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District Energy Complements Growth Strategy
September 13, 2011
Redevelopment Compels Stricter Environmental Controls
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BIOMASS FACES MARKET BARRIERS
Despite seeming abundance of wood resources, biomass accounts for a small fraction of the renewable energy supply in Canada and is even less likely to be the fuel source of district energy networks like the proposed cogeneration facility in Ajax, Ontario. More often, forestry sector companies use wood waste and/or residual forest waste known as slash to power their own sawmills and kilns.
Cost and logistics of transportation and storage make wood a problematic fuel source in markets located at greater distances from forestry operations. Environmental regulations also ensure that prospective generators will have to invest in advanced emissions control technology – a requirement that ultimately benefits air quality and public health, but can also increase capital costs relative to other types of renewable generation.
As of late June 2011, the Ontario Power Authority (OPA) reports that just 18 megawatts (MW) of biomass generating capacity is in development through the provincial Feed-In Tariff (FIT) for renewable energy program, compared to nearly 1,800 MW of wind power, 860 MW of ground-mounted solar photovoltaic (PV) and 180 MW of rooftop solar PV installations.
Advocates for the forestry sector argue that the FIT price structure does not provide adequate returns. Generators who successfully navigate the approvals process are eligible for 20-year contracts at 13 cents per kilowatt-hour (kWh) for projects producing more than 10 MW or 13.8 cents/kWh for smaller-scale operations.
That’s largely equivalent to the 13.5 cents/kWh rate for wind power, but considerably less than the 44.3 cents/kWh for ground mounted solar PV or 53.9 to 71.3 cents/kWh range for rooftop solar generation. A recently released study from the Queen’s University School of Business, commissioned by the Renfrew County Community Futures Development Corporation, concluded that the economically viable rate for biomass energy is more in the range of 27 to 45 cents/kWh. (See www.rccfdc.org.)
Proponents of biomass point to its carbon neutral status, but not all scientists and environmentalists agree. Biomass is considered carbon neutral because burning wood releases the carbon it absorbed during its lifetime so emissions from combustion theoretically balance out carbon levels prior to the tree’s growth.
Critics say that premise overlooks the fact an uncut tree would continue to absorb carbon into the future. They argue that burning takes just moments to reverse the sequestration of carbon that has occurred gradually over several generations, creating a carbon deficit that forest re-growth reimburses much more slowly. However, young, fast-growing trees capture carbon more efficiently than older growth so much depends on replanting and forest management practices.
Other demand factors for steam and/or hot and chilled water also shape the power supply, making it potentially less responsive to peak demand. “Cogeneration plants can be inflexible because they generate when customers need heat, not when the system needs power,” observes energy policy analyst Tom Adams.
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A steam plant built to power World War II munitions manufacturing is now part of the growth and economic development strategy in a rapidly growing Greater Toronto Area (GTA) community. Earlier this year, Ajax Council approved a proposal to redevelop the 70-year-old plant and convert it to a biomass-fueled cogeneration facility.
The project proponent, Index Energy, has a contract through Ontario’s Feed-in Tariff (FIT) renewable energy program to produce about 18 megawatts (MW) of electricity and also plans to supply steam and hot and chilled water to existing and future development in the Town’s central core. Construction is expected to begin before year-end on new installations to expand the plant’s capacity, comply with more stringent environmental standards and improve the aesthetics of the site.
“From the Town’s perspective, the plant is a unique part of Ajax’s history,” says Gary Muller, the Manager of Planning in the municipality that boasts more than 100,000 residents. “This project will bring it into a new century and offers an opportunity for local businesses and residents to tap into a source of cheaper energy.”
The aging facility still supplies steam for one large textile finishing company, but has lost much of its former business as nearby manufacturers either closed down or switched to other options. With this smaller customer base, the steam plant continues to operate within the parameters of its circa-1984 Certificate of Approval (CofA) from Ontario’s Ministry of the Environment – a document that allows plant operators to burn up to 550 tonnes of wood fuel daily with no controls on emissions.
Redevelopment plans triggered the requirement for a CofA amendment, which alone would have reduced the allowable release of pollutants. Index Energy has further agreed to voluntarily comply with blended standards that also incorporate recognized best practices under the U.S. Environmental Protection Act and European Union regulations – something that the Town of Ajax pushed for.
The updated plant will house four modern wood-fired combustors and boilers with associated emissions controls, while one of the existing boilers will be completely rebuilt to serve as a backup when primary equipment is shut down for maintenance. New technology is projected to reduce particulate emissions to 20 milligrams per cubic metre (mg/m3) from the current estimated level of 250 mg/m3.
“A lot of the Town’s issues and concerns really related to ensuring that the emissions from the plant were as low as possible, and we have achieved the best possible outcome,” Muller notes.
Nor is the current outdoor storage of wood fuel and a pile of ash waste necessarily the urban ambience civic officials want to see in an area bordering the downtown retail/commercial core where they hope to spur new employment related and residential development. Plant upgrades include an indoor storage area and ash-handling systems, plus a new smokestack and exterior improvements.
“Essentially, it’s going to be an entirely new plant, although some of the existing structural elements can be saved and adapted just because they were built to such a hardy standard originally,” Muller says.
The three newly installed turbines – two high-pressure and one low-pressure model – will ultimately generate up to 25 MW of electricity, although development proponents project it will be three to six years before the electricity output is at full capacity. Meanwhile, steam will be delivered via the plant’s existing underground network, but new pipes will be needed for hot and chilled water.
Index Energy has signed a 20-year agreement that allows the company access to municipal rights-of-way to for the underground pipe in return for giving the Town of Ajax a share of the profits. This will be based on a percentage of gross revenues, rising in half-percent increments from 0.5% in the first five years to 2% in the final five years.
Planning department staff, in turn, will encourage developers to connect to the steam and water loops.
Redevelopment plans are in sync with Ontario’s Places to Grow Act and associated growth plan for the GTA that mandates 40% of new development to occur within the existing built-up areas of suburban municipalities. In Ajax, that means finding room for a population projected to reach 138,000 by 2031 – and new development that is going to need heating and cooling.
“This is right on the edge of downtown so there is an absolute ability to feed into both existing and future residential development,” Muller says.
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