Biomass and Gas

Repowering ProgramSarnia Lambton Environmental

Association

May 2010

Ontario Power Generation

Biomass and Gas Repowering Program

• Business Environment

• Biomass and Gas Repowering Program

• Role of Repowered Coal Units in the Electricity System

• Forest-Based Biomass

• Agriculture-Based Biomass

• Looking Ahead - Advanced Fuels

• Lambton GS Repowering Options

• Summary: Next Steps and Key Benefits of Repowering Program

2

Business Environment

3

4

Ontario: Electricity Demand 1990-2009

100.0

110.0

120.0

130.0

140.0

150.0

160.0

15,000

20,000

25,000

30,000

90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9

An

nu

al

Co

nsu

mp

tio

n

(bil

lio

ns

of

kil

ow

att

ho

urs

)

Peak D

em

an

d(m

illi

on

s o

f k

ilo

wa

tts

)

Ontario Electricity Demand

Summer Peak Winter Peak Electricity Demand

Ontario: Electricity Supply 2002 & 2009

5

6

OPG: Ontario’s Power Company

• Ontario’s electricity generation company

• Operates a diversity of hydro, nuclear and thermal generating

facilities - vital public assets

• Strong record of safety, reliability and flexibility

• Contributes to economies of many Ontario communities and

regions and helps advance the Province’s broader economic

objectives

• The backbone of Ontario’s electricity system, enabling wind and

other forms of generation

Ontario Power Generation Profile

• Owned by the Province of

Ontario

• Generated 92.5 TWh in 2009

• Produced about 65% of

Ontario’s electricity

• 11,000 employees

• Capacity: 21,729 MW

7

OPG Facilities 3 Nuclear stations

(10 units)

5 Thermal stations

(19 units)

65 Hydroelectric stations

(4 being redeveloped;236 operating units)

2 Co-Owned Natural

Gas stations

8

9

OPG Production Mix 2002 & 2009

Target based on Shareholder

Declaration and Resolution

Proposed hard cap based on draft

Ontario Regulation O.Reg 496/07 Amendment

CO2 Emissions from OPG Coal Plants

0

5

10

15

20

25

30

35

40

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

CO

2 E

mis

sio

n (

Tg

)

Actual Targets Cap

Use of coal ends under

Ontario Regulation

O. Reg 496/07

Note: OPG will close two Lambton GS units and two Nanticoke GS units in

October 2010

10

Biomass and Gas

Repowering Program

11

Biomass in the Netherlands

Source: Sikkema R., Junginger, M., Faaji, A., IEA Bioenergy Task 40 – Country Report for the Netherlands 2007.

Universiteit Utrecht, Report NWS-E-2007-197, December 200712

13

Biomass in the US

• 50% of US electricity produced using coal

• US direction to reduce GHG’s by 28% by 2020

• US policy subsidizes biomass production ($45/dry ton)

• Many utilities looking at co-firing with coal and

conversion to biomass

• Renewable energy

• Available when you need it

• Greenhouse gas benefits significant compared to fossil fuels

• Synergy with Ontario’s agriculture and forestry sectors

• Makes use of existing generating stations owned by the people of Ontario

• Lower capital costs

Thunder Bay GS

Atikokan GS

Why Biomass at OPG Coal Plants?

Role of Natural Gas

• Natural gas allows for full output and flexibility

• Will moderate cost of power

• Early addition of gas allows additional investigations

of biomass and advanced biomass fuels

15

Biomass and

Climate Change

16

OPG Repowering Program Scope

• Assess biomass and gas options for

conversion of some of the coal fired units at

four generating stations

• Outcome > 1,000 MW of biomass-fueled

electricity generation capacity

• Help develop Ontario’s forest and agriculture

biomass fuel supply chain

• Assess advanced biomass fuels

– torrefied and carbonized17

18

Lambton GS 1,920 MW Nanticoke GS 3,640 MW

Atikokan GS 211 MW Thunder Bay GS 306 MW

OPG Thermal Generating Stations Considered for Biomass

Note: OPG will close two Lambton GS units and two Nanticoke GS units in October 2010

Biomass: Basic Fuel Requirements

• Pelletized fuel from wood or

agriculture – up to 2 to 3

million tonnes per year

• Ontario sourced and

processed

• Sustainability standards will

be applied

19

Biomass Current Focus:

