Droughts create brutal challenges for hydroelectric utilities. Is Canada doomed to experience more of them?

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Manitoba Hydro’s recent annual financial report demonstrates what happens when severe drought reduces water volumes passing through a power utility’s dams.

Manitoba suffered the worst drought in decades during the utility’s 2021-22 fiscal year. Since hydroelectric dams generate nearly all of its electricity, the low water reduced the power generated at all of its dams save one. That forced Manitoba Hydro to import power, while simultaneously drying up electricity exports that typically provide much of its revenues.

The result: a net loss of $248-million, compared with net income of $119-million the previous year. Manitoba consumers felt the impact through a 3.6-per-cent rate increase, deemed necessary to deal with the drought’s financial fallout. But in the space of a few months, the problem disappeared: Huge spring water flows, the largest since record-keeping began more than a century ago, caused Lake Winnipeg to rise more quickly than ever before, reaching its highest levels since 1976.

Meanwhile, from mid-summer to mid-October, British Columbia experienced one of the driest, hottest spells on record, resulting in extraordinarily low water levels in watersheds across the province. Helen Hamilton Harding, manager of operations planning at BC Hydro, said some of the smaller dams in the Lower Mainland and Vancouver Island produced up to 70 per cent less electricity than normal.

Even so, “in the grand scheme of our whole system, the impact was quite small,” she said. But it’s still an odd juxtaposition with massive flooding that ravaged much of B.C. in November, 2021.

Such wild swings seem to carry climate change’s calling card. But do these recent droughts truly offer a foretaste of a drier future? Or are they merely a continuation of long-standing patterns in regions well-acquainted with dry weather?

Much rides on those questions. Hydro is Canada’s predominant method of generating electricity, and is relied heavily upon by Manitoba, Quebec, B.C., Newfoundland and Labrador, and, to a lesser extent, by Ontario. If droughts really are becoming more frequent, more intense or both, that could have grave implications for national energy security.

Globally, there’s no shortage of recent, alarming anecdotes. According to the International Energy Agency, global hydropower generation declined slightly last year – the first time that’s happened in two decades – owing to droughts in China, India, the United States, Brazil, Turkey and Canada.

The European Union’s Joint Research Centre reported this summer that severe drought since the beginning of the year had lowered river discharges throughout the continent, reducing stored water volumes and wreaking “severe impacts” on hydropower generation.

In China, with flows on the Yangtze River reduced by more than half, hydropower stations that include the world’s largest, the Three Gorges Dam, have been severely affected. The low levels have forced suspension of electricity supply to factories and rationing of public consumption.

Long-term droughts and increasing aridification are also evident in the western U.S., and there’s little doubt climate change is a factor.

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But the picture in Canada is murkier. For example, a 2019 federal report entitled Canada’s Changing Climate reported that “periodic droughts have occurred across much of Canada, but no long-term changes are evident.”

Moreover, long-term drought forecasts in Canada show little consensus, and usually are made with low confidence. That hasn’t stopped people from trying: The same federal report predicted extreme summer dry periods will become more common in a high-emissions scenario, leading to drought – particularly in B.C.’s Interior and across the southern Prairies.

In a 2020 commentary, Jonathan Overpeck of the University of Michigan’s environment department and Bradley Udall of the University of Colorado law school said while other parts of North America probably won’t experience the decades-long droughts evident in the western U.S., they “will nonetheless continue to see more frequent and severe arid events – extreme dry spells, flash droughts and interannual droughts will become part of the new normal.”

In a report published in 2019, Ali Nazemi, an associate professor in Concordia University’s engineering department, and a graduate student, Amirali Amir Jabbari, studied how historical climate trends such as temperature and precipitation would affect regional hydropower production in Canada, assuming the trends continue.

“We got a very striking result,” said Prof. Nazemi. “In Alberta and B.C., we are seeing a huge decline in the production of hydropower.” Ontario and Quebec, though, would enjoy a net increase – as would the country as a whole.

Prof. Nazemi emphasized the study made a crucial assumption: Hydropower production capacity in each province depends on climates within that province. That works well for some provinces, he said, but not others. For example, much of the water in Saskatchewan and Manitoba comes from the eastern foothills of the Rocky Mountains in Alberta, which compromises the accuracy of models for those provinces.

John Pomeroy is a geography professor and director of Centre for Hydrology at the University of Saskatchewan. He warns that glaciers are retreating rapidly in the Rocky Mountains, and many will disappear completely in the coming decades. Those glaciers melt predictably toward the end of summer. Without them, river flows depend on rainfall, which is far less reliable.

“You can view a glacier as a long-term savings account,” Prof. Pomeroy said. “It’s something that you would draw upon during a drought year and replenish during a wet year. And as we’re getting more and more hot drought years, we’re taking out more than we’re putting in. Eventually we won’t have it.”

Snowpack is also dwindling, he added. Most of Canada’s reservoirs were designed to capture spring snowmelt and hold it for a few months. They lack sufficient capacity to store enough water to navigate a multiyear drought. Moreover, the rules governing their operation are based on historical climate patterns that no longer exist.

“This sequence of floods and droughts is our future, along with warmer, less snowy conditions and fewer glaciers,” he said. “That’s going to make hydroelectricity generation in Canada, as a whole, much more challenging.”

Some utilities already anticipate trouble. Ms. Hamilton Harding said BC Hydro expects to see more frequent extreme conditions, including hotter and drier summers. “Just in the last number of years we’ve seen hotter, dry summers, especially on Vancouver Island,” she said. “If the dry weather starts earlier, and lasts longer, it’s obviously harder to manage.”

Manitoba Hydro is less certain. In a written response to questions from The Globe and Mail, the utility said it’s most concerned about low-flow events that span multiple years and large areas of its watersheds, which cover more than 1.4 million square kilometres. But “the reality is the science has not yet converged on confident projections” of such events.

The good news is that hydropower operators are by no means helpless. Drought is seldom perpetual: Manitoba Hydro wants to earn enough in wetter years to pay down its sizable debt. It has also beefed up its interconnections with neighbouring utilities so it can buy power if needed. The Manitoba-Minnesota Transmission Project, completed two years ago, doubled its ability to bring in electricity from the U.S.

BC Hydro can hold back water by curtailing electricity exports by Powerex Corp., a subsidiary that trades wholesale electricity with neighbouring jurisdictions. It is also improving its snow survey stations, and weather and inflow forecasting, with the aim of accurately predicting extreme events earlier.

What does all this mean for rates and the reliable supply of power for homes and businesses? From BC Hydro’s perspective, so far, the answer is: not much. According to a report released last month, power delivery was unaffected by the recent drought.

“In this province we have this integrated network and large-storage hydro, which does give us the ability to weather some of these events,” said Ms. Hamilton Harding.

For Manitoba Hydro, though, drought will likely continue to be a factor driving rising rates.

“Last year’s drought highlights the importance of regular, moderate and predictable rate increases to help guard against the potential financial and rate impacts of a sustained drought and minimizes the chance of ‘rate shock,’ ” the company stated.

“Approximately 80 per cent of our costs are fixed in nature, which leaves little financial flexibility to deal with future risks such as low water flows, rising interest rates and the changing energy landscape.”