New combustion turbine could cost $500M, but N.L. Hydro stresses many options are being studied

A new report spells out the possible cost, size and location of a new diesel-fired power plant on the Avalon Peninsula — should Newfoundland and Labrador Hydro decide it's the best way to meet a projected surge in electricity demand.

At the request of the Crown corporation, independent consulting firm Hatch studied a number of scenarios and found that if a new combustion turbine is built, it should produce 150 megawatts of electricity, burn No. 2 diesel and be located in Holyrood. 

The six-year project's price tag: $516 million. 

A nine-page summary of the not-yet-public study, which contains commercially sensitive information, stresses that Hydro is studying several options to boost generation and hasn't yet decided to build the new plant.

It also states the Hatch analysis focused squarely on a new turbine for "emergency backup generation and load peaking."

Demand surge projected, as Muskrat Falls doubts linger

The report comes as Hydro's own projections show electricity demand may surpass supply as early as 2030, a worrying prospect for the Public Utilities Board, which has repeatedly reminded Hydro of the time crunch it faces to shore up the province's grid. Hydro is also still working to bolster the reliability of the much maligned Muskrat Falls hydroelectric project.

"The review considered the use of a combustion turbine in the instance where it might be required to provide backup generation for six consecutive weeks," reads the summary document. The report notes it modelled six weeks of backup generation "as a worst-case scenario based on a catastrophic-level failure" of the Muskrat Falls transmission lines.

Hatch reviewed the feasibility of three combustion turbines — producing 150, 300 and 450 megawatts — running on six types of fuels, at six different locations.

"The 150MW plant size allowed for a near-direct comparison of another resource option — Unit 8 at the Bay d'Espoir hydroelectric generating facility, with a 154 MW capacity. The 450 MW plant size was selected to reflect an approximate comparison of the planning reserve margin requirement of 480 MW by 2032," reads the report. The third, at 300 megawatts, was a middle ground between the two. 

"Planning reserve" is the electricity needed to avert a shortage for customers in the case of an outage somewhere on the grid.

Based on a series of technical, operational, environmental and social criteria, Hatch determined Holyrood to be the top site for a new turbine and said a 150-megawatt facility burning No. 2 diesel to be the most viable option of those considered, based on the ability to reliably source the fuel required to run the plant.

A 150-megawatt plant would need three barges' worth of No. 2 fuel to be delivered every 10 days, according to the report. A 450-megawatt facility would need double that.

Despite Hatch's findings, N.L. Hydro says it is conducting a long-term market study on "both the risk of decreasing availability of No. 2 diesel fuel and the potentially increasing availability of renewable fuels as a source of supply."

Series of studies underway

The summary report adds that the Hatch report is just one of a number of analyses building to a "series of solutions" and "significant investments" needed to ensure a reliable long-term electricity supply in Newfoundland and Labrador.

"Hatch does not recommend the construction of a 300 MW or 450 MW plant at this time given the limited sources of fuel and the requirement for a large on-site fuel storage that may or may not be used in the future," the report states. "Hatch's position is that it is a better alternative to build a 150 MW emergency backup plant for the initial phase and consider other options for subsequent phases." 

The report adds, "Hydro is in the process of developing an expansion plan that considers many different generation options, including combustion turbines, hydroelectric generation, and other potential resource options."

What about new federal emissions rules?

While the federal government announced in August a series of draft regulations curbing emissions for power plants, the report states the proposed rules "recognize that certain jurisdictions may be required to maintain fossil-fuel-utilizing facilities" and "include exceptions that may apply to Hydro's needs."

"Hydro believes that if a new 150 MW combustion turbine were to be selected as an alternative to meet the needs of the electrical system, it could be operated in a manner that is compliant with the current draft regulations and aligns with Hydro's mandate of providing reliable electricity in an environmentally responsible manner."

N.L. Hydro is completing early design work for the 150-megawatt plant and for an eighth generating unit at the existing dam at Bay D'Espoir. That work should be finished over the next year, in parallel with the utility's resource adequacy plan, due next spring, which will lay out future capacity requirements and recommended solutions.   

The six-year timeline detailed for the combustion turbine includes one year for regulatory review and approval, but the report notes, "supply chain constraints could impact delivery times." 

N.L. Hydro has been trying to shutter the existing fuel-burning Holyrood Thermal Generating Station for years but has committed to keeping the plant up and running "until 2030, or until such time that sufficient alternative generation is commissioned, adequate performance of the Labrador-Island Link is proven, and generation reserves are met."

The provincial government and N.L. Hydro have repeatedly said that once Holyrood closes, about 98 per cent of electricity from the province's grid will come from renewable sources. It is unclear how a new combustion turbine would affect that projection.

Download our free CBC News app to sign up for push alerts for CBC Newfoundland and Labrador. Click here to visit our landing page.