Economic Research & Analysis—Publications
Back to: Contents | Economic Research | Finance | Main Government

The Economy 2004- Newfoundland and Labrador

previous | next

The Proposed Lower Churchill Hydroelectric Development

The Churchill River in Labrador is recognized as a significant source of renewable, low cost, clean electricity. The full potential of this resource has yet to be realized. The development will require a multi-billion dollar investment and has the potential to provide significant long-term economic and environmental benefits to Newfoundland and Labrador and Canada over its long service life, estimated to be in excess of 75 years.  The proposed Lower Churchill Hydro development includes two potential sites. Gull Island, the larger and more economically attractive site, is located 225 km downstream from the existing 5,428 megawatt generating facility at Churchill Falls. A second, smaller site is located at Muskrat Falls, 60 km further downstream.  Over the past 30 years, there have been multiple attempts to develop these projects. One of the key challenges is the isolated geographic location, and the resulting implications for transmission of power to markets and access to infrastructure. The Government of Newfoundland and Labrador is committed to ensuring that this resource is developed in a manner that will bring real and long term benefits to the people of the province, especially Labrador. To achieve this objective the government will review all potential viable development options in terms of meeting the priorities of: promoting industrial development, meeting domestic demand and exporting surplus energy. The Government will keep its options open until sufficient assessment has been completed to make decisions on the appropriate course of action for development of the resource. This assessment includes consideration of the role for the federal government. Development of this resource will help address regional economic disparity and contribute to the achievement of Canada’s climate change objectives and therefore is in both the provincial and national interests.  A 2,000 megawatt generating facility at Gull Island has the potential to produce 11,900,000 megawatt hours of clean energy annually. This is sufficient energy to supply up to one million households annually1. Comparable production from a coal generation supply would emit an estimated 11.4 mega tonnes of carbon dioxide. An 824 megawatt generating facility at Muskrat Falls has the potential to produce almost 5,000,000 megawatt hours annually.		The estimated in-service cost of the Gull Island development, including a generation station with four generating units, rock-fill dam, spillway and transmission in Labrador is in excess of $4 billion. The smaller Muskrat Falls project is estimated to be in the range of $2 billion. The actual final costs of these developments will depend on many factors including the engineering and construction contracts, financing arrangements and associated infrastructure requirements.  The potential economic impact of the projects will depend on the development option that is undertaken and the ultimate uses of the power. The province stands to benefit from the economic and employment activity during the construction phase—total direct and indirect employment for Gull Island is estimated to be almost 17,000 person years over the six year construction period.  Aboriginal consultation is also a priority for the Government in the development of this resource. The Innu Nation has a land claim that has been accepted for negotiation by the governments of Canada and Newfoundland and Labrador. The claim includes the proposed Lower Churchill development area. The Government remains committed to a consultation process with the Labrador Innu, which dates back to Spring 1998.  The Government is committed to developing the projects in an environmentally acceptable manner. The projects will be subject to an environmental assessment process, with full public participation, and must receive environmental approval in accordance with federal and provincial legislated requirements before they can proceed. The project lead time for Gull Island is anticipated to be nine years, including an estimated 36 months for an environmental assessment and a six year construction period.  1. Number of households is dependent on multiple factors including: the heating source in the households, regional location and the electricity requirements.
Photo Credit: Newfoundland and Labrador Hydro

previous | next

back to contents
This information was current as of March 16, 2004.
[Government Home | Finance Home | Economic Research & Analysis Home | Disclaimer]