Canada

Federal dollars attempted to fill the funding gap for the Atlin hydropower expansion

The Atlin Hydro Expansion Project would increase the power output of the existing infrastructure from 2.1 megawatts to 10 megawatts.  It would provide Yukon Energy with clean electricity and reduce the Territory's reliance on diesel generation.  (Philippe Morin/CBC - photo credit)

The Atlin Hydro Expansion Project would increase the power output of the existing infrastructure from 2.1 megawatts to 10 megawatts. It would provide Yukon Energy with clean electricity and reduce the Territory’s reliance on diesel generation. (Philippe Morin/CBC – photo credit)

Several players behind the Atlin Hydro Expansion Project are looking to the federal government’s spring budget to fill a growing funding gap that Yukon’s energy secretary said is putting the entire plan at risk.

The project is supported by Tlingit Homeland Energy Limited Partnership. The project would increase the generation capacity of the existing infrastructure and include upgrading transmission lines.

The hydropower expansion would be complemented by a 40-year power purchase agreement, under which the additional power would be sold to Yukon Energy. This would provide the utility with clean power during the winter and reduce the area’s reliance on diesel generators rented in Alberta.

Funding for the project was put under scrutiny by the Yukon Legislature last fall as critics pointed to escalating costs and a serious lack of funding. The Yukon government has pledged a $50 million grant. It is one of several funding partners that include the BC and federal governments.

At the time, Tlingit Homeland Energy said the project’s price had increased due to factors including inflation, supply chain issues and a weak Canadian dollar. The funding gap must be closed by January to meet the target for commercial operations in 2025.

According to Lee Francoeur, President and CEO of Taku Group of Companies, the latest estimate for the project is $330 million.

Francoeur further announced that the funding gap stands at $106 million, including a $30 million contingent liability for increased borrowing costs due to rising interest rates.

“We were a victim of circumstances and we’re just trying our best to keep the project going,” Francoeur said.

Although the gap has not been closed, Francoeur said there is a “small window” to avoid schedules being pushed further back.

“And I wish that we have an intergovernmental approach so that everyone can move this project forward as quickly as possible because it’s not going to get cheaper. Everyone in the world is trying to move toward green energy right now, and that’s causing those prices to go up,” he said.

Claudiane Samson/Radio Canada

Claudiane Samson/Radio Canada

Yukon Energy, Mines and Resources Secretary John Streicker said none of the committed funds have yet been spent. He said the partners are at this stage trying to “line up” funding before work on the hydropower project can begin in earnest.

Streicher said it was a challenge to get all the funds needed at once. Tlingit Homeland Energy secured $80 million for the project from Canada Infrastructure Bank by borrowing against electricity sales. Streicker said the bank had agreed to lend “at very low interest rates.”

“Interest rates have changed. Suppose we don’t get the money to fill the gap this spring. It is possible that this gap will change upon us. And that could jeopardize the entire project, not just the timing of the project,” he said.

Streicher said the Yukon government helped. He said he traveled to Ottawa with Francoeur last fall to present the project to the federal government, which has already pledged $32.2 million.

Streicker said he believes the federal government recognizes the merits of the project because the hydroelectric project will be First Nations-led and would expand on existing infrastructure. However, Streicker wasn’t sure if Ottawa would pull through with the money.

“I think they’re fine with that in principle, but … they have to make tough decisions about their budget,” Streicher said.

The deficit is too large for the Yukon to cover on its own, Streifer said. But if the federal government should reach “80 percent there, or 90 percent there,” he will check whether covering the rest is possible, said Streifer.

That would shake up critics like Yukon Party energy critic Scott Kent. His party has raised questions about the feasibility of the project and its timing. Kent pointed out that the project’s 2019 estimate was $120.7 million.

As the territory’s electricity needs are expected to increase in the coming years, Kent said the government needs a solid plan to meet it.

Chris Windeyer/CBC

Chris Windeyer/CBC

“The government needs to find some viable alternatives amid growing concerns about the energy plan,” Kent said.

“Atlin is one of those projects in [Yukon Energy’s] Renewable 10-year plan. moon lake [pumped storage project] is a different one and it’s not even out of the design phase yet. So it could be years and years away.”

If the funding gap is not closed, Strecker said the government will look at other options. He said there are a number of measures in place to help power Yukoners, such as: B. Policies that allow them to connect renewable technologies to the grid, a grid-scale battery in Whitehorse, and renewable projects in the communities.

He also pointed to the Moon Lake pumped-storage project, which is slated to come online later in the decade, and talks about connecting to BC’s main grid.

“So we’re always in these conversations about how we’re going to work to build reliable, affordable, clean energy over time,” he said. “So Atlin is an important project, but it’s not the only project.”

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