Alvaro Lara, a student on the MSc Climate Change, Management & Finance programme, considers the challenges faced by off-grid communities in Canada, why climate change threatens their status quo, and how renewables could hold the key to a reliable power supply.
Colville Lake is about as remote as you can get in Canada. Located 50km north of the Arctic circle and with a population of only 160, Colville Lake was one of the last remote communities in Canada to get a power plant – waiting until 1991 for one to be installed. Since then, the community has been transporting diesel hundreds of kilometres to keep its diesel power plant running. But, last summer, this started to change when the local utility installed a 140-kW solar system and a 200-kWh battery.
Now, when the sun is shining, the solar system supplies much of the community’s electricity demand, with any excess stored by the battery for later use. The power plant effectively switches between solar and diesel depending on availability. Just 12 months into the operation of the diesel-solar-storage system, the community has reduced the operation of the diesel generator by 27%, saving 37,000 litres of diesel fuel. And locals are enjoying the benefits of diesel-free power – “we don’t even know its running”, say residents accustomed to the noise and smell of diesel generators.
Challenges faced by remote communities like Colville Lake
Colville Lake is one of approximately 300 remote communities across Canada. These communities are located mostly in isolated regions of the country or near the Arctic – and each faces unique challenges based on its location and accessibility. Not connected to the electricity grid, they typically rely on expensive and unreliable diesel generators for power, which are only accessible by ice roads during winter months. As the winter season shortens year on year – an effect brought about by global warming – the window of opportunity to transport diesel also shortens. Several communities have no other option but to transport diesel by air – a much more expensive and fuel-intensive alternative – or with ships. And however the diesel is transported, the possibility of a fuel spill is always looming, and so is the potential for serious environmental damage.
Furthermore, most of these communities have an aging electricity grid. Yet, when communities outgrow their power plant capacity, they don’t immediately receive new generators. Instead, they are placed under “load restriction”, meaning they cannot connect any new additional electrical load – a step that automatically halts all economic activity. No new homes, restaurants, schools, or medical centres can be built. This, in-turn, translates into higher unemployment, poor health conditions, and low quality services.
What’s stopping renewable deployment?
Historically, the high costs of solar, wind and battery storage technologies have made the business case for renewables deployment in Canada’s north cost prohibitive. However, over the past decade, capital costs have come down dramatically. A 2016 feasibility study by WWF-Canada identified five communities in Canada’s north where the adoption of diesel-renewable systems – like that in Colville Lake – is cost-effective today. The study found that, across the five communities, the roll out of renewables could reach between 29% to 82%. This would, over a 20-year period, result in emission reductions from between 26% to 75%, and savings of $9-30 million CAD.
However, despite this, the adoption of renewables still remains limited for two reasons:
- The lack of a consistent framework, or policy, that encourages and appropriately evaluates diesel-alternatives.
In many provinces, existing legislation does not provide the right environment to encourage the adoption of renewables. In Nunavut for example, legislation does not permit companies to generate electricity – only the government-owned utility, Qulliq Energy, is granted access to the grid. While Nunavut’s situation is not the norm across Canada, there are other policies that discourage clean alternatives to diesel. For example, in Manitoba and Alberta, renewable developers may enter into a power purchase agreement (PPA) with the local utility, but the PPA rates offered are so low that the adoption of renewables is made cost-prohibitive.
- The lack of capital required to fund these projects.
Remote communities like Colville Lake are small, and with little capital available for infrastructure projects. The cost of the solar and storage components of Colville Lake’s new power plant (excluding diesel costs) was $2.7 CAD million. Roughly half of that was funded by the federal and territorial governments. Without this support, the Colville Lake project might have never been built. In general, remote communities have very limited capital to invest in such projects. Furthermore, since renewable projects in the north are small in scale and return, large project developers – with access to capital – are unlikely to see development there as an investment opportunity.
The province of Ontario, home to 30 remote communities, offers a glimpse into the future for remote communities across Canada:
- The utility supplying electricity to remote communities in Ontario, HydroOne Remote Communities Inc. (HORCI), offers renewable developers a much more attractive PPA rate compared with Manitoba and Alberta. The rate is based on HORCI’s avoided costs of diesel fuel. That said, PPA rates could go even further if they conceded additional value for renewables from avoided emissions, as well as savings from the reduced operation of diesel generators.
- Ontario Power Generation (OPG), with partial funding from Ontario’s Smart Grid Fund, is building an advanced renewable microgrid in Gull Bay, a community of only 300. The project will integrate new solar photovoltaics, battery energy storage, and a microgrid control system with the existing on-site diesel generators to create a community microgrid.
- Canadian Solar, a renewable project developer, recently completed a hybrid solar-diesel system in Deer Lake, a community of 1,000. The solar project will provide enough power to run the school, helping to reduce the community’s reliance on diesel.
The path forwards
The momentum behind these remote renewable projects is positive for Ontario’s off-grid communities. However, it will take more than a strong pipeline of projects to encourage widespread adoption. It will take a more holistic approach – an approach that addresses the root of the policy and financial barriers described above.
The projects in Colville Lake, Gull Bay, and Deer Lake have shown the dramatic impact renewable deployment can have on the people living there – raison d’être to tackle these barriers head on and encourage the roll out of renewables across all of Canada’s off-grid communities.