Canada is on a different scale to the UK. Canadians see distance differently. For the second day of a press junket showing off Ontario’s green energy plans, we travel more than 900km to Atikokan. The journey would take two days by car, skirting lakes Huron and Superior. We don’t have that kind of time, so it’s lucky a plane from Toronto’s harbour airport can get us there in two hours.
Our destination is Atikokan power station. Built in 1985 at a cost of $800 million, the plant is the youngest in Ontario Power Generation’s coal fleet. For 27 years it ran on lignite, or brown coal – a low grade but cheap fuel source. However, in 2007 the provincial government determined to cut its coal-burning life short. By the end of 2014, it is decreed Ontario will no longer generate power from coal. That is why Atikokan is trading in its coal-handling system for wood pellet silos ready to open next year as the largest biomass plant in North America.
Ironically, biomass conversion is a rare example of something the UK is doing on a larger scale than its friends across the pond. Atikokan’s single 200MW unit is small beer compared with the three 660MW burners being converted at Drax, in North Yorkshire. It is nonetheless under intense scrutiny from politicians, who see it as a “destiny project”.
The UK government, after dithering around biomass policy for some time, has plumped for adapting old coal plants as a cost-effective way of providing dispatchable low-carbon power. While dedicated biomass plants have been left out of the draft support plans, to the industry’s dismay, biomass conversions will get a guaranteed power price of £105/MWh.
In Ontario, the approach is more cautious. Atikokan is seen as a test case. This is perhaps surprising, given the abundant forests in the province and the network’s need for flexible power to complement intermittent wind and a hefty chunk of baseload nuclear and hydro. The latter two inflexible sources account for three-quarters of the power generated in Ontario.
Andrea Arbuthnot, a spokeswoman for the Ministry of Energy, says: “Our priority is to ensure there continues to be a stable, reliable and cost-effective supply of electricity in Ontario. While we value the flexibility of biomass plants, we have to look at the rate of return for any conversion versus new generation.”
The power price agreed with the Ontario Power Authority (OPA) is confidential, but the circumstances suggest it will be relatively high. A report by consultancy London Economics International estimates its levelised cost of energy will be more than twice that of a combined-cycle gas turbine. The power purchase agreement is calculated to cover construction costs of C$170 million (£100 million) and fuel costs for ten years. It helps that the fuel supply is right on the doorstep. However, due to its remote location in a region of low demand, Atikokan is only expected to run 10-12 per cent of the time.
Local power demand has been an issue for Atikokan since its inception. Originally envisaged as an eight-unit powerhouse to supply a rapidly growing mining industry, it was halved and halved and halved again as the recession of the early 1980s hit. In the past 15 years, the region’s energy-hungry pulp and paper mills have suffered the knock-on effects of a decline in print publishing. The global financial crash in 2008 delivered a further blow. The distances involved and transmission constraints limit the opportunity for sending power to Toronto and other high-demand areas.
Mining may yet ramp up. The dramatically named “Ring of Fire” in northern Ontario is home to rich mineral deposits, primarily chromite. Would-be exploiters of the resource have been frustrated by infrastructure delays and negotiations with the “First Nation” aboriginal groups living in the area. If and when these issues are resolved, Atikokan could, with a bit more fuel storage, increase its output.
Meanwhile, the economic case cannot rest on the power output alone. Great play is made of the jobs saved by keeping the plant running and created within the supply chain, important to local support in a region with above-average unemployment. The 90,000 tonnes of pellets needed each year to feed the boiler will come from within 200km of the power station: unsaleable hardwood in Atikokan and sawdust from a mill in nearby Thunder Bay.
From the top of the plant, you can see trees in every direction. Punctuated only by the lakes that feed Atikokan’s cooling system, forest extends for miles. A correspondent from US news service CSRwire has a lot of questions about the sustainability of the feedstock, none of which ruffle Atikokan’s biomass business development director, Brent Boyko. The fear promulgated by environmental groups is that large-scale biomass will be fed by clear-felling large swathes of forest, wiping out any carbon benefits. But Boyko, who comes from a forestry background, cites research finding that managed forests retain carbon better than unmanaged. Feeding Atikokan’s boiler will bring back into use wood that until recently would have made newspapers, he argues. “It really is putting Ontario’s wood back to work.”
As Boyko and his colleagues proudly prepare for Atikokan’s reinvention, the future role of biomass in Ontario is unclear. If a price were put on carbon, they say, biomass power would look more competitive. However, there are no plans to do so in Ontario. Until such a time as carbon is consistently valued, the technology’s development is at the mercy of politicians.
Hot stuff
It doesn’t take an engineering degree to figure out that heat is being wasted at ArcelorMittal Dofasco’s steelworks in Hamilton, Ontario. The perspiration soaking your overalls as you walk through the “Hot Mill” is evidence enough.
Slabs of red-hot steel weighing 21 tonnes apiece spin past on a row of rollers every couple of minutes. Steam spurts from the mills that squeeze them down from 22cm thick blocks into 0.15-1.4cm thick coils, and from jets to blast off rust.
The company – the world’s largest steel producer – can put a number on that waste heat: 16.4 petajoules a year. It amounts to 24 per cent of the plant’s energy consumption, which mainly comes from burning coal.
Recovering some of that heat and converting it into power could save 80,000MWh a year. Other energy-saving measures planned for the Hot Mill will potentially conserve a further 22,000MWh. Together, they amount to the annual consumption of 12,000 homes, 11.6MW less generation capacity needed, or producing 18,000 tonnes more steel at no extra energy cost.
It represents a significant saving for a plant that has seen energy costs rise fivefold over the past decade, while iron ore prices rose 350 per cent.
Despite the potential savings, AMD was not prepared to invest in such initiatives alone. The payback period is estimated at five to seven years. That may not seem long to a utility company, used to recovering the cost of investments over 20 or 30 years. To a commodity producer without the benefit of a steady and predictable customer base, it is a tougher call. As a result, energy efficiency tends to lose out to investments that boost production quality or volume.
The projects are going ahead with the help of grants from Ontario Power Authority. Its Industrial Accelerator programme brings down the payback period to one or two years, making all the difference.
Ian Shaw, energy manager at the plant, says: “It is a unique programme. We are the only jurisdiction that has this programme. It has provided this enabler to these really substantial things.”