Think twice before launching hydroelectric megaprojects, expert tells Muskrat Falls inquiry
'Building a hydroelectric dam is very risky'
The first expert to provide testimony at the Muskrat Falls inquiry Monday painted a troubling picture of the history of hydro dam construction around the world, and suggested the lessons of the past have not been learned.
His testimony kicked off what will be 100 days of public hearings for the inquiry, which is probing the decision to sanction Muskrat Falls and why its construction costs have soared from $6.2 billion to more than $10 billion — $12.7 billion with financing.
"Building a hydroelectric dam is very risky," said Bent Flyvbjerg, an Oxford University professor who specializes in major project planning and management.
"The only thing more risky is if you choose to build a nuclear power plant. It's not only in Canada. It's the whole world this is risky."
Hydro projects compared to other ones
Flyvbjerg has studied nearly 300 hydroelectric dam projects around the world, dating back to the 1930s.
Average hydro cost overrun: 96 per cent
The average cost overrun? Ninety-six per cent. And nearly half the projects encountered scheduling delays.
Despite this dismal record, Flyvbjerg said things have not changed over the years.
"If you decide to build a hydroelectric power project today, you have to face up to these are the numbers and these are the actual risks you are incurring. It seems to be a very persistent phenomenon that has been with us for decades," he said.
Flyvbjerg compared hydro dams with other energy projects, and found that mining and oil and gas projects have an average cost overrun of 17 per cent.
On the transportation front, cost overruns for roads, bridges, tunnels and rail projects range from 24 to 41 per cent, which is far below that of hydro dams.
So what are the root causes of this?
Flyvbjerg gave three reasons: a tendency to blame errors on bad data and modelling, overconfidence on the part of the proponents, or what he called "cognitive bias," and political bias.
"Human beings are hardwired to be optimistic about any plan that we make," he said.
How to keep the project on track
Without commenting specifically on the Muskrat Falls project, Flyvbjerg said there are ways to prevent a project from going off the rails.
First, he said, it's essential that any major project have a realistic business case. Otherwise, he added, even the most talented team will not be able to meet expectations.
Second, he said the leadership team must be highly experienced.
And third, that team must be motivated by an accountability strategy that includes incentives.
He also stressed the importance of oversight, including independent assessments and peer reviews.
Flyvbjerd said transparency is another essential tool for megaprojects.
'Proof of the pudding will be in the eating'
Former PC premiers Kathy Dunderdale and Danny Williams are also expected to testify at the inquiry.
Williams led the charge to approve Muskrat Falls when he was premier, though it was sanctioned shortly after he left politics and Kathy Dunderdale took his place.
- It's official: Muskrat Falls a boondoggle, says Stan Marshall
- Stan Marshall a 'boondoggled buffoon' who's no good for Muskrat Falls: Danny Williams
He has since come under fire for championing the project, with former premier Roger Grimes saying its growing price tag is the "price of pride."
Williams, however, stands by the project.
"It's a multigenerational project," he told CBC News. "You have to look at this over 10, 20, 50 and maybe 100 years. That may sound crazy and unrealistic, but that's what these projects are."
"I look at the end game, and I won't be around to see it, but hopefully the proof of the pudding will be in the eating."
Williams said he welcomes the inquiry "with open arms."
"I'm hoping that inquiry will get a chance for people like me to get out and lay out the facts and say, 'Here's where it is and here's where it's going and here's where it's going to be.'"
With files from Chris O'Neill-Yates