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Our Northern communities are reliant on diesel power generation. Transportation and operating costs in these remote communities are significant, leading to high electricity and heating costs for communities, stretching household budgets that are already challenged by overwhelming food costs.
However, the costs that appear on bills every month, do not account for the true cost associated with diesel power generation. Indeed, the true cost of diesel power, isn’t just the cost of fuel and transportation, it also includes costs arising from the emission of Greenhouse Gases and the external social impacts.
To determine the true cost of diesel power generation we looked at nine northern, off-grid communities in Northwest Territories (3), Yukon (2), and Nunavut (4). Specifically, we looked at utility-supplied rate filing documentation provided to governments and energy regulators by utilities; government carbon tax costs; and research related to the direct and indirect social costs associated with the use of diesel for electricity generation and building heating purposes.
What we found was that for the communities studied, the human and ecological health costs of diesel fuel was $0.191/kWh, above the utility cost of diesel (ranging from a low of $0.41/kWh in Destruction Bay to a high of $0.76/kWh in Old Crow).
When the human and ecological health costs of diesel power generation are factored in, the economic considerations behind renewable energy development in off-grid communities becomes more attractive.
There are currently a number of ongoing energy policy development processes being undertaken at both the federal and territorial level: Generation Energy, NWT Energy Strategy to 2030, etc. In addition, there has also been announcements of significant federal investments in shifting communities away from diesel power generation.
We believe that the combination of the data from this report and the opportunity of these policy processes and investments points to a need for a national dialogue on the full cost of diesel energy. We contend that such a dialogue should lead to the establishment of a Pan-Canadian Avoided Diesel Energy Value Methodology and Formula to create a metric of actual costs.
Having a truer accounting associated with the costs of diesel power generation, rightfully strengthens the economic argument in favour of increased renewable energy development in the North. More than that, reducing the amount of diesel power generation in our communities has the potential to positively contribute to the physical health of our people and reduce the negative ecological effects on our lands and waters.
Click here to read the full report