Utility Week

Utility Week 4th October 2013

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Markets & trading Market special report: Ontario Atikokan, the biomass test case In the second of a two-part series, Megan Darby reports from Atikokan, the power station turning its back on coal and preparing to open next year as the largest biomass plant in North America. C anada 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 Timeline Atikokan is trading in its coal-handling system for wood pellet silos 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 onversion versus new generation." c 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- Biomass development at Atikokan Ontario Power Generation's predecessor started investigating the potential for biomass power in the 1970s. However, it was not until the past decade that commercial scale trials got going. Nanticoke, Thunder Bay and Lambton power stations all took part, but Atikokan was chosen to be the first in the province to convert March 2006: provincial government announces funding for Atikokan Biomass Research Centre December 2008: a dust explosion in the "powerhouse" at Atikokan puts testing on hold for eight weeks January-July 2008: Atikokan goes through several rounds of testing with wood pellets July 2012: power purchase agreement signed with Ontario Power Authority August 2010: Minister of Energy announces Atikokan will be converted from coal to biomass Mid-2014: Atikokan to start running completely on biomass September 2012: Atikokan burns its last coal 2006 2007 2008200920102011 2012 20132014 26 | 4th - 10th October 2013 | UTILITY WEEK

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