Inuvik’s forthcoming Wind Project is close to $30 million over budget.
In an email to Inuvik Drum, Northwest Territories Power Corporation communications manager Doug Prendergast confirmed the cost overruns, linking them to global inflation.
“Inflation has become a growing national and international concern in 2022, due to ongoing global supply chain issues caused by COVID-19-related lock-downs around the world as well as geopolitical factors,” he said. “The GNWT is not exempt from factors and like other jurisdictions in Canada and globally, is experiencing cost escalations in its capital projects that are largely out of its control.
“While final budget costs can’t be determined until the project is completed, the current estimated budget is in the $60-$70 million range.”
The project was initially anticipated to cost $40 million.
Prendergast said the contract for the construction of the Wind Project access road came in “higher than anticipated,” along side the costs of the battery energy storage system to hold the power generated. Also costing more than initially budgeted for are the cranes used to raise the turbines and schedule delays have racked up additional expenses in storage of components and paying project managers.
A few areas are fortunately locked in price — particularly the turbines themselves, which were purchased before the pandemic and have no led to increases project costs.
Capital costs aside, Prendergast said the project would still be a major boost for the Inuvik economy, offsetting 6,000 tonnes of greenhouse gas emissions and over three million litres of diesel — which have also increased in cost dramatically in the last few years — each year.
“Contract work flowing from the construction phase of the project will be of significant benefit to Gwich’in businesses, and the Beaufort Delta region,” he said. “For example, the contract to build the six-kilometre access road has been awarded by NT Energy through an invitational tender to Northland Builders – a Gwich’in business.
“With the increases to the price of fuel we are also recalculating the projected cost savings on the purchase of diesel.”
Costs of goods has skyrocketed worldwide as as result of multiple supply line disruptions, first from the global Covid-19 pandemic, then further complicated by the Russian invasion of Ukraine and subsequent trade sanctions placed on Russia.
The Inuvik Wind Project is expected to be completed by the winter of 2023 with the operation of a single 3.5 Megawatt turbine. However, there is room for more turbines if the energy demands of the region increase.