Atikokan GS

• Conversion to wood-fibre biomass

• Expect full electrical output capability

• Anticipated annual production of around 150 million

kilowatt-hours = enough for 12,500 homes

• Annual fuel requirements approximately 90,000

tonnes of dried wood pellets

– less than 1% of annual 2005/2006 harvest in Northwest

Ontario

• Engineering work underway20

Current Thinking:

Potential at Other Plants

Thunder Bay GS

• Similar plant design to Atikokan GS

• Considering conversion of one unit

• Full output possible on biomass

• Natural gas or wood pellet fuel

• Concept study underway

21

Current Thinking:

Potential at Other Plants

Nanticoke GS and Lambton GS

• Not all 12 units will be converted

• Compared to existing coal-fired operation:– much lower annual electricity production

– reduced electrical output on biomass

– co-firing biomass and natural gas is possible

– combination of agricultural and wood pellet fuel is possible

• Engineering concept studies underway at Nanticoke - Lambton to follow

22

Biomass: Supply Chain Business Model

OPG will:

• buy pelletized biomass fuel from technically and

financially capable counterparties who aggregate raw

biomass materials and produce processed fuel

• arrange transportation of processed fuel

• purchase fuel through competitive RFIPs on the basis of

well defined technical specifications for pelletized wood

biomass and pelletized agricultural biomass

• enter into long term fuel contracts23

Biomass: Public Considerations

Biomass has some key positive attributes: Renewable

Greenhouse gas emissions/climate change benefits

Is an alternative to coal

Ontario economic benefits

But the public will demand:

Sustainability and environmental responsibility

No impact on food supply

24

Biomass: Ensuring Sustainability

OPG is taking four actions to ensure

sustainability of our biomass fuel supply:

• applying United Nations Framework Convention on Climate

Change (UNFCCC) definition of renewable biomass

• ensuring there is a life-cycle analysis GHG benefit

• applying environmental criteria to fuel suppliers to promote

suitable “upstream” practices in the supply chain

• Commissioning research to ensure decisions continue to be

based on current science

25

Role of Repowered Coal Units

in the

Electricity System

26

Wind Generation

Wind Power output is variable

27

Repowered Coal Fleet Can Provide Flexibility

Output can respond on demand

28

Converted Coal Units - Flexibility

29

Available ramp is the difference

between minimum production

level and maximum production

level of a generating unit

Ramp provides flexibility to

backup intermittent renewables

like wind and solar on short notice

0

50

100

150

200

250

300

350

400

450

500

Typical CCGT (Dry Low Nox)

Typical SCGT (Frame unit)

Aero-based CGT Lennox on gas (gas/biomass co-

fire will be similar)

MW

Ramping …Minimum …

CCGT – combined cycle gas turbine (Portlands)SCGT – simple cycle gas turbine (York Region)aero-based – derived from an aircraft engineLennox – conventional boiler like coal units

Enabling Renewables

• Biomass is renewable electricity generation that can

increase when wind generation declines

• Converted coal units can operate at low output with

ample reserve to meet changing demands

Summer Daily Average Primary Demand and Wind Generation

13,000

14,000

15,000

16,000

17,000

18,000

19,000

20,000

21,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24Hours of the Day

PD

(M

W)

80

90

100

110

120

130

Win

d (

MW

)

Primary Demand WindMorningRamp

30

Forest-Based Biomass

31

Sustainable Forest Management in Ontario

The Ontario Ministry of Northern Development,

Mines and Forestry oversees forest management

• 78.2 % of Ontario Forests are publicly owned

• Bases sustainable forest management practices on science

• Issues sustainable forest licences

• Requires management plans - renewed every 5 years

•Monitors forestry activities for compliance

32

Sustainable Fuel Supply: Wood Pellets

Must meet UNFCCC definition of renewable

OPG will require wood pellet suppliers to have third-

party chain of custody certification demonstrating that

the wood fibre is sourced from well managed forests.

