Minn. poised to import Canadian hydro to cut carbon

Source: Daniel Cusick, E&E reporter • Posted: Tuesday, April 5, 2016

Wuskwatim Generating Station

The 200-megawatt Wuskwatim Generating Station is one of Manitoba’s newest hydrodams, completed in 2012. Power exports to the United States from this and other new hydropower facilities in Canada are expected to help border states like Minnesota comply with Clean Power Plan requirements. Photo courtesy of Manitoba Hydro.

For most of its 120 years, Roseau County, Minn., has exported three things to the world: hockey players, snowmobiles and windows.

Its frostbitten cities of Roseau and Warroad, separated by 22 miles of State Highway 11, have produced more National Hockey League and Olympic hockey team members per capita than any other place in the United States.

Roseau also lays claim to the first motorized snowmobile, invented by Polaris Industries in 1954, while Warroad remains the headquarters of Marvin Windows and Doors, a 120-year-old family enterprise that grew into a $600 million global brand.

Soon, however, this Minnesota county on the border with Canada will begin delivering another high-value product to U.S. consumers: Canadian hydropower.

In February, the Minnesota Public Utilities Commission gave final approval to a 500-kilovolt transmission line that will carry electricity from hydro dams in Manitoba to a Minnesota Power substation near Grand Rapids, Minn., on the edge of the Chippewa National Forest.

The project, called the Great Northern Transmission Line (GNTL), is spearheaded by the Duluth-based electric utility, a subsidiary of ALLETE Inc., and Manitoba Hydro of Winnipeg.

Pending final approval from the Department of Energy, GNTL would become the second 500 kV transmission link between Manitoba and Minnesota, increasing by roughly 40 percent the amount of power that can flow between the North Star State and Canada’s easternmost prairie province.

With a projected cost of $560 million to $710 million, GNTL is among a handful of major new grid interconnections planned along the U.S.-Canada border, including two major transmission links under development between New England and Quebec, Canada’s largest hydropower producer.

Experts say the construction of those lines, while expensive and politically and environmentally challenging, could make it much easier for border states from Maine to Washington to meet state and federal clean energy requirements, including carbon dioxide reductions mandated under the federal Clean Power Plan.

According to a 2015 study by the nonprofit Center for Climate and Energy Solutions, 10 U.S. states that currently import Canadian hydropower could measurably improve their Clean Power Plan compliance prospects by importing just 250 megawatts of additional Canadian hydropower.

Minnesota Power is taking an even bigger bite of the Canadian hydro pie.

Since 2011, the utility has inked two power purchase agreements with Manitoba Hydro, first for 250 MW of baseload generation beginning in 2020, and an additional 133 MW of variable supply that can be used to supplement wind energy that Minnesota Power imports from its 500 MW Bison Wind Energy Center in North Dakota.

Officials say those wind and hydro resources will be critical to complying with the Clean Power Plan, which requires Minnesota to achieve a nearly 42 percent rate reduction in power-sector carbon emissions by 2030.

“Without our link to the north, I think we’d have a very different recipe for getting there,” David McMillan, Minnesota Power’s executive vice president, said of the utility’s compliance strategy. “There are very few resources like this that can produce energy around the clock, 12 months of the year, and do so in an entirely emissions-free manner.”

Power flows north and south

The benefits don’t flow only to Minnesota. Manitoba Hydro officials say that in addition to providing export revenue to shore up its generation and delivery system, the transmission line will improve electric reliability for Canadian ratepayers by doubling the amount of power that can flow from the United States into Manitoba. Such imports could ease supply shortages during the province’s peak demand periods or when the utility’s normal hydro production is affected by drought or other issues.

“Should we have a low-water year, the new line will allow us to bring in a lot more power from the U.S.,” said Bruce Owen, a Manitoba Hydro spokesman in Winnipeg.

The line also allows the utility to optimize power imports since the United States’ lower-demand season coincides with Manitoba’s high season. “Our power demand goes up in winter because we have shorter days, our lights are on longer and we plug in our vehicles,” Owen said.

Also, while not as fast-growing as Alberta’s boom cities of Calgary and Edmonton, Winnipeg remains Canada’s eighth-largest metro area with 793,000 people. Its annual growth is roughly equal to Toronto’s, at 1.6 to 2 percent, according to Statistics Canada.

Owen noted that new residential and commercial construction, in both Winnipeg and other parts of the province, are expected to further drive up energy demand over the next 20 to 30 years.

In anticipation of that growth, as well as rising prospects for power exports to the United States, Manitoba Hydro launched a significant expansion of its generation system over the last decade. Major new assets include the 200 MW Wuskwatim Generating Station on the Burntwood River, completed in 2012, and the pending completion of the 695 MW Keeyask Generating Station on the Nelson River, expected in 2020.

