Atikokan conversion converts ratepayer cash to emissions
The September 10, 2014 press release from the Ontario didn’t quite put it the way this headline does, but if you look behind the PR slogan, “A New Era of Cleaner Air in Ontario” it is obvious! The conversion of the Atikokan coal plant to biomass was complete, went the news story, but the real news is, it will cost us ratepayers a lot and will not save the planet. Why? It is going to emit lots of carbon when it actually runs and produces some electricity.
For background a visit to Renewable Energy World and an article about the conversion process a year ago tells a lot about the project. The article tells you how much the anticipated percentage of production will be, compared to its 200 MW capacity (10% to 12%), the tonnes of wood pellets to be stored (10,000), annual purchase of pellets (90,000 tonnes; one of the chosen suppliers has a contract to supply DRAX with 400,000 tonnes of pellets annually from their Wawa facility), thermal efficiency (close to coal in the mid 30s), the conversion cost ($170 million), and the term of its power purchase agreement (PPA) with the OPA (10 years) with the added information that the latter covers both the conversion and fuel costs (one assumes that it will also cover the costs of operations, maintenance and administration [OMA] of the 70 permanent workers).
In order to calculate how the Atikokan plant will burden ratepayers to produce 1 kilowatt of power, we need to make some basic assumptions in respect to the calculations, but the following are on the conservative side.
- The converted plant will operate at 10% of capacity thereby producing 175,200 MWh (megawatt hours) annually calculated as 200 MW X 20% X 8760 hours = 175,200 MWh
- At 10% capacity the plant will use 38,000 tonnes of wood pellets annually at a cost of $200 per tonne meaning annual costs of 38,000 X $200 = $7.6 million.
- The conversion costs of $170 million will be amortized over the 10 years of the OPA contract meaning (on a straight line basis) an annualized cost of $17 million.
- The cost of the 70 employees will average $100K per annum (all-in with pension and benefits) calculated as 70 X $100,000 = $7 million.
- The foregoing represents total annual costs of $34,600,000 to produce 175,200 MWh creating a cost per MWh of $197.49 per MWh or 19.7 cents per kWh (kilowatt hour). The math is simply the total cost of $34,600,000/175,200 = $197.39.
There’s more: pellet delivery will require 10 trucks per day within a 200 kilometer radius, five days per week, to bring those 90,000 tonnes to the converted plant. One of those plants is located in Thunder Bay a distance just under the 200 kilometer radius. How is that going to produce “Cleaner Air in Ontario” as suggested by Energy Minister Bob Chiarelli?
The other distorted fact about biomass is that 2.5 tonnes of wood is required to produce 1 tonne of pellets and requires considerable energy to both grind and produce the pellets. They also are less efficient (lower efficiency ratings than all fossil fuels) and produce more CO2 than bituminous coal. The reason biomass is regarded as “renewable” is that the trees cut to produce the pellets (or wood chips) may eventually grow back—it just takes 40 years or so!
A website, Partnerships for Policy Integrity put it succinctly by asking this question: “Is biomass “Worse than coal? Yes, if you’re interested in reducing carbon dioxide emissions anytime in the next 40 years.”
So, what’s the real news story? Our Ontario Liberal government has caused OPG to plunge into further debt, increased our electricity bills and created more emissions than we had before the conversion. The truth is there behind the doublespeak about cleaner air.
September 15, 2014
The opinions expressed are those of the author.