33

Sustainable Fuel Supply: Atikokan

• Atikokan GS: 90,000 tonnes of wood-based fuel

per year - Less than 1% of annual harvest in NW Ontario

• OPG Request for Indicative Pricing issued in March

and closed May 12th

• The Ontario Government has invited proposals for

the use of about 11 million cubic meters of unused

Crown wood supply

34

Wood Pellets – Life Cycle GHG1

1 Zhang, Yimin; Jon McKechnie; Denis Cormier; Robert Lyng; Warren Mabee; Akifumi Ogino; Heather L. MacLean. "Life Cycle Emissions and Cost of Producing Electricity from Coal, Natural Gas and Wood Pellets in Ontario, Canada", Environ. Sci. Technol. 2010, 44, 538-544

35

Forest Environment: Current Research

OPG is supporting a four-year research program led by

the Ontario Ministry of Natural Resources and Natural

Resources Canada’s Canadian Wood Fibre Centre

(CWFC) to:

• Examine the impacts of different harvesting

practices on forest and soil carbon and nutrient

fluxes; and

• Enhance the ability to measure carbon stocks in

Ontario’s forests.

36

Agriculture-Based Biomass

37

Agricultural Biomass

Commercialization Project

• Ontario Ministry of Agriculture, Food and Rural

Affairs (OMAFRA) and OPG are leading the project

• Biomass for combustion energy – coal replacement

• Steering Committee of government, agriculture

organizations, industry, researchers, First Nations

agriculture; OMAFRA and OPG are co-chairs

38

Agricultural Biomass

Commercialization Project cont’d

First step: establish feasibility

• Economic viability

• Environmental sustainability

• Fill research gaps (agronomic, economic, logistic)

If feasible:

• Develop industry capable of 2M tonnes of ag biomass

• Develop opportunity for ag sector and rural communities

to participate

39

Agricultural Biomass

Commercialization Project cont’d

Technical focus:

• Miscanthus, switchgrass, sorghum, prairie grass, willow and poplar

• Agricultural residues

• Crop production, harvesting, aggregation, densification, storage

• GHG lifecycle assessment

• Fuel characterization

40

Agricultural Biomass

Commercialization Project cont’d

If successful the expectations are:

• Reduction in GHG’s compared to fossil fuels

• Ability to support/balance solar and wind on grid

• New jobs and investment

• Establish Ontario biomass market for energy generation

• Participation of agriculture sector in value chain

• Potential opportunity for agriculture sector to generate carbon

offset credits41

Agricultural Biomass:

Crop Considerations

Selection of appropriate crop to grow:

• Soil types

• Climate

• Harvesting

• Environmental benefit (including ecological)

• Technical suitability (combustion)

42

Agricultural Biomass:

OPG GHG Assessment

University of Toronto and University of Guelph

are conducting a carbon dioxide lifecycle

analysis for agricultural crops and by-products

43

Agricultural Biomass:

Sustainable Fuel Supply

Fuel must meet the United Nations Framework

Convention on Climate Change (UNFCCC) definition

of renewable biomasshttp://cdm.unfccc.int/EB/023/eb23_repan18.pdf

Additional sustainability criteria will evolve

44

Looking Ahead –

Advanced Fuels

45

OPG’s “Advanced” Biomass Fuel Program

Advanced biomass fuel is heat-modified biomass

(ie torrefied and carbonized)

Advanced biomass has potential:• high heat content

• may be suitable for existing coal handling systems

• outdoor storage

OPG assessing:• Status of advanced fuel suppliers

• Handling and combustion properties of Advanced Fuels

• Overall costs of advanced fuels46

Lambton Generating Station

Repowering Options

47

Lambton GS: Options

• Some gas conversion studies have been done

• Biomass test firing in 2008

• Two units closing in October 2010

• Two units considered for repowering

• Co-firing biomass and natural gas is possible

• Engineering concept studies underway at Nanticoke

with Lambton GS to follow

48

Lambton GS: Potential Gas Conversion

Benefits:

• Local gas supply, pipeline to station relatively low cost,

quick installation

• Units can operate at very low minimum load and can

ramp up production very quickly

• Not as energy efficient as a gas turbine (boilers were

designed to burn coal) but can be converted

relatively quickly and costs are much cheaper than a

new gas plant

49

Summary:

Next Steps

and

Key Benefits of Repowering

Program

Next Steps

• Establish cost recovery mechanism

• Plant modifications engineered & contracts let

• Processed fuel available at the right price

• Fuel supply chain in place

• Fuel supply that is sustainable

51

Key Benefits of Repowering Program

Economical:

►Re-use of generating assets owned by the people of Ontario

►Conversion of coal units to natural gas is most cost-effective

capacity option

Environmental:

►Conversion to biomass fuel is an opportunity to manage CO2

Flexible:

►provides electricity system flexibility to support integration of

(intermittent) renewables

52

53