Friday, 7 February 2014

THE "7 MINUTE" BACK-UP PLAN FOR MUSKRAT FALLS

Occasionally, I receive comments from readers who don't put them on this Blog.  Their best value is when they are shared.


Recently a reader stated his views regarding my Submission to the PUB's Pre-Conference Hearing on Wednesday past.  In it I described suggested that the PUB consider the need for a 'back-up' system for Muskrat Falls among other issues.  


In reply, the reader offered his thoughts and proposed a gas turbine replacement for Holyrood.  

People such as Cabot Martin, former Adviser to several Premiers, and Dr. Stephen Bruneau of Memorial University proposed the idea two years ago. They argued that the natural gas option represented a less expensive and less risky option to the $7.7 billion Muskrat Falls Project. 


Ironically, natural gas-fired turbines may be the best 'back-up' system, too. 

Martin and Bruneau saw the advantage of maintaining power generation close to where the electricity is used. They hoped it would constitute a springboard to encourage development of Newfoundland and Labrador's offshore natural gas resources.   

Even if our offshore industry wasn't ready to supply the gas, LNG tankers, likely out of the U.S., could be used in the interim.

There is growing recognition that the Island will need a 'back-up' power supply if the Labrador Island Link(LIL) fails in a winter storm. Alpine conditions will represent a major threat to a transmission system that runs over the Long Range Mountains. Then there are the risks of the undersea cable crossing the Straits of Belle Isle.  The possibility that Nalcor May lose Hydro Quebec's challenge to the Water Management Agreement is a concern, as is the fear that Nalcor has over committed  power to Nova Scotia under the Energy Access Agreement, in order to secure the Federal Loan Guarantee.


The writer's comments are re-produced here with an artist's rendition of a GE gas turbine facility. Unfortunately, the comments section of my Blog does not permit uploading such images. Here they are:


Re: Holyrood Power May Be Needed:

Des Sullivan made a number of salient points in his presentation to the PUB.  I thought that this one was the most significant:


What Sullivan highlights is the need for some sort of "back-up" insurance generating capacity to fill in on the rare occasions when the LIL is disabled due to weather events or equipment failure.  [Note: "When", not "If".]  


However, refurbishing Holyrood wouldn't make sense in my opinion, due to the costs involved.  Not just equipment replacement costs (i.e. boilers, steam turbines, dynamos), but more importantly the ongoing operational costs - which over a matter of years, add up substantially.  And then there are the operational considerations.  


Thermal power plants work best when run continuously, allowing the system to reach thermal equilibrium, and run at a "steady state".  However, they are also complex and time-consuming to start-up, and equally so to shut down, as you have witnessed in this past winter's drama.  A major drawback is that in the event of an emergency demand for power, response time from a "cold start" is measured in hours, not minutes.  Not exactly what one wants for an emergency blackout situation.



Instead, I would recommend that the present Holyrood plant be scrapped - as originally planned - and the facility replaced with one featuring gas turbine generator units. 


General Electric produces a 9E model gas turbine unit, which produces 128 MW of power. So 4 of these units, ganged together, would produce the same output as the current Holyrood thermal plant.  


A key feature is that, as with the commercial jet engines they are derived from, they can be safely started (or shut down) in a matter of minutes and reach full power in less than 7 minutes from a "cold" start.  No cooling water is required, and depending on the fuel used - natural gas, fuel oil, or even synthetic fuel - emissions are very "clean".  


Here is a GE Installation featuring 2 9E gas turbine units.  A Holyrood replacement would essentially double this installation. 

Best of all, there would be no need to run the units all of the time, thus saving significantly on fuel and operational costs.  Instead a weekly schedule of hour-long "runs" - feeding power into the Provincial grid on a rotating basis, would exercise both the equipment and operating personnel, ensuring that the units are constantly available to meet the needs of any emergency situation.  


They could also be used, incrementally as needed, to "top up" the grid when extremely cold weather places severe demands on the grid, as happened during this past winter.  Accordingly, there would be no prospect of "brown outs", or having to institute rotating "black outs".


These GE units have built up and incredibly reliable operating record around the world, and are also used by major American and Canadian utilities like American Electric Power, Consolidated Edison, Direct Energy, Duke Energy, and Pacific Gas Electric.



Seems to me that a gas turbine "solution" would offer the best of all worlds for Nalcor, and the residents of Newfoundland.

                                      *****************************************
Final Note:
The public has been under the illusion that MF is a panacea.  It has been terribly oversold.  The idea that Newfoundland ratepayers may have to pay for the Project, with all its attendant costs and risks, in addition to the cost of a “back-up” system has not yet entered public consciousness. 


Now the PUB is asked to deal with the question.  In the coming days, we will find out if that semi-judicial Agency is willing to undertake the evaluation as part of its mission to investigate what happened in early January and to prevent future occurrences.  

Newfoundland Power, David Vardy, Ron Penney and Cabot's Martin's Submissions, as well as my own, called on the PUB to widen the scope of its investigation to include the post-Muskrat period. The PUB said, on Wednesday, it will announce its decision within 7-10 days. 

Monday's Blog Post will discuss why Newfoundland Power has broken ranks with Nalcor.



Nalcor, on the other hand, wants the PUB's investigation to NOT include Muskrat Falls. 

Stay tuned. 


