Guest Post by PlanetNL
PlanetNL43: Assessing the Holyrood
Life Extension Report
Dispelling Lies and Half Truths
On March 31, NL Hydro provided the Public Utilities Board with a consultant report assessing the Holyrood plant with a focus on continuing to use it for potentially decades more as a backup facility in the event of a major loss of power to the Island grid. The report considers just one of several options being considered in a major Reliability Assessment hearing before the PUB started in 2018 and seems as though it may never conclude.
The new report provides a favorable review of the suitability of the plant, maintained as
a backup facility. To what should be no
one’s surprise, the plant is not in an awful and unreliable condition and way
past its prime. It just needs what
should be considered ordinary upkeep for any industrial facility.
What we don’t know, however, is what exactly Hydro asked the consultant to study or if the report accurately describes the way the Holyrood plant must be used to provide an acceptable level of utility reliability. It appears Hydro has guided their consultant to the wrong scenario.
Proof of Fraud and Irresponsible
Planning
The consultant report is expert
evidence that we should wish was available prior to the conclusion of the
Inquiry into Muskrat Falls. It would
have shown that the stories spread by unscrupulous politicians and Nalcor
executives around a decade ago were grossly exaggerated misrepresentations
regarding the plant’s condition and potential to be used in the future. Those would be leaders got off much too
lightly for their abuse of the facts and this report could have more fully
exposed their fraudulent scheme.
It’s now ironic to the extreme
that Hydro in 2022 finds itself seriously considering the life extension
strategy of Holyrood as the possible best solution to make up for the
unreliability of the Labrador Island Link (LIL) transmission line. Don’t expect them to say those words anytime
soon but understand that this is exactly what is happening.
Compare that to ten plus years
ago when the public was told that the LIL would ensure that power generation at
Holyrood would end forever. We were told
the LIL was going to be a more reliable replacement. It simply wasn’t true, and
it has nothing to do with how the LIL has been plagued by seemingly unsolvable
problems and delays in its completion.
The fact of the matter is, a decade ago just as now, no long-distance
transmission line can ever be considered adequately reliable.
Outage events will happen on all transmission lines or within terminal stations that can deprive major load centres of electricity. Every line, based on its length and complexity can be estimated to have a probability of failure. A line as long and complex as the 1100km LIL, traversing several long stretches very isolated and weather-prone terrain, a subsea crossing, complex AC to DC and DC to AC converter stations, and other critical points of possible failure, always posed significant risk of failure and always should have had local generation backup. Nalcor/Hydro/Government lied.
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| Holyrood Thermal Generating Station (Photo Credit: CBC) |
Taking away the Holyrood plant
and not budgeting to replace it with other backup generation on the Avalon
Peninsula was a major omission from reasonable utility planning strategy. Hydro is now as quietly as possible
attempting to undo the lie and revive good utility practice without shining a spotlight
on its past behaviour.
The key question today is whether
the current administration at Hydro is now fully committed to proper utility
practice or might still inflict unacceptable risk and compromise.
A few years back, Stan Marshall
opened that darkened door when he stated that the public needs to ask itself
how much it wants to pay for reliability.
Saying such a thing was irresponsible in at least two key ways.
First, the utility is supposed to
have standards to follow and have enough expertise to do the job. They should not abdicate that responsibility
and ask the public to do the calculations for them. Hydro in 2022 needs to be thorough and
forthcoming in presenting what is the acceptable standard of service and what
options meet those criteria.
Second, was the public given all
the proper facts when a decision had to be made on Muskrat Falls and was the
public fully and properly invited to weigh in?
Those answers are no and no. The
utility actively engaged to mislead and defraud the public. Why should anyone believe the public is getting
the whole truth this time? If their
repeated underplaying of the troubles with the LIL is any indication, Hydro has
yet to fully change its stripes.
There is a third related issue
that cannot be as directly attributed to Stan Marshall as it happened just last
year. Involved are Premier Andrew Furey,
ex-Hydro Chair Brendan Paddick who led Government’s rate mitigation team for
Furey, and the current Hydro administration who surely provided input on the long-term
utility strategy and cost projections. The
issue is that all the publicly available utility operating cost estimates and
strategic documents available leading up to the conclusion of the July 2021 rate
mitigation scheme completely lack any allowance for long-term backup
generation. There was no Holyrood or a
suitable replacement in the post-Muskrat rate proposal presented to the public.
Sadly, there is considerable room for doubt that Hydro truly understands or is willing to fulfill its professional responsibilities. Alternatively, but no more acceptable, we must wonder if Hydro continues to be ordered by Government to conceal and lowball costs for devious political purposes. The truth with this crowd is always unclear.
The Holyrood Standby Option As
Described in the Report
There is no good news. Just bad news and really bad news.
The report described relatively
ordinary capital upkeep, relatively low fuel consumption, and other operating
costs seem reasonably reduced compared to historic costs. The net annualized costs total roughly $65M
per year. The bad news is it appears
this cost was not included in the Premier’s rate mitigation plan and presumably
it will be fully allocated to ratepayers as a future unforeseen rate increase
of at least 1.0 c/KWh.
