PlanetNL14:
Hydro Reliability This Winter - At the Mercy of the Weather
The Liberty Consulting Group is a specialist frequently
utilized by regulators to provide critical analysis of how utility businesses
are performing, especially in the wake of major failure. The NL PUB hired Liberty in 2014 to assess
the causes of the January 2014 outage event known popularly as Dark NL and to
subsequently monitor NL Hydro’s plans to upgrade the system. Liberty has evaluated Hydro’s winter
readiness every year since and is monitoring the Transition To Operations (TTO)
efforts to integrate Muskrat Falls, the Labrador Island Link and the Maritime
Link.
The latest Liberty report, Winter 2018-19 Supply Adequacy, was
filed by the PUB on September 5, 2018.
The report indicates considerable wariness and frustration with Hydro
and Nalcor and tremendous concern that neither the Labrador Island Link will be
a reliable source of generation this winter, and nor should Holyrood or other
existing generating assets be considered as reliable as Hydro is expecting.
Liberty’s own words tell the story quite clearly. No further editorial is offered in this
posting, however, additional analysis and interpretation will be delivered in a
future related posting.
From the
Executive Summary:
Power
supply vulnerability has become a problem for the Island Interconnected System
(IIS) in recent years as winter approaches.
The nature of the threat may change each year, but the exposure to
supply-related outages persists. This
year, delays in the reliable in-service date of the LIL and their impacts on
anticipated supply from Labrador (known as recall power), and poor performance
at the Holyrood Thermal Generating Station (TGS) increases the risk of supply
related outages considerably.
Hydro
and Nalcor representatives were unwilling to provide information about LIL schedule
details sufficient to permit us to identify a realistic LIL in-service
date. Nevertheless, what we have learned
supports a conclusion that the LIL is unlikely to be reliably in commercial
operation at the start of the winter. We
have further concluded that, once accepted into commercial operation, the LIL
is likely to prove somewhat unreliable, due to: (1) its planned operation as a
monopole in its first year, (2) continuing problems with one of its primary
vendors, general Electric (GE), (3) the limited duration of the minimum
successful run required for acceptance (20 days versus 60 on many other such
projects), and (4) the typical problems associated with any new facility in its
early operation, especially one whose technology is new to the owner.
A
rapid change of circumstances has brought Hydro, in just several months, from
more-than-adequate supply to violations of its reliability criteria and
heightened risk. Management had
consistently reported that the LIL would indeed be available for the winter,
but there is now a strong possibility that will not be the case. Liberty therefore recommends that the Board
require Hydro to aggressively demand and monitor action by Nalcor to ensure
that Nalcor undertakes all possible actions to minimize further delays in
placing the LIL into reliable operation for this coming winter, while at the
same time preparing contingency plans for the unavailability or limited
reliability of the LIL. Given the
unacceptable trends in Holyrood performance, we are also recommending more
aggressive action by Hydro to improve its asset management program and
capabilities.
On the
Significance of, and Tolerance for, Violations:
Our
interim April 24, 2014 Report, our first on Hydro’s operations, observed (at
page 19) that Hydro operated “near the edge,” and it appears to still do
so. Perhaps this concern of operating
near the edge will go away with the completion of MF. This question should get a definitive answer
in a major supply report from Hydro in November 2018. For now, we recommend
treatment of all violations as important, with multiple years of continuing
violations being particularly problematic.
On the
Status of the LIL:
…
In our opinion more attention and pressure from management was necessary to
apply to GE, the apparent cause of the primary schedule threats. The serious problems facing GE at the
corporate level are well known, and its capability to meet Nalcor requirements,
even with the best of intentions, remains far from clear. We did not see in
this quarter signs of significant improvement in the pace of critical
work. At an August 17, 2018 meeting with
TTO management, the Company representatives did not express confidence in GE’s
ability to meet an in-service date of mid-November.
We
were not able to secure from management information necessary (such as critical
path schedule information) for determining the likely impacts of many of these
issues. Nalcor’s representatives, for
example, declared critical path schedule details for GE work on the LIL beyond
the scope of legitimate inquiries from us.
The limited information we were provided is not sufficient to address
the length of likely delays in reliable LIL operation, but we do think they may
well prove considerable. That
management’s lacked confidence in the dates it offered to us on August 17 was
demonstrated by Hydro’s letter to the Board on August 27 advising of an
extension in LIL’s completion date to January 2019.
