Muskrat Falls assumptions and ignoring the future

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While the rest of the developed world is rapidly moving off the electricity grid, thanks to new energy-saving devices, rapidly evolving power-storage technologies and ever cheaper and more efficient wind turbines and solar panels, the Dunderdale government is telling us that we absolutely must “develop” the Lower Churchill Falls.

Yes, let’s ignore the new reality and blunder our way into one more ecological and sociological disaster, the cost of which, incidentally, will cripple us financially for generations.

Think that the new technology I’ve alluded to is pie in the sky? Think again.

Solar power generation worldwide has doubled in the past 12 months, and now stands at 12 gigawatts, with China and Germany in the lead at over 2,800 megawatts (MW) each, and the U.S. rapidly catching up, at 2,000 MW.

Analysts at EPEX, the European power exchange, report that solar electricity in Germany is cutting peak electricity prices by 40 per cent — giving rise to headlines such as: “Why Generators Are Terrified of Solar.” Existing fossil fuel generators in Germany are rapidly losing money and could soon go out of business. Critics might say: “yes, but you’re talking about expensive fossil fuels. Hydro power will be so much cheaper.”

No it won’t, when you factor in the enormous pricetag for the Muskrat monstrosity, which will almost certainly end up costing us $12 billion. The average power bill is determined largely by transmission, distribution, wholesale and retail costs. Our transmission costs will be huge when you consider what it will take to build the necessary infrastructure.

And we must not forget the shareholders of Fortis, who will be demanding profitability and ever-increasing share prices and dividends from their board of directors, who will in turn be demanding their bonuses. So the threat of competition from solar power this side of the Atlantic is very real.

The authors of a recent article in the journal Nature conclude that Moore’s law (Gordon Moore 1965) applies to much more than computers.

Moore’s law states that the size (and cost) of computer chips goes down by approximately 50 per cent every 18 months.

This exponential reduction has been happening for the past 40 or more years, and looks like it will continue for another decade or so. The authors studied 62 different technologies — including solar cells — and showed that these items undergo a similar reduction in cost every year or two. European energy analysts at the McQuarrie Group, along with analysts at UBS Investment Bank, have stated that the cost of rooftop solar panels has already fallen to such an extent that their rapid deployment is “probably unstoppable,” and “is heralding an energy revolution.” I should add that these panels work perfectly well in cold climates such as ours.

And solar panels are only part of the equation: battery technology and other storage technologies are making dramatic progress, so that low-cost solar electricity will soon be accessible 24/7. If you think that such a transformative change couldn’t happen here, just look at how quickly we embraced the Internet and cellphone services, and look once again at Germany, where people, fed up with high electricity bills, have gone off the grid entirely. And just imagine how fed up consumers in this province will be when they see the costs that Newfoundland Power and its shareholders will be passing on to us when Muskrat Falls comes online.

What will Nalcor do when consumers in this province decide en masse to go off the grid?


None so blind

Blinkered, as usual, (or wilfully blind) to what’s going on in the world of science and technology, our politicos are evidently determined to ignore the enormous cost and financial risk and forge ahead with a kind of project that has become increasingly unacceptable in most parts of the civilized world.

And in terms of public safety and energy security, Muskrat Falls makes no sense at all: we will be dependent on a single source of electric power via a long transmission line that has to contend with one of the harshest climates and terrains anywhere in the world (not to mention icebergs scouring the seabed over the undersea portion of the cable). Talk about putting all your eggs in one basket.

To add insult to injury, not only will we be victims of Nalcor’s monopoly on power production: we will also be obliged to accept their inflated electricity rates — the direct result of this hugely expensive, unnecessary project whose construction is being promoted on the basis of similarly inflated estimates of our future electricity needs.

For this gift to posterity we can thank the legislation recently announced by Jerome (The Enforcer) Kennedy. This legislation effectively neuters the Public Utilities Board, rendering it powerless to prevent any rate increases over the life of the 50-year contract.

It’s the kind of deal that would make the drug lords of Central America green with envy — nobody anywhere on Nalcor’s turf will be allowed to sell a single watt of electricity, no matter how competitive their prices.