The really bad news is that the
concept throughout the report is for non-generating standby usage of the plant. It will take at least four hours to bring the
plant from warm idle to full power on the grid after an unscheduled outage. Four hours in a nasty winter weather event,
the most likely cause for needing the backup power let’s not forget, will seem
like an eternity for most customers. It will
also result in cold homes and businesses demanding even more power than normal upon
reenergizing. If there is not enough
standby power to meet that extra loading, rotating blackouts and intermittent
service will result.
Four hour waits and possible rotating
outages would be a massive step backward from the current system which includes
Holyrood as a full-time running baseload generator. Normally, Holyrood operates at considerably
less than its full 470 MW total power and therefore has reserve capacity that
can be exploited by increasing the fuel burn rate. Small to medium scale outages can usually be
restored within minutes if not seconds.
For additional capacity, the 123 MW combustion turbine at Holyrood and the 50MW unit at Hardwoods (this one is slated to also be decommissioned upon completion of the LIL) can be started and at full power in under than 30 minutes. Without getting into all the technicalities, utility standard thresholds for spinning power reserve and non-spinning off-line backup are all in the 10–30-minute range and the existing system operates within the standard. The minimum four hour wait of the proposed Holyrood standby concept comes nowhere near any acceptable utility standard. If implemented, the first time such an outage happens, public fury would be sure to rise.
What the Report Lacked
There is a compromise middle
ground solution that would meet 10-30 reliability criteria. Hydro could bring Holyrood onto the grid in
anticipation of high-load high-risk events so that it could quickly respond to
a possible transmission failure.
Expecting really cold weather or a high-risk storm? Run the plant until the event has fully
passed by. In addition, Holyrood would
also be brought onto the grid anytime the LIL is working at a reduced capacity.
Seems simple and obvious
right? Sure is. In fact, it’s pretty much the operating
strategy Hydro has had for the past three years during which the LIL has
trickled some power onto the Island grid.
Despite the blinding obviousness of the situation, Hydro did not ask the
consultant to look at this scenario. More
than a year and an unspecified amount of money was spent on this very important
report and did not properly specify what the utility truly needed.
When the PUB Reliability hearing
picks up pace in the coming months, Hydro will not have obtained the right
assessment for the operating conditions they need to employ. The hearing will foreseeably evolve into
partial usage strategies, to which Hydro will offer their own unsubstantiated
opinion of how the plant will perform and what the costs will be. Those costs will be higher for sure,
somewhere far closer to the current operating situation than to the impractical
warm idle concept employed in the consultant report.
Based on the experience of the
last three winters, we may only reasonably count upon the LIL to operate some
of the time and at reduced transmission levels power levels. In this scenario, Holyrood must run full-time
as baseload generation to ensure system reliability. Being unable to fully shutdown the plant and
put it into standby results in very low savings opportunities. In the past three winters, LIL power
deliveries have put only a minor dent in Holyrood production requirements. The inability to take Holyrood generation
fully off-line has resulted in the majority of LIL energy being delivered to
Nova Scotia instead of being used on the Island.
Costs in this scenario will be way beyond that shown in the consultant report. For example, rather than reduce staffing from 101 to 58, all personnel will be required. The expected rate impact in this scenario is likely to be at least 2 c/KWh. If the LIL ever consistently operates at full design capacity, increased periods of proper off-line standby time interspersed with operations during high-load high-risk events, the best-case rate impact might be 1.5 c/KWh.
Alternatives?
The 701- page consultant report provides
a mere one paragraph of less than 100 words on what might be an alternative: a
set of new diesel-fired combustion turbines.
Clearly it was not their mandate to explore any alternatives in detail. The brief mention of it within the report is
effectively useless except to possibly confuse or mislead readers about its
validity.
The question must be asked, is
there a thorough and detailed report in the works elsewhere describing a valid
operating strategy and annualized cost estimate for standby combustion turbines? As additional combustion turbines placed on
the Avalon Peninsula represent the only robust standby power solution that meets
utility reliability standards, it’s reasonable to expect a lengthy and detailed
concept report will be coming. Yet,
having reviewed all documents related to the Reliability hearing on the PUB
website, no indication that such a report is in the works can be found.
In lieu of any such commentary
from Hydro, you may wonder if combustion turbines would be a better solution and what the cost is, relative to running the Holyrood plant. The answer to the first part is likely a big
yes. The cost is likely no more and
possibly slightly less – 1.5 c/KWh is a reasonable basis to start with. Any analysis should include a wide range of
scenarios based of varying degrees of performance of the LIL ranging from very
good to very bad. The scenario of a
perfectly-performing LIL, as was the fundamental and sole assumption of the
consultant report into the Holyrood plant, is woefully inadequate.
Let’s hope Hydro has more
in-depth reports yet to come and that future ones are more on target with
reality.
