(Sept. 1, 2010) The Ontario government’s plan to turn off coal and switch to biomass at the Atikokan Generation Station is a VERY expensive way to reduce Greenhouse Gas (GHG) emissions.

I am all for the generation of electricity from biomass/pellets. But EVERY European biomass-fired and co-fired electricity generation unit also produces a significant amount of heat (steam and/or hot water) that is supplied into a district heating system.

It is the co-generation of heat that makes the numbers work.

60% of Danish residential and commercial space and water heating is supplied through a hot water distribution system. 80% of the hot water in Denmark’s district heating system originates at old power plants that are co-fired with coal and wood pellets.

Atikokan is too far away from any sizable community to be a cost-effective district heat supplier. This is the wrong plant to convert to biomass. A major modification to accommodate biomass feedstocks at the Thunder Bay power station potentially makes MUCH more sense.

When you operate those boilers to generate electricity, they are working at a 30% to 40% (max) efficiency rate—lower if you’re burning biomass, nearer the high end if you are burning coal. When you co-generate useful heat at the same boilers, you are cranking up the efficiency rate (BTUs of energy in for BTUs of useful energy out) to 75% to 90% (depending on technology and fuel), even if the boilers are quite old.

It is only when you are switching to biomass AND cogenerating marketable heat—best bet in Ontario is hot water for district heat, as opposed to steam, which can be cost-effectively moved over distances up to 55 km. Building hot water transmission capacity is typically significantly less expensive than building incremental capacity to transmit electricity.

The role of district heat—and the role of old coal-fired power plants in the supply of hot water for district heating networks—in a national energy efficiency and GHG reduction strategy is well understood in both Europe and the US. In fact, every US climate change bill that has passed 2nd reading or better since 2006 (including the Waxman-Markey bill which passed 3rd reading in the House) includes the following provisions, which are expressly intended to dissuade utilities from de-commissioning old coal-fired boilers if/when they are positioned to supply district heat.

From the Waxman-Markey climate change bill, passed by the House in 2009 (identical language appears in two subsequent Senate draft bills):

In Section 102, “Definitions”, the bill defines “utility units” (page 282) as follows:

`(54) UTILITY UNIT- The term `utility unit’ means a combustion device that, on January 1, 2009, or any date thereafter, is fossil fuel-fired and serves a generator that produces electricity for sale, unless such combustion device, during the 12-month period starting the later of January 1, 2009, or the commencement of commercial operation and each calendar year starting after such later date—

`(A) is part of an integrated cycle system that cogenerates steam and electricity during normal operation and that supplies one-third or less of its potential electric output capacity and 25 MW or less of electrical output for sale; or

`(B) combusts materials of which more than 95 percent is municipal solid waste on a heat input basis.

This definition is repeated in the definitions for Section 111 (starting page 283), which definitions apply to the allocation of GHG allowances as well as the emission caps and obligations to surrender allowances that apply under the law.  The wording in these sections explicitly states that the new obligations to cap emissions and surrender allowances applies ONLY to “utility units” and not to electricity generating units that are deemed not to be utility units.

In other words, the above definition of “utility unit” affects an exemption from the new cap and trade obligations for combustion devices that meet the criteria outlined in (A) or (B) above. By definition, this is a very significant incentive for US owners of existing coal-fired power generation units to cogenerate steam (which they may or may not condense into hot water) and use the combustion units to supply heat into a District Heating system in lieu of using those units primarily to make electricity.

I am worried that Ontario’s early GHG reduction projects will be so expensive the net result will be a loss of public support for further measures to reduce GHGs in the province. Instead of the FIT—where government both sets prices and picks technologies, with all of the related complications and inefficiencies—Ontario should put a legally binding Renewable Energy Standard (“RPS” or “RES”) in place (with the broadest possible definition of “renewable” and including building efficiency upgrade projects as renewable energy credit-earning and where 277.778 Pjs of biofuel sales equates to 1 MWh of renewable power sales).

Instead of picking specific power generation units to fire or co-fire biomass, the Province should incorporate an exemption from the RES for existing coal-fired generation units that are converted to co-generate district heat, and issue RECs to those units, where 10,000 lbs of steam-equivalent hot water equates to 1 MWh of renewable power and earns a REC—whether that steam is 100% generated from biomass or 30% biomass/70% steam.

Aldyen Donnelly, September 1, 2010