And if anything goes wrong with the Atlantic Canada power sales deal, the ratepayers of Newfoundland and Labrador will be left to pick up the entire tab.

Given the aforementioned exponential developments in domestic power technology, Nalcor’s estimates of future energy needs are, quite frankly, ludicrous and laughable, especially when you look at the timescale on which they are prognosticating — from 2010 to 2029, and then on through 2029 to 2067! Looking back over that same period, historians will likely regard this exercise in futility as something akin to that of an “expert” from 1900 predicting the number of horses and steam engines the province would need by 1967.

If the Muskrat Falls project is such a fabulous deal for this province’s ratepayers, then why has the government effectively abolished the regulatory powers of the PUB?

I’m guessing that it’s not about allowing Nalcor and Newfoundland Power to offer us big rate reductions and generous discounts.

How ironic that, while almost every enlightened government on the planet is encouraging households and businesses to generate their own electricity (and is buying from them whatever surplus energy they produce), our benighted, self-serving politicians will be slamming the door on any such opportunity.

And while in many countries, including the U.S., energy co-operatives work on a profit margin just sufficient to meet their costs and maintain their infrastructure, in this province the suppliers of our electricity are answerable primarily to their shareholders, as is evidenced by our ever-escalating hydro rates. Co-operatives, on the other hand, are owned by the consumers and are answerable only to them.


Fish merchants are our past

There are three kinds of entrepreneur: the productive, the unproductive and the destructive.

Productive entrepreneurs foster innovation and diversification; the unproductive entrepreneur seeks to establish a monopoly; while destructive entrepreneurs achieve their goals through coercion, deception and environmental degradation.

Although the second and third of these three business models went unchallenged during the heyday of the fish merchants and robber barons, productive entrepreneurship is the only business model that is socially acceptable today.

I leave it to readers to decide which two of these models best describes the 50-year farce now being foisted on the ratepayers of this province.

Our provincial government has suppressed and avoided any and all reasonably objective discussions of the obscene megaproject that is Muskrat Falls, and is evidently determined to ram it through with the indecent haste of a shotgun wedding.

And who are the beneficiaries of this hare-brained scheme? Certainly not the ratepayers of this province and certainly not the people whose land will be inundated over an area of 40 square kilometres. The people pushing for this project have nobody’s interests at heart except their own.

Premier Kathy Dunderdale blithely informs us that the (borrowed) money allotted for Muskrat Falls has nothing to do with the provincial deficit, which is part of our operating budget. Who, then, will be responsible for paying down the Muskrat Falls debt?

That would still be us — the taxpayers — wouldn’t it?

So how will we be able to pay down the deficit when we are already saddled with the Muskrat falls debt, most of which we will be paying down after our oil has gone? Really, Premier Dunderdale, do you think we’re that simple?

Evidently you do.

For sheer arrogance and deceit, the present Progressive Conservative regime is every bit as culpable as the Smallwood/Wells/Tobin Liberals. As the saying goes, people who bow to those above usually trample on those below — and the politicians responsible for this looming disaster have evidently been doing lots of bowing over the past several years.

I wonder how Premier Dunderdale will enjoy having her name forever associated with a legacy that will be every bit as miserable and contentious as that of Joey Smallwood, Brinco and Churchill Falls.


 Tony Rockel writes from Placentia.

Organizations: Newfoundland Power, McQuarrie Group, UBS Investment Bank Public Utilities Board Smallwood Wells/Tobin Liberals

Geographic location: Muskrat Falls, Germany, U.S. Lower Churchill Falls China Central America Atlantic Canada Newfoundland and Labrador Placentia

