Muskrat Falls megahydro cost increases

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The Canadian province of Newfoundland and Labrador is promoting the development of a multi-phase, gigawatt-scale hydropower project on the Churchill River in Labrador.  But estimates of the so-called megaproject's construction costs continue to mount, now reaching nearly $7 billion (Canadian).

The Churchill River drains much of western Labrador, combining large volumes of water with a significant drop in elevation.  For these reasons, Canadian provinces and utilities have long sought to harness its power.  In 1971, the Churchill Falls dam and hydropower plant came online; today, the Churchill Falls facility can generate 5,428 megawatts of power, giving it the second largest capacity of any power station in North America.

In 2010, Newfoundland and Labrador utility Nalcor Energy and Nova Scotia utility Emera announced the Lower Churchill project.  The first phase proposed, Muskrat Falls, entails the construction of a dam with an 824 megawatt power house, with the subsequent Gull Falls dam bringing the proposed Lower Churchill project's total capacity to over 3,000 megawatts.  The Muskrat Falls project received a key approval by provincial government in December 2012, and construction is now underway.  90 per cent of the project contracts have been awarded, and 98 per cent of the engineering on the project has been done.

Back in 2010 when Nalcor and Emera first announced the project, the cost forecast for the Newfoundland and Labrador portion was $5 billion.  But as the St. John's Telegram reports, the latest cost estimate for building the Muskrat Falls project has jumped by about $800 million, to $6.99 billion.

This estimate does not include the cost of the Maritime Link transmission system to be built by Emera, connecting Newfoundland to Nova Scotia via undersea cable.  The Maritime Link is expected to cost an additional $1.5 billion.

Despite the cost overruns, the project is reported to be on schedule to be completed in 2017.

 

Topics:  Canada, Construction Contracts, Energy, Energy Projects, Hydropower

Published In: Energy & Utilities Updates, Environmental Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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