The Lower Churchill Project consists of two proposed installations, Gull Island and Muskrat Falls. The combined capacity of both facilities will be 3,074 MW, providing almost 17 terawatt hours of electricity per year.
Extensive pre-feasibility work, such as the progression of the environmental assessment process, finalization of a Water Management Agreement; negotiations for an Impacts and Benefits Agreement (IBA) with Innu Nation of Labrador; development of a financing strategy; as well as extensive engineering studies and field work have been undertaken.
The Lower Churchill Project will be developed in two phases beginning with Muskrat Falls. The Gull Island Project will proceed several years after Muskrat Falls.
The Muskrat Falls Project will include:A. Muskrat Falls Generating Facility
The development of the Lower Churchill Project is consistent with commitments made in the Government of Newfoundland and Labrador’s Energy Plan which states that the development of the Lower Churchill Project must be considered in the context of Nalcor’s broader Integrated Resource Planning initiatives. This assessment has been completed and Nalcor’s subsidiary, Newfoundland and Labrador Hydro (Hydro), has submitted a Generation Planning Issues Report to the Board of Commissioners of Public Utilities.
The report signals that a generation planning decision must be made by the end of 2010 if the appropriate planning, approvals and construction can take place to meet anticipated demand. Hydro has evaluated all practical supply options for generation sources to meet the Island’s long-term electricity needs and it has determined that Muskrat Falls, with a transmission link to the Island, provides the least cost and most environmentally-friendly solution to meet this need.
The Energy Plan also states that, if a decision is made to proceed with the Lower Churchill Project then Holyrood oil-fired generation will be replaced with electricity from this project. The replacement of this facility will reduce greenhouse gas emissions by more than one million tonnes annually, eliminating the province’s dependence on the supply of imported fuel and remove future volatility in electricity prices. The project will also eliminate the requirement for additional fossil-fuel generation in the future and avoid associated emissions.
The development of Muskrat Falls will meet the energy requirements for both Labrador and the Island and also provide sufficient capacity for future industrial developments in Labrador and throughout the province. However, the power and energy of generation at Muskrat Falls is initially greater than what is required for the domestic market and the related surplus presents an opportunity for Nalcor to export power.
To monetize the value of the surplus power, Nalcor Energy has partnered with Emera, a publicly traded entity based in Nova Scotia which is the parent company of Nova Scotia Power, Bangor Hydro-Electric and Maine and Maritimes. Nalcor and Emera have reached an agreement that includes equity investments by Emera in the Maritime Link and the Labrador-Island Link, provision of power to Nova Scotia Power, construction of a Maritime Transmission Link between provinces and assignment of transmission rights in the Maritime Provinces and New England to Nalcor. This agreement will generate value for both companies and builds on Nalcor’s existing relationship with Emera for the marketing of a portion of recall power from the Upper Churchill in the United States.
This development of Muskrat Falls is financially attractive, generates a positive rate of return and ensures long-term price stability. An agreement with Emera for transmission access in Nova Scotia, New Brunswick and through to New England and the sale of additional power to export markets, further enhances the viability of the development and makes this approach the most economic solution over time. It also creates further export opportunity in the future for the other significant renewable hydro and wind resources throughout Newfoundland and Labrador.