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Recent comments

  • Various Comments
    March 18, 2013 - 11:48

    Germany is fortunate that peak solar coincides with peak air conditioning demand, so it works out quite well. Our problem is heat in the winter and at night. Many new homes in St. John's require 3000W continuously to heat them 20C above the outdoor temperature or 6KW when it is minus 20C. This is not the kind of energy you are going to be storing in inexpensive batteries. The solution for us is better homes, less glass, windows facing south, better insulation and thermal mass and then an efficient heating system such as heat pumps. We could also have developed smaller hydro plants on the island rather than Muskrat Falls as needed - if needed. If you want to see solar thermal in Newfoundland, see: It is great for making hot water on sunny days, and useless the rest of the time. I have tried all the technologies and have lots of instrumentation set up to collect data. The Shawmont small hydro report is here: Energy alternatives are here: The remainder of the document consists of hundreds of topographic maps with annotations and is available at the QEII library. See for good energy discussions, including a discussion on Germany and the elimination of subsidies all over Europe because of the economic disaster unfolding. Your $12B price tag sounds like a SWAG (scientific wild assed guess) and is as good as anything. Many capital projects end up 100% over budget and there will be thousands of change orders due to rugged terrain and technical problems. Part of the underestimation problem is the intense pressure on project mangers to give the cost and timeline the politicians want to hear. A realistic price or timeline up front on a mega project like this would kill it. People don't want to hear things like, we are 90% certain that the price will fall between 8 and 14 billion because it sounds risky. Same thing goes for modelling future power prices. Comments welcome.

  • David Elliott
    March 18, 2013 - 01:01

    A well written piece, however a few points I would like to make. All solar projects in Germany are subsidized, the costs are not reflected in power rates (which a user can control by reduction of usage) but in absolute taxes. Germany has recently starting reducing available subsidies to solar industry and is increasing it's coal usage. China is incorporating as much renewable power as possible ie. solar (also subsidized), but with a preference for available hydro. Why $12 B? Why not 13,14 16? Why not 11.5, or 10, 8? Please defend this personal assumption. Moore's law is not a law, but an observation. Statement concerns density of transistors, nothing directly to do with cost. Once again as it is only an observation other matching correlations are merely the same. McQuarrie Group and UBS Investment Bank are sales agents for their clients. If they release a document, it means they are advertising for their clients. You should provide some references for the batteries, I try to key an eye for any developments in the tech. but options are limited, very expensive,potentially envi damaging. I may return with more follow up.

    • Tony Rockel
      March 18, 2013 - 23:42

      David Elliott, Thank you for your response. While it’s true that solar power in Germany is subsidized, and that these subsidies are now being reduced quite drastically because of today’s budgetary constraints (and also possibly because of lobbying by worried utility companies), consumers continue to install solar panels on their homes. On the topic of subsidies, fossil fuel companies, worldwide, continue to receive massive taxpayer subsidies (in the US, $10 to 50 Billion annually) despite being more than capable of standing on their own. At present, Germany produces 5 times more solar power than the US as a whole, even though Germany gets about the same amount of sunlight as Alaska (Washington Post Feb 8 2013). This amounts to $30 GW, (3 to 10% of Germany’s electricity). Deutsche Bank says “we see the sector transitioning from subsidized to sustainable markets in 2014.” This projection is based on the emergence of large, unsubsidized markets such as in India, where “grid parity” has already been achieved. Deutsche Bank’s analysts see a rebound in solar panel production in the 2nd half of this year, and a further drop in the cost of Chinese panels to 42c per watt in 2015, which would make solar cheaper than natural gas and coal in most parts of the world. You can dismiss the predictions of bank analysts, but you can’t ignore what’s happening in technology. What happened with computers and the internet is inevitably happening in solar and other energy technologies that I won’t go into here. Today’s solar capacity worldwide has just passed the 100GW threshold. The International Energy Agency (IEA) projects a doubling of solar installations to 230 GW worldwide by 2017. A final cost of $12 Billion for Muskrat falls is not at all outlandish: with 6.2 billion for the dam, 2.9 B for the plant and 1.2 B for transmission lines, you already have 10.3 B, and have you ever heard of a project without cost overruns? Two recent studies of cost overruns in large projects, one on rails, tunnels and bridges (Transport Reviews 2003), another on highway projects (EJTR, March 2010) showed cost overruns ranging from 40 to 200 percent. Given the number of unknowns in the MF project, I think my estimate is very conservative. NALCOR has no experience in this kind of project, and they will be beholden to the now known to be problematic firm of SNC Lavalin for all of their engineering advice. Yes, Moore’s Law is based on observations of a trend that has held consistently for over 50 years and should continue until 2020, by which time the conductors on chips will only be 1 or 2 atoms wide, and chips will have to go 3D. It is one of several such “laws” associated with the development of technology. Newton’s laws of motion and of universal gravitation are also based on observations. So we’re not talking about legislation here. Yes, Moore’s Law has to do with the density of transistors, and if you can cram twice as many of them onto the same surface area, you will have effectively halved their cost while simultaneously making them run more efficiently. Almost every other area of technology is evolving at the same exponential rate (Nature News, March 4th 2013). The original paper by Nagy et al. is in PLoS ONE e52669 (2013). See also the publications of Ray Kurzweil and Peter Diamandis (CEO of the X Prize foundation). The human brain is hardwired to think linearly:--if I take 30 steps I will advance 30 feet. This “default mode” worked fine in the hunter-gatherer era, but in the age of technology, where change occurs exponentially--- not so well. The rapidity of change on the latter scale is hard to visualize: if the power of personal computers were to double every year for 30 years (which it has), then today’s PCs would be 1000,000,000 times more powerful than they were 30 years ago (which they are, and for much less than they cost back then). In terms of battery technology, take a look at carbon nanotubes, graphene, supercapacitors, air-zinc batteries, sodium ion batteries and graphene/lithium technologies. Take a look at the work of Donald Sadoway at MIT.

