N.L. Hydro pitches $2B plan to expand Bay d'Espoir plant, add combustion turbine in Holyrood

Newfoundland and Labrador Hydro says it's moving forward on proposed plans to expand its resources as power demand grows, pitching nearly $2 billion in developments to the Public Utilities Board.

Rob Collett, Hydro's vice-president of engineering, said the pitch to the PUB serves as a "minimum investment approach" that proposes two expansion projects — a new 150-megawatt combustion turbine in Holyrood, N.L., and a new 150-megawatt generating unit at the existing Bay d'Espoir hydroelectric dam.

The turbine would cost around $890 million and construction would begin in 2026, according to the 800-plus page proposal, while a new generating unit in Bay d'Espoir would cost a proposed $1.08 billion with construction beginning in 2028.

Those pricings have changed since they were first reported in July 2024. Originally proposed to be between $1.2 and $1.6 billion for the pair, Friday's estimates now combine to around $1.97 billion.

Collett said that's because Hydro now has more information.

"We have a better sense of not only what we're building, but how we're going to build it. All those indirect costs, as well as the aspects of risk," Collett told reporters.

"Aspects like tariffs and those kinds of things can weigh into those estimates as well. All those pieces have fed into the number we've presented today."

The projects would be ready for operation in 2029 and 2031 respectively.

Hydro has said both projects would aid in retiring the Holyrood thermal generating station — which would cost hundreds of millions of dollars to keep operational beyond 2030.

"The units inside that plant need to be retired, and this is the most cost effective way to do that," Collett said.

However, he said there are other factors in play that could keep Holyrood online. For example, the station currently serves as backup power for the Labrador Island Link — which has faced reliability concerns.

"We could be in a position by the end of the decade to retire the plant, but it's a number of factors at play there. It could be more load growth, we could need more backup depending on reliability considerations," Collett said.

"A likely situation is we might need more sources of supply, and we'll bring those online as quickly as we can."

Parties committed to keeping power rates low

Power usage across Newfoundland reached 1,691 megawatts in 2024, according to N.L. Hydro, and is expected to increase by an additional 14 per cent to 1,928 megawatts by 2035.

But with that increase in needed power, Collett said both Newfoundland and Labrador Hydro and the provincial government are committed to make sure electricity rates don't increase with it.

"The good news is these projects are going to be a few years before they're in service, not until the end of the decade. And so there will be absolutely no impact until then," he said.

"After that, you know, we have a commitment from the provincial government about rate mitigation. That rates will be minimized. We're going to minimize rates to get them as low as possible for customers."

Environmental concerns were also considered, Collett said, since the combustion turbine would burn diesel.

The turbine would only be used as a backup as a peaking facility with limited use, he added.

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