Business & Real Estate

SMUD cancels $1.45 billion hydro project in El Dorado County

The Iowa Hill power plant was to be built along the Upper American River Project at Slab Creek Reservoir.
The Iowa Hill power plant was to be built along the Upper American River Project at Slab Creek Reservoir.

The Sacramento Municipal Utility District has canceled plans to build a $1.45 billion hydroelectric project at Iowa Hill in El Dorado County, citing high costs and the potential to obtain power more economically from other sources.

SMUD’s board of directors voted unanimously to abandon the project at Thursday night’s meeting. The utility said the project had exceeded costs estimates, and there was “a predetermined cost-based off ramp.” SMUD also said the high cost of the project presented financial risks.

Iowa Hill was to be a 400-megawatt, pumped-storage hydroelectric project, utilizing various power sources to perpetually pump water to generate electric power, as opposed to a system where gravity pushes water to a turbine. The project was to have been built along the Upper American River Project at Slab Creek Reservoir.

The utility said its engineering contractor last year provided a construction cost estimate of $1.45 billion. An investment of that size, SMUD said, would significantly limit choices the utility has to pursue other power-generation technologies. Previous cost estimates for the project were in the range of $800 million to $1 billion.

In 2015, SMUD said it re-evaluated the need for energy storage that would have been provided by the Iowa Hill project, determining that less than half of its capacity would be needed prior to 2030.

Scott Flake, project director for Iowa Hill, said the proposal dates back to 2001, “and there have been a lot of changes since then. … The price of solar has dropped dramatically. There are a lot more alternatives now.”

SMUD said the electric utility business is moving away from large, central power plants in favor of a wider distribution of energy resources, including battery storage and solar installations. The utility said other options include compressed-air energy storage, microgrids and small, flexible generating units fueled by natural gas. SMUD said technology for storing electricity in lithium-ion batteries “has advanced at a surprising rate recently and could become economical on a larger scale in the next decade.”

SMUD said electric vehicles also could play a role in meeting future energy storage needs. The idea – promoted by Gov. Jerry Brown – is to have utilities pay electric car owners to store power in their parked vehicles that could be sent into power grid when it’s needed.

The utility said it’s also working with the Western Area Power Administration to study the feasibility of adding a new transmission line in the Sacramento Valley. That could provide a similar boost in SMUD’s capability to serve peak load and access to more clean renewable energy resources from the Pacific Northwest. SMUD said the Colusa-Sutter Transmission Line project would help SMUD meet goals to integrate larger supplies of intermittent renewable energy at a projected cost of about $240 million.

SMUD said it will determine this summer whether to build a new, small powerhouse below Slab Creek Dam, independent of Iowa Hill.

The utility said its decision to cancel the Iowa Hill project will not affect planned upgrades to the Slab Creek Dam and improvements to recreational attractions.

Mark Glover: 916-321-1184, @markhglover

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