Inuvik wind project costs almost double, NWT asks Ottawa for help
Construction of a wind turbine outside Inuvik is now expected to cost up to $70 million, nearly twice the initial budget. The NWT has asked the federal government for more money.
Four years ago, the project to build an 80-metre turbine on a hill east of the Beaufort Delta community received $30 million in federal funding and $10 million from the territorial government.
The 3.5-megawatt turbine is expected to put a major dent in Inuvik’s diesel consumption and make a sizeable contribution to reducing greenhouse gas emissions in the territory.
But the initial budget of $40 million has now grown to $60-$70 million, the NWT Power Corporation confirmed on Thursday – an increase first reported by NNSL.
Doug Prendergast, a spokesperson for the power corporation, stated by email that five factors had contributed to a surge in the project’s cost.
The winning bid to build an access road to the turbine’s hill was higher than expected, Prendergast wrote, as were estimates for the cost of a battery energy storage system and the cost of using large cranes to raise the turbine.
Delays – which Prendergast did not detail – have increased the cost of project management, he wrote, as well as the cost of storing components. Lastly, larger contingencies (sums of money set aside in case of other unforeseen costs) are now in place and included in the revised budget.
The turbine itself and other major components “were purchased before the pandemic and have not contributed to any increased project costs,” Prendergast stated. The pandemic and Russia’s invasion of Ukraine have since driven up many prices, in part through global supply-chain problems.
Asked how a cost overrun of up to $30 million would be covered, Darren Campbell, a spokesperson for the NWT’s Department of Infrastructure, stated his department “recognizes NWT residents are concerned about the cost of living and inflation.”
Campbell said the GNWT “has recently shared information with Infrastructure Canada regarding this project funding shortfall, and will be following up to discuss this issue, in an effort to help alleviate project cost escalations.”
So far, there’s no indication of Infrastructure Canada’s response.
Why the turbine is considered important
Building wind power for Inuvik has been researched for more than a decade because the town is so diesel-hungry.
As the NWT’s largest off-grid community, Inuvik burns through more than five million litres of diesel each year according to a 2017 feasibility study for the wind turbine. The study states that’s “approximately half of all the diesel burned in the NWT for electricity generation.”
In addition, the town uses just under four million cubic metres of natural gas annually. All of that diesel and natural gas has to come from southern Canada, though a subsidiary of the Inuvialuit Regional Corporation is working to develop a natural gas well on the Tuktoyaktuk Peninsula to restore some local supply.
Together, those levels of diesel and natural gas cost upward of $9 million annually to acquire for a town of around 3,000 people – and the cost can fluctuate significantly depending on fuel prices. Using those fuels produces an estimated 22 kilotonnes of greenhouse gas emissions each year.
The territorial government says the wind turbine is expected to reduce diesel consumption by three million litres – more than half of the diesel Inuvik currently uses for electricity each year – and bring down emissions by six kilotonnes.
Much of the construction cash is also being spent with Gwich’in-owned businesses, the territorial government has said.