Owen said both of those generating stations will be available to dispatch power to the United States, and both meet U.S. EPA’s requirements under the Clean Power Plan.

In fact, Manitoba Power sees such strong potential in U.S. electricity imports and exports that it agreed to finance two-thirds of the cost of the Great Northern Transmission Line in Minnesota while also investing roughly $275 million in a separate 123-mile transmission line that will link Winnipeg’s grid to the GNTL interconnection in northern Roseau County.

The Canadian portion of the line, called the Manitoba-Minnesota Transmission Project, remains under review by provincial regulators, Owen said. Like GNTL, it will require final approval from the federal government. Owen also noted that, as in Minnesota, the new line will require easements and rights-of-way agreements with private landowners, a process that takes time and resources to complete.

“There are already a number of transmission lines going through southern Manitoba, so we’ve dealt with these kinds of issues before,” Owen said. “We obviously appreciate people who live in rural Manitoba and who don’t want a transmission line outside their back door.

“How we work with those landowners, how we respect their rights and how we respect the rights of First Nations groups when we site and build these projects — this is all part of an ongoing process,” he added.

‘Presidential permit’ still needed

In Minnesota, utility officials said they, too, are negotiating with private landowners, Native American tribes and government agencies that have jurisdiction over the thousands of acres that will be affected by the line. According to Minnesota Power, the line will require a 200-foot-wide corridor that must be cleared and maintained in perpetuity. Some of that right of way will require crossing wetlands and habitat for species like lynx, wolves and bats.

Such concerns are being addressed under the National Environmental Policy Act, which requires consultation with wildlife and wetlands agencies, including the U.S. Fish and Wildlife Service and the Minnesota Department of Natural Resources.

Many of GNTL’s largest hurdles have already been crossed, culminating in February’s approval of the final project route by the Minnesota PUC. That decision hinged on the completion of a final environmental impact statement, multiple agency reviews, and several rounds of public comments and hearings.

Minnesota Power officials attribute the GNTL project’s relatively smooth permitting effort to a unique “pre-application” process that began in 2013. It involved more than 75 meetings with local landowners, community members, tribal leaders and government officials, including regulators from Minnesota and the U.S. Department of Energy, which co-wrote the environmental impact statement with the Minnesota Department of Commerce.

DOE still must issue a final record of decision for the transmission line pending completion of agency consultations, as well as a “presidential permit” allowing the U.S. and Canadian lines to interconnect at the border. Officials said both those documents could be issued this spring, pending no major conflicts.

Leigh Currie, energy program director at the Minnesota Center for Environmental Advocacy, a legal aid group that has challenged other energy projects in northern Minnesota, including Enbridge Inc.’s Sandpiper oil pipeline, said her organization has not taken a position on the GNTL (EnergyWire, April 10, 2015). She isn’t aware of any organized opposition to the project by private citizens, tribes or interest groups.

Currie noted that “while there are aesthetic and other concerns for landowners” whose property is crossed by high-voltage lines, her group “generally supports transmission projects that … facilitate further development of renewable energy resources in the state.”

Lots of lakes, hydro not so much

The GNTL is also a conduit for Minnesota to diversify its clean energy portfolio.

The state has long been a leader in wind energy and is rapidly adding solar power to meet state renewable energy portfolio standard requirements. In the southwest part of the state, thousands of acres of corn and soybean fields have made way for commercial-scale wind turbines, ranking Minnesota as a top 10 wind energy producer nationally and third-largest in the Midwest. Xcel Energy Inc., headquartered in Minneapolis, is perennially the No. 1 U.S. utility in megawatts derived from wind.

Hydropower, by contrast, has represented a relatively modest share of the state’s electricity mix despite Minnesota being home to more than 500 miles of the Upper Mississippi River. Minneapolis was home to one of the nation’s first hydropower plants when local businessmen constructed a turbine and power house at Saint Anthony Falls in 1882, delivering electricity to the city’s grain mills and streetlamps.

Today Minnesota generates 384,000 megawatt-hours of electricity from hydro dams, less than 1 percent of all electricity produced in the state, according to the National Hydropower Association. But views on hydropower are changing, especially since power from hydro dams can be dispatched in such a way as to take advantage of peak wind and solar power generation.

Officials say the integration of hydropower with other intermittent renewable resources like wind and solar can allow utilities to rely much more heavily on carbon-free energy without compromising grid reliability. “We think of [hydropower] as a complementary fuel that is unparalleled across our resource base,” said Minnesota Power’s McMillan.

“It comes down to economics at the end of the day,” said Doug Vine, a senior fellow at the Center for Climate and Energy Solutions and co-author of the 2015 report on Canadian hydropower and the Clean Power Plan. “If it makes sense from a cost and reliability standpoint, there’s no reason for utilities in these border states not to import clean energy that’s so close to them.”