The Juan de Fuca Cable(“JDF Cable”) is a proposed 550 MW
(megawatt) submarine transmission inter-tie, approximately
50 km (30 miles) in length, that will interconnect Victoria,
British Columbia, Canada (British Columbia’s capital city at
the southern tip of Vancouver Island) with the City of Port
Angeles, Washington, USA (on the north shore of
Washington State’s Olympic Peninsula).
The Project will interconnect what are now the terminal ends
of two radial transmission lines in British Columbia and
Washington State, resulting in a new cross-border inter-tie
running parallel to the present main transmission pathway
between Vancouver, British Columbia and Seattle, Washington.
By connecting these two systems, the Juan de Fuca Cable
Project adds approximately 25% in new electrical trading
capacity between western Canada and the west coast of the
United States.
The Project proposes to use High Voltage Direct Current
(“HVDC”) Voltage Source Conversion (“VSC”) transmission
technology. This “Smart Grid” advancement in HVDC
technology was developed by ABB, Inc. and was first
commercially introduced in 1997, with a number of highly
successful commercial installations completed internationally
since introduction.
Project Status
The Juan de Fuca Cable, formally initiated as a project
in 2004, is fully permitted in both Canada and the
United States. The Project has received a “Certificate
of Public Convenience and Necessity” from Canada’s
National Energy Board, and a “Presidential Permit” from
the United States Department of Energy. As part of the
process for achieving each of these two major permits,
full environmental permitting (including an
Environmental Impact Statement, or “EIS”), and
comprehensive public consultation has been completed.
All technical studies required prior to commencement of
construction have been completed on both sides of the
border, including Feasibility Studies, Transmission
Interconnection System Impact Studies, and Facilities
Studies. The required technical studies were conducted
by British Columbia Transmission Corporation for the
Canadian interconnection and by Bonneville Power
Administration for the interconnection into Washington
State. Since the studies were completed, the British
Columbia Transmission Corporation has been integrated
into British Columbia Hydro & Power Authority
(“BC Hydro”) - a utility corporation wholly owned by
the British Columbia government. Bonneville Power
Administration (“BPA”) is a utility agency owned and
operated by the government of the United States, with
oversight by a delegation of Congressional
representatives from the region that the utility
serves.
The Project has also been issued an order
granting “Market Authority” by the United States
Federal Energy Regulatory Commission (“FERC”).
This order authorizes the Project to establish the
market rates for use of the facility through direct
negotiation with prospective customers, rather than
being subject to a tariff established by state or
provincial utility commissions.
The Juan de Fuca Cable’s
required time for manufacture and installation has been
estimated by ABB to be 26 months commencing from a “
Notice to Proceed”. ABB recently completed a project
very similar to the Juan de Fuca Cable between Estonia
and Finland within a 19 month period. By comparison,
the time frame estimated recently by BC Hydro to
complete an alternative proposed project between British
Columbia and Washington State is 10 years.
Project Rationale
The Juan de Fuca Cable is one component of a larger plan
initiated by Sea Breeze Power Corp. and its joint venture
partner, Boundless Energy, LLC, to provide “state of the
art” electrical access between the renewable
resource-rich regions of British Columbia and Alaska,
and the market demand of California. New transmission
for the west coast region will be especially important
given that the State of California passed legislation
(Senate Bill X1-2) on March 29, 2011, mandating that 33%
of electric power sold within the State by 2020 must be
from renewable resources.
However, the Juan de Fuca Cable, due to both its physical
location and its proposed technology, offers a range of
benefits to a broad geographic region, beyond merely
serving as a conduit for export of renewable energy from
British Columbia.
For example, a coordinated plan between
British Columbia and the states of the Pacific Northwest
could allow both areas to sustain higher penetrations of
renewable energy, especially highly variable wind energy,
than either could achieve independently. This could be
implemented by taking advantage of the seasonal diversity
between the wind regime of coastal British Columbia, and
that found in the lower Columbia River region, and
allowing renewables from one region to “firm” those of
the neighboring region.
In 2001, the World Energy Council identified the coast of
British Columbia as hosting the most economic wind
resource in the world. In addition to its extraordinary
wind resource, British Columbia enjoys a diverse and
abundant potential for world-class development of other
renewable sources of energy, including hydroelectric,
wave, tidal, geothermal, and biomass. Recognizing this
potential early on, Sea Breeze Power Corp. became the
first private sector developer of wind farm sites in
British Columbia in 2002.
Notwithstanding its extraordinary endowment, development
of renewable resources by independent power producers
within British Columbia has progressed slowly, in part
because of the small population (4 million), low
domestic prices for electricity (a benefit resulting
from construction of a network of large hydroelectric
dams installed many decades ago whose costs have
amortized), and transmission capacity constraints into
the United States and into California.
Following decades of self-sufficiency provided by the
Province’s large hydroelectric resources, over the past
decade British Columbia has become a net importer of
electricity. This situation could potentially change
rapidly as a result of new policies and legislation
introduced by the Province’s governing political party,
most notably through the Clean Energy Act passed in 2010.
This Act declared support for development of an export
market from the Province for renewable energy, produced
by independent power producers.
However, the development of a robust market for export
of renewables from British Columbia still must grapple
with the consequences of a general lack of investment in
transmission throughout North America over the past 30+
years. This lack of investment has gradually led to
severe congestion both within regions and between
regions.
One region most affected by such congestion
lies directly south of British Columbia in the Pacific
Northwest. The majority of the electricity generation
and transmission services for this area are managed by
Bonneville Power Administration.
