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CANADIAN ENERGY NEWS

Scott Simpson

British Columbia's "vast" green energy potential has convinced a California utility to advance a project taking B.C. electricity south.

B.C.'s plans to develop new renewable energy sources including wind, small hydro and biomass power will leave the province with a huge exportable surplus of electricity by 2016, according to a report released Wednesday by Pacific Gas and Electric.

PG&E serves 15 million customers in north and central California, and last year was granted authority by the California utility regulator to spend $14 million on a study of B.C.'s green power potential.

It identifies as much as 30,000 gigawatt hours -- equivalent to half of B.C.'s present generation -- that could be ready by 2016.

The report is likely to provoke critics who have called on B.C. to slow down development of green resources here on the premise that California would get the benefit of power exports while this province suffers the environmental degradation associated with large-scale renewables development.

However, the PG&E report scuttles the argument that independent power producers could directly export electricity to the U.S., leaving only marginal benefits for B.C.

The California utility said it rejects the idea of buying power directly from independents, saying it wants to deal only with BC Hydro and its power trading subsidiary Powerex.

PG&E also rejects a proposal by Vancouver's Sea Breeze Power to install a new transmission cable along the Pacific coastal seabed and bring B.C. green power south without connecting to BC Hydro-BC Transmission Corporation power lines.

PG&E says the private company's project is too expensive.

"Contracting directly with an entity such as BC Hydro and/or Powerex through a power purchase agreement to deliver an all-in product at the U.S./Canadian border is the most viable option to obtain renewable generation," said a report summary.

Instead, PG&E wants to proceed with negotiations to build a $4-billion ground-level transmission line upgrade from the Selkirk substation in southeastern B.C., and down through the U.S. to northern California.

However, PG&E expresses uncertainty about qualifying small-scale run of river hydro power from B.C. as a green energy source.

The company says current regulations in California do not recognize run of river as renewable power because of its potential for "adverse" environmental impacts.

Additionally, PG&E says B.C. will have to demonstrate to California regulators that its run of river projects qualify as renewable energy -- something that the provincial government is already taking for granted in its own description of green power.

B.C. energy sector commentator David Austin said he is not convinced that the transmission infrastructure to support the project will proceed.

As well, Austin said Washington state and Oregon may yet prove to be cheaper sources of green power than B.C.

"New transmission has to be built in the U.S. to provide firm access to the northern California market and it has to be built at a price that allows electricity from B.C. to be cost-competitive in the California market," Austin said in an e-mail.

"There are sources of renewable electricity in Washington and Oregon that PG&E can also possibly purchase and they are closer to California than those in B.C."

The report identifies a "strong complementary relationship" between B.C. and California, which have peak power needs at alternate times of the year: B.C. in winter and California in summer.

The next step of the project is to pursue discussions with Powerex and BCTC, the PG&E report said, and monitor the progress of B.C.'s independent power producers in developing proposed renewable energy projects.

ssimpson@png.canwest.com