for big hydro plans to balloon in cost, said Crowley, pointing to Newfoundland and Labrador’s Muskrat Falls project. He said that’s one reason why WWF-Canada remains focused on solar and wind technologies, which continue to drop in cost as they find more widespread adoption.

Crowley concedes that Nunavut faces many competing priorities when it comes to spending scarce public funds. But he envisions Inuit development corporations becoming partners for these renewable energy projects to help shoulder the costs.

And if the territory wanted to pursue renewable energy, it would be a good candidate to receive federal funds earmarked for this purpose, he said.

“It’s very important that Nunavut work closely with the federal government to ensure there’s an equitable share of the monies that have been set aside.”