U.S. power developer betting on natural gas

A proposed natural gas plant to be built next to the Nanticoke generating station. Natural gas will gradually replace coal-fired facilities in the province.

CPV links project to Ontario plan for phase out of coal energy by 2014

Toronto Star: TYLER HAMILTON - August 06, 2009

A U.S. power developer is forging ahead with plans to build a massive natural gas plant next to the Nanticoke coal-fired generating station, betting that the government will desperately need the project as a way to meet its 2014 deadline for phasing out coal power.

"We just don't see the province having a lot of options," said Duncan McEachern, vice-president of CPV Development Canada, a subsidiary of Competitive Power Ventures of Washington, D.C.

CPV wants to construct a 1,200-megawatt, high-efficiency gas plant that can help supply electricity demand in southern Ontario from morning to night. It would be a combined-cycle plant, meaning it would capture waste heat from its gas turbines and use it to turn steam turbines. This boosts plant efficiency to 60 per cent from about 40 per cent.

"It's a good complement to renewable sources," said McEachern. "It's capacity you can count on in the event the winds aren't blowing and the sun isn't shining."

Closing the Nanticoke station on Lake Erie, the largest coal-fired power plant in North America, is considered the biggest challenge to Ontario's coal phase-out plan and attempts to eliminate the province's reliance on the dirtiest fossil fuel.

Yet the plant is a low-cost source of electricity and an anchor for the southern Ontario grid, providing voltage support that keeps the system in balance and capable of supplying up to 4,000 megawatts of power – roughly equal to 20 per cent of the province's total power demand on a weekday afternoon last month.

Ontario Power Authority, the province's electricity-system planning agency, has directives from the government to boost energy conservation and renewable energy supply to help achieve coal phase-out goals, though smaller natural gas plants are being built to complement these green-energy sources.

Increased imports of hydroelectric power from Quebec are also being considered, as well as the burning of biomass – such as wood chips – at the Nanticoke station instead of coal.

CPV is well into the permitting process and is expected to complete its environmental assessment this fall.

The plant would be built on 24 hectares of a 83-hectare lot, just a few kilometres north of the existing Nanticoke plant and positioned between U.S. Steel's Lake Erie facility and the Esso Nanticoke refinery owned by Imperial Oil Ltd.

Jack Gibbons, chairman of the Ontario Clean Air Alliance, said he's not convinced that CPV's plant is necessary, even though it would be much cleaner and emit 60 per cent less greenhouse-gas emissions compared to the existing coal plant, which is the largest single emitter of carbon dioxide in Canada.

"It's not a terrible option. It's better than other options out there," said Gibbons, adding that the province has only "scratched the surface" on adding more green power and reducing per-capita electricity use.

"It may ultimately be necessary, but it's premature."

Nuclear has also been considered for the region, though it wouldn't be operational until at earliest 2020.

But even that's off the table. Last month, nuclear operator Bruce Power announced it was withdrawing an application with the country's nuclear regulator to site a nuclear plant in the community of Nanticoke.

McEachern said the government has a tall order to fill.

"Sometimes things don't always go according to plan," he said.

"By having a facility here that's fully permitted, ready to go, it would provide the province with an opportunity where if it doesn't achieve its objectives or the market fundamentally changes, this is an alternative."

Some groups, such as the Clean Affordable Energy Alliance, argue the Nanticoke coal plant is already paid for and should continue to be used as long as investments are made to reduce its emissions. Natural gas prices, while low today, tend to be volatile and promise to rise dramatically over the coming decade, they argue.

Jobs are also an issue.

As a coal plant, Nanticoke now employs 600 workers. CPV's proposed gas plant would employ 35.