There
is no sound basis at present and with the information we do and do not have for
considering the, later date likely. With
no basis for identifying a likely date for reliable commercial operation of the
first pole, we can nevertheless offer the following interim conclusions:
·
We find it
unlikely that the LIL (single pole) will be in commercial operation for the
start of the winter 2018-19.
·
Acceptance
of the facility for operation will not necessarily demonstrate a capability to
perform reliably: “Paper” declarations in the industry that critical facilities
have been accepted for operation (particularly in other high-pressure
situations) are often followed by the emergence of issues that make them
undependable for extended periods.
·
Whatever the
“actual” state of completion and readimess when accepted, we find likelihood
that the LIL will operate reliably in the early months. The LIL will remain prone to the
uncertainties any new major facility faces early in its operating life,
especially one involving technology new to the operating company. In addition, the problems with GE are
unlikely to simply go away.
·
Hydro
models the LIL with a forced outage rate of 1 percent. This assumption may be optimistic, given
prior reports suggesting multiple monopole trips in the four winter
months. The immaturity of the LIL in the
coming winter could produce many more outages.
Also, the limited duration of the required run (20 days) does little to
add confidence that operations after acceptance will be continuous.
 |
| NL Hydro President, Jim Haynes |
Deterioration
of the thermal assets, including the Holyrood TGS and the Hardwoods and
Stephenville CTs, is well known.
Management has invested considerably in these facilities. They continue to survive but in a debilitated
condition. Hydro intends to address the
CT issues directly in the upcoming November 2018 supply analysis – an analysis
that should include the long term plan for the assets and specifically address
the remaining lives of Hardwoods and Stephenville.
Management
has attributed many of Holyrood’s 2017-18 problems generally to on-going boiler
and air heater fouling, and plans fixes for those problems in the fall of
2018. This generalization understates
the poor condition of these units. The
frequency of trips and de-rates, the large number of independent events, and
the degree of overall degradation are so great we find it impossible to effectively
summarize them here. … it seems impossible to expect any different results this
year.
The
condition of the thermal assets cones as no surprise, but the emergence of
hydraulic asset problems does. New and
expanding penstock issues appear especially troubling. Management reported the root cause of the Bay
D’Espoir Penstock 1 in a March 23, 2017 report to the Board, but the current
Hydro report states that the 2017 root cause analysis was wrong, requiring
investigations to take a new focus.
Inspections comprise a key part of Hydro’s efforts now, but visual
inspections may be proving inadequate.
Visual inspection of Penstock 3 in April 2017 showed no evidence of
cracking, nut non-destructive testing (NDT) a month later confirmed that cracks
did indeed exist. The report suggests
the need for an aggressive future inspection program, but makes no mention of
any new NDT requirements versus visual inspections.
Other
hydraulic unit problems continued in 2017, but still await repairs later in
2018. These problems include the rotor
key cracking at Upper Salmon, the bearing coolers at Hinds Lake and the Cat Arm
spherical valve controls. The report
includes no discussion of Exploits, but we note that deliveries under this
contract have fallen short of expectations for at least the last three years,
resulting in high replacement costs for the lost energy. Hydro has indicated that this issue is
neither substantive or permanent.
The
overall deteriorating condition of the fleet demands action by Hydro
management. … In the meantime, the major threat for this winter is the Holyrood
TGS. That threat could produce very
severe consequences on days when the LIL is unavailable.
On the Maritime
Link:
…
access to firm capacity represents a notable missing benefit. We believe that this benefit is becoming less
practical because of commercial and operational issues, and firm capacity
post-MF may not be practical at all, because the time lag to bring capacity
into Newfoundland, even if it were available, will preclude its qualification
as spinning (10 minute) or operating (30 minute) reserves.
Not
to diminish the current and likely long term benefits of the ML, it will not,
however, prove the source of long-term, firm capacity that some had hoped.
On the No LIL Scenario:
A
major loss of load event in this scenario requires a combination of
circumstances: (1) LIL out of service, (2) loss of multiple Holyrood units and
(3) a high load day. The first condition
is very likely, at least for the first part of the winter. The second is increasingly more likely, given
Holyrood’s reliability issues. This all
suggests that, for at least part of this winter, the IIS may be at the mercy of
the weather.
The full
report may be downloaded here:
For a brief bio on Liberty, click
here:
http://www.pub.nf.ca/applications/IslandInterconnectedSystem/files/consultant/LibertyBio.pdf
http://www.pub.nf.ca/applications/IslandInterconnectedSystem/files/consultant/LibertyBio.pdf
