Market Snapshot: Overcoming the challenges of powering Canada’s off-grid communities

Release date: 2018-10-03

Over 280 communities in Canada–home to approximately 200 000 people–are not connected to the North American electrical grid and natural gas distribution pipeline systems.^Footnote 1 These remote, or off-grid, communities primarily rely on expensive diesel-fired generation, while others rely on smaller local or regional electricity grids based on hydro or trucked-in liquefied natural gas (LNG).^Footnote 2

Despite the challenges, many remote communities in Canada are exploring opportunities to reduce their reliance on diesel fuel, improve electricity reliability, and reduce carbon emissions. These opportunities include developing renewables, hydro or LNG, expanding grids, and connecting to the North American grid.

Source and Description

Source: NRCan – Remote Communities Energy Database

Description: This interactive Tableau map shows the location of Canada’s 283 off-grid communities (as of May 2017). The communities are colour coded based on primary power source. Of the 283 communities illustrated, 171 are Indigenous and the remaining 112 are non-Indigenous.

Powering remote communities is a key component of the Government of Canada’s Pan-Canadian Framework on Clean Growth and Climate Change. The framework commits to reducing greenhouse gas (GHG) emissions by helping rural and remote communities as they transition away from diesel-fired generation and towards cleaner energy sources. One example is the Gull Bay First Nation, in Northern Ontario. The community is co-developing a microgrid that will use solar, battery storage, and grid technology to reduce diesel use. The project, which is expected to be completed by the end of 2018, will reduce diesel use by around 110 000 litres each year.

Northern Challenges

Roughly one-third of these off-grid communities, accounting for over 100 000 residents, are in Canada’s northern territories. The remaining two-thirds of communities are located in every other province except the Maritimes provinces.^Footnote 3 What makes the northern territories unique is that none of them are connected to the North American grid and they have higher-than-average reliance on diesel-fired generation, as illustrated by the yellow areas in the graph below.

Source and Description

Source: NEB – Canada’s Energy Future 2017

Description: This interactive Tableau bar chart illustrates the composition of electricity generation in each province or territory in Canada. The chart illustrates the high reliance on petroleum (diesel) fuel for powering the northern territories, particularly NWT and Nunavut. In 2015, NWT relied on diesel-fired generation for 52% of its electricity needs. Nunavut relied on diesel-fired generation for 100% of its electricity needs. Yukon relied on diesel-fired generation for only 5% of its electricity needs.

Diesel is a reliable, easily stored, and energy-dense fuel. Diesel-fired generators are relatively affordable, easy to install, and can be scaled-up as required. However, diesel has high operating costs, high emissions relative to other types of generation, and its prices can be volatile. This energy system poses significant challenges for the residents of Nunavut, who face some of the highest energy costs in Canada.

To keep energy affordable in the North, large subsidies are required. For example, all communities in Nunavut have electricity costs subsidized at 28.4 cents per kilowatt hour (kW.h) for the first 1 000 kW.h per month in the winter or the first 700 kW.h per month in the summer. If electricity consumption exceeds these amounts, the consumer is charged the unsubsidized rate. The unsubsidized rate varies by community, from 56.7 cents per kW.h in Iqaluit to 112.3 cents per kW.h in Kugaaruk.^Footnote 4 Similarly, electricity rates in NWT are also subsidized with most communities paying 29.5 cents per kW.h for the first 600 kW.h. Rates then increase to reflect the true cost&–as high as 68.4 cents per kW.h–for each additional kW.h. Electricity rates in Yellowknife are unsubsidized at 23.7 cents per kW.h.

Yukon’s territorial electricity grid is supported by four hydroelectric facilities that supplies over 95% of the territory’s total power needs. Diesel and LNG are used during periods of peak demand or during hydro disruptions. However, several communities in Yukon are not connected to the territorial electricity grid. These communities rely on distributed^Footnote 5 diesel-fired generation for electricity. Because Yukon has no refineries, the diesel is imported by truck from refineries in Alberta or Alaska. In the case of the fly-in community of Old Crow, diesel must be delivered by plane. While connecting Old Crow to the territorial grid is not feasible, the settlement is now exploring renewable energy to reduce its environmental footprint, increase its self-sufficiency, and lower its energy costs.^Footnote 6

Source and Description

Source: Government of Yukon

Description: This map illustrates Yukon’s electrical grids and generation stations.

In the Northwest Territories (NWT), two hydro-based grids provide electricity for a large number of communities.^Footnote 7 However, these hydro-grids face challenges. During normal precipitation years, hydro can provide 95% to 99% of the electricity on the Snare Grid, which includes Yellowknife. During drier years, most notably 2014/15 and 2015/16, hydro provided an average 68% of the electricity on the Snare Grid. Diesel-fired generation provided the other 32%.

Inuvik, NWT, is a community of over 3 000 residents in the Mackenzie Delta. Inuvik previously relied on natural gas from the nearby Ikhil gas field for power generation. Since 2013, Inuvik has used LNG trucked-in from Delta, British Columbia (B.C.). With the completion of the all-season Inuvik-Tuktoyaktuk Highway in 2017, the hamlet of Tuktoyaktuk is also considering LNG-fired generation. Tuktoyaktuk, like many other communities in NWT, is currently 100% reliant on diesel-fired generation for its electricity needs, which is more expensive than using LNG to generate power.

