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Energy
| 06/07/17

Alberta coal plants switching to gas, but biomass could be cheaper still

TCE

Cheap natural gas may deliver Alberta’s phase-out of coal much faster than the government’s 2030 deadline, but converting some coal plants to burn biomass instead could turn out to be cheaper still, according to researchers.

The province’s two largest coal-fired electricity producers, ATCO and TransAlta, said last month that they plan to transition away from the carbon-intensive energy source much earlier than expected. ATCO said it is to switch its plants over to gas by 2020, and TransAlta wants to make the move by 2022.

Natural gas-fired electricity produces roughly half the greenhouse gas emissions of electricity from coal, but it appears that neither firm is making the move due to the province’s carbon tax regime. Instead, the switch just makes business sense: TransAlta expects to save $1.5 billion as a result of the decision.

Once the natural gas transitions at coal plants have been made, Edmonton’s Capital Power will be the only company left running such plants in Alberta (AB). But it is understood that Capital Power is considering switching over to biomass instead, although no decisions have been publicly issued.

Parallel to this, new sources of low-carbon generation have to be installed to meet projected demand increases of as much as 30 percent on current levels by the end of the next decade, according to the Alberta Electric System Operator (AESO). These demand projections, or ‘load forecasts’, are based on expected economic and population growth and do not include increases in demand resulting from clean electrification of transport, heating and cooling, and industrial processes. Therefore demand is likely to be higher still once such decarbonisation efforts are factored in.

Recently modelling analysis by PICS flagship Low-carbon Pathways to 2060 Project has concluded that converting coal plants to use biomass from forest residues as fuel, which currently provides just three percent of electricity generation in Alberta, would result in significant cost savings.

According to the modelling, renewable energy credit expenditure of $18.7 per megawatt hour (MWh) needs to be provided to clean power producers by the province in order hit its target of 30 percent of electricity generation by renewables by 2030, if biomass-conversions are excluded. Once biomass is brought on board, that cost declines to $16.5 per MWh.

Moreover, under current projections, an investment of $13.4 billion in new wind farms would be needed by the end of the next decade. But with the incorporation of biomass plants, this sum drops by $2.6 billion. The reason is that biomass offers an energy source that is non-intermittent but still low-carbon, while wind power’s intermittency requires greater build-out to attempt to make up for this variability. Under the biomass scenario, the proportion of wind in the energy mix declines from 24 percent to 18 percent, as biomass plants displace some wind farms.

Biomass however cannot completely replace natural-gas generation or wind because there isn’t enough biomass to sustainably cover the whole demand. Logging residue data from PICS’ Forest Carbon Management Project contributed to these calculations.

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Natural gas may help Alberta get off coal before 2030 deadline, but adding in biomass plants might be cheaper

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