LNG eDrive is a Massive Subsidy04 Nov 2016
Update: Commenter cpnet notes that in EAO documents the proponent estimated a plant power usage of 1,500,000 MWh / year, which is three times larger than my guesstimate. The EAO document notes it is a very conservative (large) estimate, but at the outside it would imply a subsidy three times larger – about $45,000,000 per year compared to the old LNG power pricing deal. It’s probably somewhere between.
The British Columbia government’s new “eDrive” rate for LNG producers is going to be creating new jobs at an ongoing cost of $138,000 per job at the electrically powered Woodfibre LNG plant in Squamish.
Let’s do the math, shall we? Here’s the input data:
- The Woodfibre plant will produce 2,100,000 tonnes of LNG per year.
- Using modern equipment, it takes 230 kWh of electricity to chill 1 tonne of LNG.
- The price BC originally set for electricity used for LNG was $83.02 per MWh, compared to a prevailing industrial rate of $54.34 per MWh. The new “eDrive” rate is actually just the industrial rate, so the announcement today amounts to a rate change of $28.68 per MWh.
- The Woodfibre facility will create 100 long-term jobs. Since the cost of electricity inputs will also run for the lifespan of the facility, this seems like the right number to compare to.
Now the math:
- 2,100,000 tonnes of LNG times
- 230 kWh of electricty is
- 483,000,000 kWh per year of useage. Which can also be stated as
- 483,000 MWh per year. Times
- $28.68 per MWh in eDrive subsidy equals
- $13,852,440 per year in foregone revenue for BC Hydro, which for
- 100 permanent jobs is
- $138,524 per job
If we want to create 100 new government-funded jobs:
- Why are we paying $138,524 for each of them; and,
- Why are they freezing methane, and not teaching kids or building transit or training new engineers.
Government is about choices, and this government is making some batshit crazy choices.