  • Wondering
    March 15, 2013 - 13:12

    Tony, the process for screening the various new technologies for energy saving is currently under the Conservation Plan by the utilities. It is a minor part of the Nfld Power Rate Application and goes unnoticed by most. It amounts to half of one percent of the yearly power sale budget. Other places spent more than 5 times, percentage wise , and achieve 10 times more to reduce energy use and save costs for the consumer. What is being done here gets little scrunity,by the consumers or the media. It is important to know what are the major cost effective measures and invest into that. What works in Florida don't work well here and vise versa, as it is geographic and climate sensitive. Experts suggest that such measures lag behing because there are no mayor ribbon cutting cermonies associated ( as for Muskrat Falls). Example, Mhi and Nalcor said housing has reached saturation for energy savings.But R2000 standard construction reduces heating requirementrs by 40 percent in Nfld. R2000 with efficient heating adds another 25 to 30 percent reduction, together about 70 percent reduction for heating energy. Older homes with typical upgrades in windows and insulation, gives 15 to 20 percent reduction, and can benefit by 40 percent further reduction with efficient heating, for a total of 55 to 60 reduction. On an island wide basis, All this can be done at about 1/4 the cost of new generation like Muskrat Falls. And this is not pie in the sky. But it is a significant undertaking for more than 100,000 houses and more small commerical buildings, and should have started on this a decade ago. But regardless it will kill the demand for MF power, as far as our heating load goes.

  • What is alledged in the article below is another reason I want an Anti-Corruption Squad established to be proactive in monitoring the Muskrat Falls Project.
    March 14, 2013 - 21:46

    The article in the Globe and Mail url address below titled "SNC dodged donation laws, probe told" is a must read.

  • Based on the story by CBC News today contained in the url address below , I want an Anti Corruption Squad established to oversee the Muskrat Falls Project.
    March 14, 2013 - 11:27

    I just read the story by CBC contained in the url address below and it frightens me. I want an Anti-Corruption Squad formed to oversee Muskrat Falls for the sake of our province, its hydro-consumers and the electorate in general. I do not want to see our province go insolvent for the sake of a measley 800 mega watts of hydroelectric energy. Title of the Story SNC-Lavalin senior execs accused of hiding commission fees

  • saelcove
    March 14, 2013 - 09:44

    SNL_Lavalin senior exec accused of hiding commission fees this happened at a dam in angola

  • saelcove
    March 14, 2013 - 09:39

    SNL_Lavalin senior exec accused of hiding commission fees this happened at a dam in angola

  • Just sayin
    March 14, 2013 - 08:33

    Jefford, you say Muskrat hyrdo is cheap! At about 15,000 dollars per kw!. You need your head examined. An reliability is very much in question. How do you prevent all the outages the nothern peninsula is prone to when the high winds load the lines with salt.