NWT is also home to several mining operations. All of NWT’s mining sites are powered by diesel, with the exception of the Diavik Diamond Mine where four wind turbines provide 11% of the mine’s needs.

Source and Description

Source: Government of Northwest Territories

Description: This map illustrates NWT’s electrical grids, renewable generation stations, and mining sites. The 28 MW Snare Grid is located north of the Great Slave Lake and provides hydroelectricity to Yellowknife. The smaller, but lengthier 18 MW Taltson Grid is located south of Great Slave Lake. All of NWT’s mining sites are powered by diesel, with the exception of the Diavik Diamond Mine where four wind turbines provide 11% of the mine’s needs.

Unlike Yukon and NWT, Nunavut has no significant primary energy production,^Footnote 8 no regional grids, and no back-up generation. Nunavut’s power needs are met almost entirely by distributed diesel-fired generation. All of Nunavut’s diesel needs are met through fuel that is delivered in bulk by barge or ship during the summer and stored in tanks located in each community. The Qulliq Energy Corporation (QEC) operates 26 diesel-fired generation plants in 25 communities.

Though wind-energy projects attempted in Nunavut were ultimately unsuccessful, newer wind turbines might be able to withstand the harsh conditions of the Arctic.

Northern Opportunities

Canada’s territories have each developed an energy strategy that involves a move towards renewable energy and reducing GHG emissions.

Of the three territories, Yukon benefits from having the most comprehensive grid and the highest percentage of electricity from renewable generation. Yukon’s Energy Strategy prioritizes replacing diesel with renewable energy in remote communities as well as diversifying Yukon’s electricity supply with renewable energy and lower-emitting natural gas. The strategy also includes demand management to reduce overall and peak-time energy consumption.

In 2013, Yukon’s Micro-Generation Policy helped residents and businesses offset their electricity consumption by connecting renewable forms of generation to the territorial grid. Yukon now leads western Canada in solar panel units in operation per capita. Yukon’s Energy Strategy also notes that wind energy potential is currently being mapped, and that geothermal potential exists within the Whitehorse city limits.

NWT’s 2030 Energy Strategy sets a target of reducing GHG emissions from electricity generation in diesel-powered communities by an average 25% by 2030 from 2018 levels. The strategy also includes increasing the share of renewable energy for space heating to 40%, and improving the energy efficiency of buildings.

With strong solar potential in some regions, solar photovoltaic (PV) projects currently exist in many NWT communities. In 2016, over 900 kilowatts of installed solar PV capacity helped offset an estimated 200 000 litres of diesel consumption. Prior to 2015, Colville Lake had the oldest diesel plant in the NWT and the community of 160 faced frequent outages. In December 2015, a new hybrid solar/diesel/battery system began operation and within its first year displaced over 37 000 litres of diesel fuel. While solar PV benefits from the abundance of daylight in the summer months, solar faces the drawback of very limited daylight hours in the winter resulting in very little power being generated.^Footnote 9

A long term-vision of the Northwest Territories Power Corporation (NTPC) involves connecting the Snare and Taltson grids to better use existing hydroelectric facilities, and reduce the need for diesel generation in some communities. NTPC is also considering connecting the Taltson grid with Alberta or Saskatchewan. If developed, NWT would become the first territory to connect to the North American grid.

Nunavut’s Ikummatiit Energy Strategy was developed in 2007 and included key objectives of reducing the energy-related emissions and Nunavut’s reliance on fossil fuels while supporting clean and alternative energy sources. QEC’s Energy Framework examined the costs and benefits of renewable energy on customer’s rates in five communities. Depending on the amount of wind capacity installed in each community, QEC’s high level analysis shows significant potential to reduce diesel consumption with a payback period ranging between nine years and 31 years.

Southern regions of Nunavut have strong potential for solar power, receiving up to 20 hours of sunlight in the summer and 5 hours of sunlight in the winter. A solar panel array has been in operation at the Arctic College in Iqaluit since 1995. Solar panels were also installed at QEC’s plant in Iqaluit as a pilot project in 2016. Also in 2016, the Government of Nunavut unveiled a net metering program that provides residents with a credit on their energy bill for excess power that is generated using renewable sources and delivered to the community grid.

A Senate Committee on Energy, the Environment and Natural Resources report from 2015 notes that for many remote, northern communities, diesel generation is the “only viable option for reliable base load power and will likely continue to be for some time”. Other technologies for baseload generation may be viable in the future, including small modular nuclear reactors (SMRs). SMRs can be built with a capacity of up to 300 MW, and have the potential to generate emissions-free electricity for decades without refueling. While no SMRs are in operation in Canada, a Canadian Nuclear Laboratories study found that SMRs could be economic in the North, and result in lower electricity costs.

Canada’s Energy Systems

Canada’s remote off-grid communities, and the North in general, are unique elements in Canada’s diverse energy system. You can read more about your province’s or territory’s energy system in the NEB’s Provincial and Territorial Energy Profiles, and read more about Canada’s evolving electricity sector in the NEB’s Canada’s Energy Future 2017 report and accompanying visualizations.