Generation of wind energy within the BPA region has
advanced more rapidly than in British Columbia, with
approximately 3,500 MW presently installed and another
4,000 MW planned over the next several years.
Unfortunately, transmission planning measures to cure
chronic and systemic transmission constraints within
the BPA system have not been adequately coordinated to
accommodate the influx of wind energy to the region.
BPA now has more generation to manage at times than it
has either local customers to sell to, or transmission
capacity to export. In June 2010, this situation
resulted in significant negative pricing and emergency
efforts to maintain the system when high winds passed
through the region during the peak spring run-off.
As a result of this situation, BPA implemented a
policy in March, 2011 curtailing production of wind
energy at certain times of the year. This policy
unfortunately results in a failure to fully utilize
otherwise available renewable energy, and has also
had the impact of diminishing the attractiveness of
wind generation investments in the area, as demonstrated
by the regrettable direction of some wind developers to
consider cancelling plans for future investment in the
region.
The policy implications going forward also
translate into lost opportunities to fully optimize the
export potential of renewable energy from the region.
The two obvious export markets for BPA would be the
markets of California or to British Columbia where the
excess power could be efficiently managed though British
Columbia’s hydroelectric storage reservoirs.
Additional transmission capacity into British Columbia
would make a major contribution to alleviating this
crisis for wind producers in the Pacific Northwest,
while simultaneously creating a new source of revenue
for British Columbia in the form of increased
transmission revenues, storage fees for use of the BC
Hydro storage reservoirs to manage the seasonal surplus
of electricity, and the opportunity to access discounted
energy for British Columbia’s industrial and
Summary of Benefits
Among other significant benefits, the Juan de Fuca Cable
will provide increased long-term firm capacity for the
export of renewable energy from western Canada to the
western United States, provide increased capacity to
import energy to meet British Columbia’s current and
near-term needs as required, and provide increased
capacity to allow BPA to manage its current excess
energy production, and thereby prevent under-utilization
of wind capacity currently installed within BPA’s
service territory.
The Juan de Fuca Cable will also regionally introduce
the benefits of HVDC Voltage Source Conversion
technology, which offers voltage and frequency
stability, “black start” capability, control of
directional flow, and which is ideally suited to digital
control and support of future “smart grid” technologies.
From a geographic perspective, the Project will offer
additional reliability to Victoria, the capital of
British Columbia, and to the City of Port Angeles in
Washington State. Each of these cities are located at
the end of radial transmission lines, and are each
consequently able to only access electricity from one
direction.
Having access to a back-up secure source of electricity
via the Juan de Fuca Cable would greatly diminish the
prospect of future outages in Greater Victoria.
Through the ability to re-route energy at peak times
around presently congested pathways, the Juan de Fuca
Cable will also provide the benefit of deferring
transmission system upgrades within the region. This
could save the regional utilities hundreds of millions
of dollars.
Socio-economic projections for the Juan de
Fuca Cable are also very interesting. An independent
report conducted by Idaho National Labs (a US federal
agency) in 2008 calculated that the Juan de Fuca Cable
would create $134 billion in spin-off benefits and
result in the creation of 177,000 person/years of
employment for the bi-national region over a 30 year
period.
Risk and Revenue Sharing
The Project is presently seeking to arrange revenue
contracts for use of the Cable by the region’s
utilities, independent power producers, and private
sector trading entities. The US Department of Energy
recently declined to proceed with an application for a
loan guarantee for the Project absent the Project being
able to clearly demonstrate ability to service debt.
It is management’s belief that the risk required to
proceed with the Project could be easily assessed if the
regional utilities were to jointly test the level of
interest in the market for use of the Juan de Fuca Cable.
Credible, third party calculations filed with the
British Columbia Securities Commission have estimated
that beneficial returns to the Province of British
Columbia alone would be on the order of $500 million
over the life of the Project, based on increased
network tariffs and increased trading profits resulting
from the ability to conduct more cross-border trade as
a result of the Project.
Beneficial returns to Bonneville
Power Administration are estimated to be of a similar
magnitude.
Based on such projections, which could be
verified and contracted for by the regional utilities
prior to assuming any risk, revenue sharing between the
Project and the two interconnecting utilities (BC
Hydro and BPA) may be a feasible mechanism for financing
the project, rather than the conventional transmission
financing approach of burdening the ratepayers of the
two interconnection regions.
Ownership
The concept of direct export of renewable energy from
British Columbia to the United States through
construction of an independently developed transmission
line was conceived by Sea Breeze Power Corp. (with head
offices in Vancouver, British Columbia, Canada) in 2003,
who then joint ventured with Boundless Energy, LLC (of
York Harbor, Maine, USA) to develop the Juan de Fuca
Cable project. Each of Sea Breeze and Boundless
presently hold 49.5% of the Project’s parent entity,
Sea Breeze Pacific Juan de Fuca Cable Limited
Partnership, with the remaining 1% held by the general
partner, Juan de Fuca Cable Management, Inc.
Each of Sea Breeze and Boundless own 25% of the project’s
general partner, with the remaining 50% owned by Energy
Investors Funds, a United States-based private equity
firm specializing in power generation and transmission
projects.
For more information about the Juan de Fuca Cable
Project, please visit www.JDFCable.com.
ON BEHALF OF THE BOARD OF DIRECTORS
“PAUL B. MANSON”
__________________________
per: PAUL B. MANSON, President & CEO |