Cost is an important factor in the decision to build a generation project. Our public utility, Yukon Energy, is mandated to provide equitable access to affordable energy for all Yukoners. This is the benefit of a utility model of electricity where we all connect to a central grid. Today in the Yukon all new energy infrastructure is compared to the least expensive solution, thermal Liquified Natural Gas, which costs 23¢/Kwh (full cost utilization). The Utilities Board reviews all projects and compares them to this baseline as a way to ensure that electricity costs stay affordable and accessible to all. The cost, environmental effects, and socio-economic effects of any given project are all tied together and there are important tradeoffs and risks to consider.

The cost report explores high-level cost estimates for the construction, operations and maintenance of the six priority sites. The estimates are Class 5 estimates meaning they could be 50% less or 100% more and are rough desktop studies based on what we know today about the sites. They provide a reference for comparing the sites to each other to determine which merit further investigation. The paper also details the desktop design for each project and full construction estimates can be found in the appendices. Capital costs for the projects are estimated to be between 850 million and almost 3 billion dollars. These costs are substantial and reflect the cost of building hydroelectric projects in the Yukon that include environmental and socio-economic mitigation measures.

A common unit of cost in energy is the levelized cost of energy (LCOE). The LCOE represents the per-kilowatt hour (KWh) or megawatt hour (MWh) cost (in real dollars) of building and operating an energy generator (hydro, wind, solar, thermal, etc.) over an assumed financial life and duty cycle. For this study two different LCOE measures were used. The Full Utilization LCOE and the Forecast Utilization LCOE.

• The Full Utilization LCOE represents the cost of the hydro facility if we use 100% of the energy that can be produced by the facility starting the day it opens. This is a standard way to evaluate energy resources but does not provide an accurate picture of the cost of electricity in Yukon where we have an islanded grid and cannot sell excess power.
• The Forecast Utilization LCOE represents the cost of electricity based on the usable electricity generated by a hydro facility over time. In Yukon the usable electricity will be less than 100% of the energy that could be generated, therefore the Forecast Utilization LCOE will be higher than the Full Utilization LCOE. Click here to see details on how the LCOE’s were calculated.

Granite Canyon and Two Mile Canyon are the least expensive projects, followed by Fraser Falls and Detour Canyon. The cascade projects are the most expensive options because in essence two projects are being built to meet the need. The cascade sites also need the longest transmission lines.

There are several potential ways to pay for a project the scale of Next Generation Hydro. As an example, Yukon’s most recent hydro project, Mayo B, was an enhancement (+10 MW) to the existing Mayo A hydro facility and a transmission project that connected two transmission systems together. The project capital cost was $120 million; the Federal Government provided $53.5 million of the funding, while Yukon government and Yukon Development Corporation supplied $30.14 million and electrical ratepayers $36.5 million. Minto mine also supported the transmission line financially. Federal Government funds and partnerships allowed the project to proceed without negatively affecting ratepayers. This was a necessary intervention, given that Yukon has a very small number of ratepayers (rate base).