5 comments:

  1. Excellent idea! My only question is what would the main thence costs look like, especially if a cold snap during the winter required weeks of continuous operation? I am sure other turbine solutions exist should the duty cycle proposed be too strenuous for the noted GE units.

    John d Pippy

    ReplyDelete
  2. Interestng thoughts as per Des. I do wonder if this fracking on the western coast could prop up a new NG heat company for the local area. Be part of the deal to allow fracking however no burnoff as is seen else where. Pump cheap fuel to local towns at cost. Could really sway peoples opinions of having fracking in their neighbourhoods if near free heating was involved.

    ReplyDelete
  3. Megaprojects and regional development: pathologies in project evaluation

    Post-project assessments are essential for understanding the strengths and weaknesses of regional development planning. Thomas Gunton, a scholar in resource and environmental management, produced a paper completing an evaluation that compares pre-project forecasts to post-project outcomes for one of the largest and most comprehensively planned megaprojects ever undertaken in Canada: the Northeast Coal Project (NECP).

    The evaluation shows that instead of achieving the expected net benefit of Can $0.9 billion (2000 Canadian $), the NECP incurred a net loss of Can $2.8 billion. The project also generated less than one-half of expected regional employment and failed to mitigate structural problems in the regional economy. Although project planners had all the information that should have led them to forecast this negative outcome, this information was either ignored or dismissed. The explanation for this seemingly irrational behaviour on the part of project planners is explained by a combination of errors in the evaluation methodology and interest group behaviour in regional resource development. Strategies to reduce the likelihood of these errors in future projects include improvements in evaluation methodology and changes in the institutional structure of project evaluation.

    Gunton argues that governments are inherently ill-equipped to develop natural resource laden mega projects,

    he describes it succinctly here:

    Government leaders are primarily interested in facilitating economic growth by supporting large new resource development. Government bureaucrats are eager to support the objectives of powerful private sector and political leaders to increase prestige and influence. Those opposed withdraw to other assignments. The regional business community that benefits from an expanding economy supports large projects. And the resource companies, infected with exuberant expectations during market booms and the ability to shift risk onto the public sector, become strong advocates. The inevitable result is a cumulative causation of interest group support, which develops a ‘group think growth’ mentality that suppresses opposition and inevitably leads to an under-estimate of risks. Although this propensity can be mitigated by better appreciation of market fundamentals and independent evaluations based on comprehensive guidelines which fully assess risk, it would be naive to think that such tendencies to exaggerate benefits and underestimate costs can ever be entirely overcome.

    How do we know these results can't occur with the Muskrat Falls project?

    /www.tandfonline.com/doi/abs/10.1080/0034340032000089068


    waj







    ReplyDelete
  4. Natural gas should have been the first option and even now it makes good sense and could even pay dividends in the next 4 years before Muskrat comes on stream. The rule of thumb for a natural gas plant is about $1 million per megawatt plus the cost for offloading and storage. The plant costs don't tend to go over much because they can be turn key from competitors such as GE, Mitsubishi and others. As mentioned above they burn cleaner and reach full output much faster thus converting the potential energy into electricity.
    Natural gas trades in the US per million BTUs currently about $5 which is a lot higher than a couple of years ago and seasonally high due to a cold winter. There are 5.8 Million BTUs in a barrel of oil and the rule of thumb conversion is 6 times however that is only potential energy. Holyrood converts the potential energy of oil into electricity at about 35% (approx. 600 Kwh per barrel) whereas a new combined cycle natural gas converts the potential energy of natural gas into electricity at 61%. Therefore the comparative figure of natural gas to oil should be 3.3 unlike the 6 times figure Wade Locke used in his presentation along with inflated prices for the infrastructure. Stephen Bruneau used actual comparative costs in his presentation, Wade Locke did not provide comparative examples.
    Holyrood is currently burning about 1.4 million barrels of oil at a cost of about $140 M. Converting that over to natural gas equivalent at say a European price which is easily achievable of $12 the current annual fuel savings would be about $85 M per year. Once Vale comes on stream next year (a large part of the basis for Nalcor's business case), the savings would be in the range of $150M per year in fuel.
    The capital cost would run in the range of $1B allowing for overruns. That is $500M for the plant and $500M for the offloading and storage. Quite a bit from Wade Locke's numbers. Note as far as a back-up estimate for offloading and storage Newfoundland LNG had an estimate of $1.4 B to build their offloading and storage system in Arnold's Cove. They could accommodate 4 tanker loads per week in and out whereas the current load for Holyrood would be less than two tanker loads per year which is a difference of 100 to one. Newfoundland LNG spent about $10 M in their planning and also used SNC Lavalin for part of the work.
    You may also note that Newfoundland LNG obtained environmental approval for one module (about 150 MW) of gas to electric generation for Arnolds Cove which is about 3 km from the powerlines running across the isthmus. Nalcor could partner with them for an immediate back-up. No, I don't work for NF LNG.
    Holyrood would be the better location for the natural gas plant however for the potential to link to a pipeline as per Stephen Bruneau's presentation and also better non-reliance on the powerlines from Bay D'espoir for ice storm exposure.
    A natural gas back-up is unlikely to happen until there is a change of Government or even Leadership. Perhaps Bill Barry would listen if he gets in because he doesn't have any connection to the current decision.

    ReplyDelete
  5. This comment has been removed by a blog administrator.

    ReplyDelete