How bundling power can help remote Arctic communities transition to clean energy
By teaming up and diversifying energy sources, far-flung villages can attract crucial investment
A diesel power generating station operates in Rankin Inlet in 2015. (Janne Wallenius / CC BY-SA 4.0 via Wikimedia Commons)
The predominantly Inuit town of Kugaaruk, Nunavut in Canada’s far North pays more than a dollar per kWh for electricity — nearly ten times the cost of power in southern Canada. Like many of its remote neighbors in the Arctic, Kugaaruk’s steep power prices come from its need to import diesel. Given the off-grid nature of these communities, this diesel is generally shipped in or brought in by air — both of which are expensive forms of transport, compared to the pipelines that serve most major populations centers. Burning diesel also releases black carbon, a local air pollutant and powerful agent of climate change.
Several Arctic nations, including Canada, have successfully increased the proportion of renewable technologies in their electricity mix. So, why are towns such as Kugaaruk stuck with this expensive, dirty technology, while the rest of the Arctic progresses forward in sustainability? There are two key barriers: First, these towns require a dependable supply of power to operate in their harsh climates — and most renewable resources are too intermittent to provide consistent energy on their own. Second, the upfront costs for these technologies are higher than these small and generally lower-income communities can afford. At the same time, small power projects are unattractive to external investors given their lower expected returns.
This complex problem requires a solution that maintains a consistent power supply and boosts investment in the region. Community partnerships centered around hybrid generation can bring the requisite scale and reliability.
What if Kugaaruk partnered with the towns of Igloolik and Cape Dorset and presented investors with a portfolio of energy projects — perhaps by combining solar and propane, a dependable but cleaner-burning replacement for diesel? Consolidating investments can increase expected returns and reduce risk by pooling smaller and more stable, larger projects. Investors might even consider selling carbon offsets or renewable energy credits, which are more profitable with a larger package of green investments. In return, investors would charge the towns annually for the amortized cost of the investment plus a return. After paying off the capital cost, the communities will only pay for imported propane during the winter. Finally, the partnerships can work with investors to train local facility operators and coordinate expert maintenance. The communities and investors would create a public-private partnership, making sure to incorporate local knowledge and needs throughout the process.
Similar payment schemes are already being used to deploy solar power in African countries like Kenya and Nigeria, where several companies are delivering energy to rural communities by financing clean energy projects. To manage the financing issues surrounding small projects, a relatively new energy access company — Microgrid Investment Accelerator — plans to aggregate microgrid projects in order to offer more attractive investment terms.
Bundling renewables like solar with propane offsets diesel use in the summer when solar potential is high while maintaining year-round reliability. In addition, moving from diesel to propane would pave the way for the transition from biomass heating and cooking — another major source of black carbon emissions in the Arctic — to the cleaner-burning propane. Overall, these hybrid systems reduce electricity costs, improve air quality, and increase employment opportunities for isolated communities, while also mitigating climate impacts.
To implement this solution, local governments must collaborate on the technologies to include in the portfolio and on how to reach potentially interested social impact and/or energy investment partners. These communication platforms should be regionally-based, perhaps in cooperation with existing, energy-focused non-profits. For example, in Canada’s Northwest Territories, the Arctic Energy Alliance may act as a communication vehicle in partnership with the provincial government. Knowledge-sharing on structuring these investments could be managed via national and international organizations like the Arctic Council This coordination would align well with the Arctic Council’s goals per the Fairbanks Declaration in May 2017 that, among other things, sets targets to limit black carbon emissions between 25 and 33 percent below 2013 levels by 2025.
Of course, some aspects of this proposal warrant careful management. Communities must ensure that proper training is provided, which can be difficult given the number of towns to manage. If training is insufficient, the likelihood of equipment failures or misuse increases, risking physical harm, increased pollution, or worrying blackouts. Furthermore, agreements must be structured fairly for all communities. These important points require thoughtful consideration from local leaders and financial experts, facilitated by the provincial governments creating these platforms.
