Electrical Business

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The Rock requires new power generation to meet future electricity demand


November 8, 2012
By Anthony Capkun

November 7, 2012 – A report released by the Department of Natural Resources, “Electricity Demand Forecast: Do We Need the Power?”, concludes that Newfoundland & Labrador needs a new source of electricity generation, as the demand will exceed supply in the near future.

“Electricity demand is strongly linked to economic growth and, since 2002, Newfoundland and Labrador has experienced significant economic growth as a result of mining and petroleum developments,” said Jerome Kennedy, minister of natural resources. “GDP has doubled, personal disposable income per person has increased by 62%, and housing starts in the past decade have been, on average, 56% higher than in the previous decade.”

From 2002 to 2011, about 28,800 new homes were constructed, with 86% of those using electric heat. In 2011, there were about 18,600 more residential customers on The Rock than in 2006. While industrial demand has fluctuated, growth in residential and commercial demand has sustained electricity demand.

“We are experiencing a time of unprecedented development and opportunity in Newfoundland and Labrador,” added Kennedy. “Forecasted demand clearly indicates that future growth will lead to further increases in the number of households in the province, and new developments in the commercial and industrial sectors.”

The current economic forecast prepared by the Department of Finance indicates GDP growth of 1.6% annually for the next 20 years. The forecast shows continued growth in the economy driven by major investments in natural resource projects. It also shows that the number of households in the province and new developments in the commercial and industrial sectors are expected to increase.

Newfoundland and Labrador Hydro’s (NLH) Planning Load Forecast indicates that, by 2015, the province will be challenged to reliably meet peak demand in winter months and, post-2019, there will not be sufficient energy supply to reliably meet demand throughout the year. NLH’s electricity demand forecast points to continued residential and commercial growth. Industrial demand will be led by the Long Harbour processing facility, which will require about 85MW of new supply.

In addition to island demand, an estimated $10-15 billion of investment in Labrador mining projects may be realized over the next decade. Based on projects already in construction or near sanction, existing generating capacity to meet winter peak demand in Labrador will be exhausted by 2015-17.

“Nalcor has a mandate to meet the province’s growing electricity needs. Through long-term load forecasting and prudent generation planning, we can ensure we continue to meet consumers’ electricity needs today and long into the future,” said Gilbert Bennett, Nalcor’s VP of the Lower Churchill Project. “Our load forecast clearly shows the need for a new source of power for island electricity consumers and Muskrat Falls and the Labrador-Island Link is the lowest-cost option to meet this need.”

“The historical trends, present demands, economic indicators and proven forecasting experience of Newfoundland and Labrador Hydro clearly establish that new generation is essential to address demand needs,” said Kennedy. “The Muskrat Falls project is the least-cost solution to this supply challenge. It is critical that sufficient generation supply exist to ensure that homes and residences have access to reliable least-cost electricity for heating and other household requirements, and that business and industry have the power they need to grow.”