    March 13, 2013 - 21:57

    There is only one source of power that is reliable, safe,cheap to operate and Dependable , That is the power created by Developing the power of a water falls, The Churchill Falls Power is the safest, Cleanest and Most reliable source of power in the world. Canada has (9) NINE Atomic Power Plants Like The one that Gave all the problem in Japan? A couple of years ago, You can check that on line one of them is in Quebec. To develop the muskrat falls and run a power line to the island then underwater to the Eastern Mainland of Canada, With extra lines to carry the upper Churchill Power when the" ONE SIDED CONTRACT IN PLACE NOW WITH QUEBEC EXPIRES IN "2041" The Contract That Gave Quebec OVER $99 BILLION DOLLARS" For THE SALE OF POWER since the Churchill Falls Power Plant Started, While NEWFOUNDLAND Only Got "$1 BILLION " With THE Contract now in place. Which Expires in 2041, If Newfoundland Built the Muskrat Falls With A Power transmission line to the island then under water to Eastern Mainland with power lines Heavy enough to carry the upper Churchill After 2041 that would make Eastern Canada The Power House Of North America

    • Tony Rockel
      March 14, 2013 - 17:03

      H Jefford, You don't seem to have understood a word of what I've written. Hydro is the cleanest and cheapest source of power?? Not if it comes from Muskrat Falls. What about the environmental damage caused by flooding 40 square K of land (rotting vegetation, methane) and the greenhouse gases released in making thousands of tons of concrete? Solar power is at least as clean. Where in my article did I promote nuclear power? Btw,you seem to be having trouble with your CapsLock. Are you using a hand-me-down keyboard from Premier Dunderdale's old office?

  • Corporate Psycho
    March 13, 2013 - 19:04

    When I think of Muskrat Falls I feel like I am being taken by a bunch of thugs.

  • Wondering
    March 13, 2013 - 16:29

    Tony, I feel you are somewhat misinformed to think that new low cost generation alternatives is the solution to our energy problem, and that many can go off grid in the near future.Most houses need say 8 kw continuous power in the cold winter days.At about $3000 per kw installed, that is say $24,000 per house for about 8 hours operation per day at perhaps only 4 kw of output in our climate, given our cloudy conditions.. And then add your cost for storage!. Wind is better but has limits when the wind speed is too low or too high. If you follow what other jurisdictions are doing, the best option is to REDUCE demand by efficient products, and for our climate is for efficient heating . It is 1/3 the cost of solar and operates 24/7. This so dramatically reduces household demand. Then wind and island hydro can make Muskrat unnecessary. This is proven technology with many installed in Nfld. Once you reduce your load by 50 percent with efficient heating, some solar can be of benefit, but this is very much secondary. Any alternative must be evaluated as to cost effectiveness, and that much depends on the climate you live in. Efficient heating in a well constructed house will cost about 300.00 per YEAR ( at current rates of 11.17 cents per kwh) for heat per 1000 sq ft of area. Who will want to go off grid if you can heat that cheap? These systems are being promoted and customers assisted with costs in other jurisdictions, but not here, but why? Maybe because no one bothers to oppose the rate increases or demand better efficiency programs. I am amazed at the degree of ignorance of the benefits of this technology for our climate, invented in Japan some 30 years ago and used in Canada for over 10 years. Other jurisdictions struggled to bring cost effective efficiency programs to the consumer. In the last couple of decades over half of North America have gone this way, but not without people demanding it. Can You expect Fortis to actively want to reduce energy sales when they say 96 percent are satisfied customers? My point is this , why do we need any major new energy source, Muskat or solar, when we currently waste over 40 percent of our energy use with obselete baseboard heaters? The ignorance is that most don't beleive this is so. The newer technology is much more cost effective that Muskrat of solar or wind etc. They say ignorance is bliss. Perhaps that is why no one complains that we are not being offered these as part of the Take Charge program. It is as simple as this: new energy sources, solar or hydro, cost 3 to 10 thousand dollars of more per kw of generation. Efficient heating costs about 1500 per kw installed and reduces electricity use for heat by 50 percent. In Nova Scotia they are callling this a heating REVOLUTION. But it is not so new, we are just behind, as usual.