The benefits of attracting private capital to the region, however, are vast. As a first step, regional governments can provide platforms for remote communities like Kugaaruk, Igloolik, and Cape Dorset to come together, empowering them to bring investment in clean, reliable energy to places that are often left behind.
Henna Trewn has experience in energy policy and consulting, working with clients ranging from market operators to utilities. She is currently pursuing public policy and business graduate degrees at Harvard University and the Massachusetts Institute of Technology.
This article originally appeared in Arctic Today and is republished with permission.
Strange to read about private capital and investment in Nunavut; so rarely is it talked about.
Biomass heating and cooking? The author of this article does understand that Nunavutmiut do not have access to biomass for cooking or heating unless it is shipped up like the diesel….. And let’s be honest we do not need external investors to take on this challenge. We need the subsidy scheme to change. Currently the subsidy is for diesel, not for renewables. So until the subsidy structure changes Nunavut will stay on diesel. Also propane…… Not likely. What the author fails to understand is the cost alone to change out the heating system and fuel tanks to do so would be more than the savings……
Solutions need to come from each unique community, as each has its own needs, challenges and wants. Some communities want wind turbines, others do not.
Let’s stay away from external investors who will ignore these community concerns, and look to Inuit Orgs investing mining royalties back into the community for energy projects.
“In addition, moving from diesel to propane would pave the way for the transition from biomass heating and cooking — another major source of black carbon emissions in the Arctic — to the cleaner-burning propane.”
Just how many wood stoves and furnaces does she think are in use up here?
Apply to the 20/20 Catalyst Program
https://indigenouscleanenergy.com/2020-catalysts-program/
Hmm Mw Trewn gives me cause to think.
Kugaaruk eh – north of the arctic circle too eh, and an interior climate eh.
Sun goes below the horizon eh – so much for solar
Propane liquifies at -40 C and it does get a bit colder than that there.
So mid winter no solar and no propane powered generators – Any more ideas Ms Trewn?
Reads to me like we have one of those southern experts and the companies listed interested in taking our Nunavut money down to the good old US of A.
Clearly this individual has never been to Nunavut
More clearly, Nunavut exists in a twilight zone where sound advice from an Ivy League school graduate with extensive industry experience is essentially meaningless.
Non market forces and exceptionalist thinking are so strong up here, basic economics often do not readily apply, or are misinterpreted.
Regular diesel gels in low temperatures. We have special “Arctic” diesel shipped to us at a premium cost as a result. Diesel often costs more up here than gasoline. Down south the opposite is mainly true. Wax or paraffin will clump in ordinary diesel starting at zero degrees Celsius, and at around minus 15 C it will begin to gel.
We forget that this fuel has been adapted for us, and that the price we pay for this specialty fuel is normal. Even then, we have extra long and wide diameter pipes going into our houses to preheat it, which is yet another cost and complication.
We therefore think it is the best fit solution, even though the emissions are nasty. I suspect if you looked overall, propane could be our better fit solution with the use of heating blankets and such technologies.
I’m sure the author of this article is quite competent at what they do, but they clearly didn’t do enough research into Nunavut before writing this. Why would Kugaaruk, Igloolik, and Cape Dorset enter into an agreement on renewables?
These communities are separated by vast geographical distances, are represented by different Inuit Associations, and have greatly varying climates. I know the author was just using these communities as an example, but it just goes to show how little the author actually researched Nunavut. Why not use Arviat, Whale Cove, and Rankin as an example? Three communities that actually share enough commonality to make sense as a partnership.
Yeah the writer needs to learn a bit more about Nunavut climate and infrastructure and they would realize that their proposal has fatal flaws.
No doubt diesel is bad for Nunavut and the environment.
Let me offer some solutions – none of which would do the whole job; wind turbines (there are calm days/weeks), solar (no sun in winter), tidal (it works but it may have ice issues), micro nuclear (not a fan due to technical expertise needed).
Let’s face it, it’s going to be a big issue.