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The economic and policy aspects of small hydro development in British Columbia

University of British Columbia

Small hydropower offers many advantages as a source of energy and it has been successfully developed by the private sector in the U.S. and in Ontario. Although there is considerable interest in developing British Columbia's vast small hydro resource, there has been very little progress to date. The reasons for this are related more to economic and political factors than to technical issues. In this thesis I review the situation in B.C. and propose a policy framework for energy purchase price, one of the main issues involved in small hydro development. The price offered small hydro producers for their electricity is clearly less than B.C. Hydro's avoided cost, but there is little evidence to support the amount offered. I suggest that, in the absence of an established, competitve market, energy purchase rates should be based on the utility's avoided costs, and that avoided costs be determined by amortizing the capital costs of the next scheduled project over a 20 year period, rather than basing them on the average levelized costs of all future projects. Furthermore, small hydro development should take a two-stage approach, similar to Ontario's, whereby energy is initially purchased at the utility's full avoided cost and later, when the small hydro industry has had a chance to develop, energy would be purchased at market value or through a competitive bidding process.

Text

2010-10-27

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http://hdl.handle.net/2429/29596

Civil Engineering

University of British Columbia

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