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Muskrat Falls and the Maritime Link
How Nova Scotia and Newfoundland and Labrador are thinking big about their energy future
[/vc_column_text][vc_column_text disable_pattern=”true” align=”left” margin_bottom=”0″]On Nov. 26, 2014, provincial politicians from Nova Scotia and Newfoundland and Labrador gathered at Bottom Brook, N.L., to celebrate a milestone. Standing in the mud, surrounded by leaders of energy companies from both provinces, they broke ground on the Maritime Link, a project to connect Newfoundland and Labrador’s Muskrat Falls hydroelectric project to the grid in Nova Scotia and beyond.
It’s an ambitious $1.5-billion undertaking, one that involves building a high-voltage transmission line between the provinces, including 170 kilometres of sub-sea cabling under the Cabot Strait. But for project supporters, it shows the opportunities that can arise when jurisdictions look beyond their own borders to find solutions to energy issues.
The Maritime Link is part of a larger program originating with Nalcor Energy Ltd., Newfoundland and Labrador’s Crown energy company, to develop a wholly owned 824-megawatt hydro-electric facility at Muskrat Falls on Labrador’s lower Churchill River. The project also calls for the construction of transmission lines to carry electricity to hydroelectric facilities at Churchill Falls and to the island of Newfoundland’s eastern coast, which allow the province to retire a major oil-burning generating station on Conception Bay.
Halifax-based Emera Inc., a publicly traded energy company, is participating in the project as the developer and 100 per cent owner of the Maritime Link. For its investment, it will be able to buy 20 per cent of Muskrat Falls’s electricity over the next 35 years, a volume that will help Nova Scotia reduce is reliance on coal-fired generation and develop backup supply to support other renewable projects. (Emera is also a partner in the transmission line from Muskrat Falls to the island of Newfoundland.)
Additionally, the companies have negotiated agreements to sell surplus electricity — about 40 per cent of Muskrat Falls generation — regionally and into the northeastern United States through Emera’s connections to the continental grid.
With a price estimated at more than $7 billion for the construction of Muskrat Falls, new transmission lines and the Maritime Link, the project comes with its share of risk. In Nova Scotia, critics have argued that the Maritime Link costs more than is necessary to meet the province’s energy goals and will drive up energy costs for con- sumers. In Newfoundland and Labrador, Muskrat Falls has come under fire for its hefty price tag and a legal challenge from Quebec. Both provinces, meanwhile, face questions about whether surplus electricity will find markets in the U.S., where domestic shale-gas generation is on the rise.
For now, at least, project proponents say the development is on track to start delivering electricity in 2017. The degree to which it meets expectations remains to be seen. But at the very least, Muskrat Falls and the Maritime Link will be an important case study on interprovincial co-operation as Canada explores strategic energy opportunities.[/vc_column_text][/mk_custom_box][/vc_column][vc_column width=”1/2″][vc_column_text disable_pattern=”true” align=”left” margin_bottom=”0″]A national energy strategy is unlikely to apply retroactively to any existing deals or developments. But McLeod says, “real success will come at the political level” if future decisions take such concerns into account. That likely explains why most observers are putting a lot of stock in a deal struck last fall between Ontario premier Kathleen Wynne and Quebec premier Philippe Couillard. The agreement is an exchange contract, under which Ontario has agreed to supply 500 megawatts of electricity to Quebec in the winter, when Ontario’s nuclear capacity out-produces Quebec’s hydro. Quebec will do likewise for Ontario in the summer, when Ontario’s demand peaks. The agreement itself is modest, but it has a lot of symbolic and substantive value — a fact clearly not lost on new Alberta premier Jim Prentice, who travelled east for talks with both Wynne and Couillard immediately after their deal was announced, gaining support for a streamlined pipeline approvals process from Wynne in the process.
McLeod says it’s encouraging to see such dialogue and apparent willingness to co-operate. “I would say that we’ve got people in the premiers’ chairs who are experienced and who are looking at ways to make this work,” he says, in reference to the national energy strategy process. “I think the messages coming out of Toronto and Quebec City and Edmonton and Victoria are all very strong.”[/vc_column_text][mk_blockquote style=”line-style” font_family=”none” text_size=”22″ align=”left”]
The result [of having a strategy in place] would be a more co-operative environment in which to operate.’
[/mk_blockquote][vc_column_text disable_pattern=”true” align=”left” margin_bottom=”0″]What’s equally important, both to the national strategy’s immediate success and to Canada’s future prosperity and well-being, is that Ontario has announced it plans to join Quebec, British Columbia and Alberta in putting a price on carbon. (In early April, Ontario signed an agreement to adopt a cap-and-trade system similar to one already in place in Quebec.)
Once this occurs, 86 per cent of Canada will be living in a province under some kind of carbon pricing system, either through carbon taxation, intensive-based pricing or cap-and-trade. This activity has also helped push carbon pricing, sustainable economic development and environmental protection onto the agenda in national energy strategy negotiations.
“Energy and the environment are really two sides of the same coin and you really couldn’t get anywhere through the energy process exclusively,” McLeod says. “Frankly, this is where a lot of people on this file have wanted to get to.”
Individually, provinces are counting on the fight against climate change and the shift to a greener economy to promote sustainable economic development. Mousseau says incorporating these concerns within a national framework will accelerate the transition and its prospects. “It would make it easier for provinces to move because they would know where their other partners are going,” he says. “Also, by having larger groups, a larger economy involved, it would be possible to have a better economy of scale.”
Senator Black also sees environmental considerations being critical to the future success of the energy sector itself. “How we manage our footprint, how we manage our emissions, how we deal with safety issues, how we deal with cleanup, is now the No. 1 issue,” Black says. “[To ensure ready access to export markets for our energy,] what we need to do is ensure that we are global leaders in this matter. There is also a huge business opportunity for Canada to be the global leader here and then export the technologies that [we] develop. It’s a win-win.”
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