QEC moves on feasibility study for two Iqaluit hydro dams

The old diesel-fueled power plant in Iqaluit won’t produce enough electricity to take the growing city into the future. (FILE PHOTO)

Nunavut’s electrical power utility, the Qulliq Energy Corp., is moving a step closer towards building two hydroelectric power projects in Iqaluit by paying for its own $4-million feasibility study on the two proposed dams.

The QEC looked for territorial and federal money in the past to move ahead with the study, but the estimated $450-million project has been “hitting several roadblocks,” Peter Mackey, the president of QEC, told Nunatsiaq News.

Previous plans that would have seen construction of a dam at Jaynes Inlet start in 2010 faltered because no organizations were willing to foot the bill for the $4-million study.

And QEC can’t get any money from the federal government’s Green Infrastructure Fund either because QEC, a Crown corporation, is considered to be a “for profit” entity.

To that end, the QEC board has decided to pay for the study themselves before fuel and construction costs increase.

“We wanted to start this right now when there’s still some stability in the oil prices, before we get to the point where we don’t have enough money to spend on purchasing more oil,” he said.

“The longer we leave it, the more [the price] is going to grow because of inflation alone,” he added.

The feasibility study will ensure the project will be profitable, said Mackey, who is confident the project is “bankable” based on pre-feasibility study data.

After the study, and if the Nunavut Impact Review Board recommends approval of the project, QEC could start construction in 2015, assuming it is able to find financing for a project that would see two dams near Iqaluit, at Jaynes Inlet and Armshow South, across the bay from the town.

“Pending funding for the overall project, and looking at moving ahead with engineering, construction [should] be completed by 2019,” said Mackey, adding that there are a few options for funding.

“We’re looking at this from the perspective of taking on other partners if we go to construction of it, through a [public-private partnership] arrangement,” he said.

The other option is if the federal government lifts the Government of Nunavut’s borrowing capacity, or debt cap, which currently sits at $400 million.

“If they do that, it opens up more options. If they don’t, we’re severely hampered by that debt and we’ll be looking at more on the lines of a P3 arrangement,” Mackey said.

If completed, the dams would provide Iqaluit with a capacity of 18 megawatts of electrical power, enough to sustain Iqaluit until 2040 and beyond.

Originally, the plan was to build one dam at Jaynes Inlet and add another after the load capacity demand for the city crept up. Now, however, it’s a race against the clock to build two dams to sustain Iqaluit’s power needs in the long-term.

Last March, Nunavut’s energy minister Peter Taptuna said diesel-power plants that supply Nunavut with the most expensive electrical power in Canada are old and nearing the end of their life cycles.

“Given the cost that we incur for the diesel power plant, specifically with fuel, the cost of the engines and with environmental protection regulations for running diesel generator sets causing the cost for the generators to be substantially more, we expect to see the future price creep [up] in cost of electricity throughout all of Nunavut,” Mackey said.

The hydro dams would offset this price, and give Iqaluit some sustainability, said Mackey.

“Our primary concern is the stability. And obviously there are some environmental considerations in terms of reducing dependency on fossil fuel, reduction of greenhouse gas, C02,” he said.

QEC also has the option of expanding to a third hydro dam on Armshow South after the dams reach their capacity.

Leona Aglukkaq, Nunavut’s MP, campaigned on the promise of building a hydroelectric dam in Iqaluit in the 2011 federal election.

According to a previous socio-economic study, the project’s construction is expected to generate about 75 jobs, millions of dollars in spin-offs, and lead to the construction of a deepwater port.

A new, up-to-date socio-economic study should be released by QEC soon.