    • Tony Rockel
      March 14, 2013 - 16:53

      Wondering, With all due respect, you will see that I did mention the importance of energy-saving technologies in my very first paragraph. But I also emphasized how solar power technology is rapidly evolving in terms of higher efficiency and lower cost, and that this is happening at a pace that will soon (within 5 years) lower the price of solar to a fraction of what it costs today. At least we both agree on the colossal wastefulness and foolhardiness of damming Muskrat Falls.

  • Anyone who follows the National News is quite aware of Quebec's Anti-Corruption Squad and its findings.
    March 13, 2013 - 12:12

    SAELCOVE, those of us who follow the National News all know that the province of Quebec has formed an anti-corruption squad which has uncovered many improprieties by 13 companies which has added hundreds of millions of dollars to certain construction projects. The article contained in the url address below of December 19, 2012 states that Quebec Anti-corruption Squad Netted 49 Arrests, 175 Charges For 2012," Robert Lafreniere, head of the provincial unit created last year, states in the article that the Quebec Squad is just getting warmed up", and that "Acts of collusion and corruption exist everywhere in Quebec — in every region. Our investigations are proving this to us," Lafreniere told a news conference. He said "We have discovered new stratagems that I will reveal at the appropriate moment."

  • joe
    March 13, 2013 - 12:00

    Excellent article.Also, add to the $500 the increased cost of nearly everything we buy,especially food-these new supermarkets are major consumers of electricity. Also,consider increasing municipal expenses,the increased cost of street lighting,running recreational facilities etc.-more cost to the taxpayer. Maybe the next piece of legislation, Bill29ZZZ maybe,will make it illegal to own portable generators and solar panels,and,who knows,if it gets bad enough,outlaw domestic wood burning.

  • Cyril Rogers
    March 13, 2013 - 11:25

    In light of their recent financial shenanigans and their "oppressive" secrecy about anything Muskrat, this government is on a collision course with structural deficits that will leave us in an impossible fiscal position. It is obvious that they have no solutions to these problems and will continue to throw good money after bad by continuing to move ahead on building Muskrat Falls. They are clueless and oblivious to the fiscal realities that are already raising their ugly heads. This is one more reason why we badly need democratic reforms that would allow the electorate to RECALL administrations that are clearly on a willful path to self-destruction while dragging the rest of us along as well. Sadly, by the time of the next election we will already be in hock to the tune of five or six billion dollars and will be a long way from completion. By then, it will be too late to pull back and we will quickly lose all of the potential we had gained through our oil resources.

  • saelcove
    March 13, 2013 - 10:22

    The anti corruption squad is already busy investigating a nalcor partner can anyone guess who it is

  • Where is the Anti-Corruption Squad to shed some light on this project that will sink our people and our province into an enormous debt forever?
    March 13, 2013 - 09:21

    Thanks for your very informative letter to the editor Mr. Rockel, the information you provided begs the question to be answered from our Premier Dunderdale namely "Where is the Anti-Corruption Squad and if there isn't one already established when will it established"?

  • Ed Power
    March 13, 2013 - 09:10

    Recipe for Disaster - Step One...Dig large hole in ground. Step Two...Pour in large amounts of money. Step Three....Repeat for balance of the century....

  • Maurice E. Adams
    March 13, 2013 - 08:56

    Best I have read on the Muskrat Falls fiasco. Well done indeed Mr. Rockel. If you have not already, may I also refer you to my few scribbles (and comments from others) at ....... Please keep up the great work. This project must be stopped --- for all the reasons you have so eloquently described (and others).

  • Oppressive future
    March 13, 2013 - 07:05

    “It’s the kind of deal that would make the drug lords of Central America green with envy”. It’s on record that the PC Regime & friends expect in excess of $20-Billion over 50 years. That’s $2.5-Billion/yr. or abt $500.00/month from each and every resident. Add to that our ginormous loan payments, service costs, taxes, interest, subsidized public funds, Take or Pay Clause, etc. How come we are not allowed to know how much they will make us pay for a necessity of life? What are they hiding behind Bill 29? Why do we have to wait until their reign is over so a new government can tell us what is going on?