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Is it time for Manitoba to end dependence on hydro and build a gas-fired power plant?

Posted: 07/27/2013 1:00 AM | Comments: 0

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Forget hydro power. Let's build a natural-gas fired electricity plant near Brandon!

That's nuts, right?

Manitoba is famed for its cheap, renewable power. We're even a little smug about it. And we're well into the planning and preparatory construction for the next generation of hydro dams in the north, dams the NDP government says will secure our power supply and bolster the economy for generations. Gas prices are volatile. Natural gas emissions cause climate change. And no one wants an ugly power plant in their neighbourhood.

Despite that, a gas-fired power plant might not be such a crazy idea. There is a growing group of electricity experts in the province who say the idea, while not perfect, is worth considering. And it's a notion that could get more traction early next year when the future of Manitoba's power supply, arguably the biggest public policy issue at play right now, gets scrutinized by the Public Utilities Board.

At issue before the PUB is whether Manitoba Hydro should forge ahead with the next generation of multibillion-dollar northern dams or whether those are too financially risky and other options ought to be considered.

Hydro's capital expenditures looming in the next two decades top $33 billion, nearly three times the provincial operating budget this year. It's enormous money that is largely out of sight, out of mind for most Manitobans since the dams are located in a remote corner of the province.

Fearing the $33-billion risk, the Public Utilities Board has repeatedly floated the idea of a gas-fired plant, a modern, efficient combined cycle one that uses the steam produced by natural gas combustion to turn a second set of turbines. Southwestern Manitoba would be the likely location, along the TransCanada gas pipeline.

Figuring out Manitoba's power future is remarkably complex. It forces Manitoba Hydro to forecast domestic usage, export prices, drought risk, construction inflation and how continent-wide environmental policies might shift. And, there is little preliminary research done on whether a gas-fired plant might fit the bill, instead of, or in addition to, a new hydro dam. Still, there is a lot of chatter. Here's how it's shaking out.

 

PROS

 

A natural gas plant is faster to build

 

Building a northern dam takes years. The construction time for the 695-megawatt Keeyask dam is eight years and it's a baby compared with Conawapa, which is about double the size. Building a hydro plant involves huge excavation and flood mitigation, digging a coffer dam, creating spillways, huge concrete works, building the powerhouse and a mini-town for workers -- all done in remote, tough-to-access locations. Construction time doesn't include the time spent negotiating with First Nations, which can take another decade.

Building a gas-fired plant takes about three years. And it's much simpler and arguably easier to find and hire construction experts since gas plants are being built across North America.

 

It's much cheaper to build in the short run

 

An 800-megawatt natural gas plant would likely cost more than $1 billion to build. That sounds like a lot. It's the cost of five Investors Group Fields. But it's peanuts in the power-plant building world. Keeyask would be six times that, and Conawapa would be 10 times that.

Two new plants underway in Alberta will each cost about $1.5 billion, a fraction of the cost of a northern dam. But, Hydro has already spend hundreds of millions of dollars designing those dams, negotiating with First Nations, working on environmental approvals and now even starting early construction work preparing to build Keeyask. Those costs would be orphaned if Manitoba Hydro did an about-face and turned to gas.

 

It requires way less transmission

 

A gas plant near Brandon would require dramatically fewer kilometres of power line to ship the electricity to users, most of whom live just a couple hundred clicks away.

Graham Lane, former chairman of the Public Utilities Board and an advocate for the exploration of a gas-plant option, says it may even render moot the need to build the controversial Bipole 3 transmission line from the north. A gas plant would also improve the reliability of Manitoba's power system during storms -- one of the oft-stated reasons for a third bipole. Trouble is, work has already started on Bipole 3, and millions have already been spent.

 

It diversifies our power sources

 

Diversity is good, and we have none. A few wind turbines don't really count. Many experts say Manitoba needs either a better mix of homegrown power in case a massive drought hits or the northern transmission lines fail, or much better connections to the United States so we can import more power in a pinch. A gas plant would fit the bill and is very good at coping with peak energy demand when the system needs a quick source of power as a stop-gap. And it's easy to expand a gas plant to meet increased demand down the line.

 

Natural gas is abundant and cheap (for now)

 

"There's a heck of a lot of gas out there," says Lane. "And trying to estimate when a price spike could occur is very hard."

That's one of the risks of a gas plant. Gas prices are very low now, thanks in part to fracking techniques that have unleashed new North American sources. That won't last forever, but it might last for much of the life of a gas plant. Also, Manitoba has gas. There are significant shale-gas deposits in southwestern Manitoba, still too untested and expensive to extract, but it may only be a matter of time before Manitoba is doing the same kind of fracking for gas now underway in the U.S. (and engulfed in controversy). A homegrown gas-extraction industry could bolster the case for a power plant.

 

CONS


It would make Kyoto nearly impossible

 

The province has already failed to meet its Kyoto greenhouse-gas targets, but emissions are shrinking slowly. A gas plant would stymie that modest progress.

It's tough to know exactly what the emissions would be from a gas plant, since that depends on how efficiently it's built and how much it's used. But Calgary's 320-megawatt combined-cycle power plant produced nearly 450,000 tonnes of greenhouse gases in 2011, according to the latest data. That's equivalent to about a quarter of the emissions generated by Manitoba's top 10 emitters.

 

It's a NIMBY nightmare

 

If Ontario is any measure, no one really wants a gas-fired power plant in their backyard. In Ontario, the Liberal government is still embroiled in scandal over a decision to cancel two proposed gas plants; one in Oakville, the other in Mississauga. Both were very unpopular and the Liberals kiboshed them in what was widely seen as last-ditch ploy to save area candidates from defeat in the 2011 election. Western Manitoba is already cranky about the Bipole 3 power line. A gas plant would likely spawn a whole higher order of NIMBY.

 

Gas prices could spike

 

Hydro dams last for 100 years, and are still widely seen as the cheapest way to produce power when measured over the life of the dam. The input costs are basically nil, while the input costs for a gas plant are volatile. It's a trade-off between the hefty upfront costs of a dam and the risky operating costs of a gas plant.

 

It's not what we do

 

Hydro is Manitoba's oil. That is the mantra repeated endlessly by the NDP government. Renewable power, which also happens to be among the cheapest in North America, is our calling card, and a gas plant would undermine that. "My own view is that Manitoba has a certain brand of energy, and a gas-fired plant would affect that brand," said Peter Miller, a longtime Manitoba Hydro watcher and frequent participant in Manitoba Hydro's regulatory hearings.

Gas plants are also not what Manitoba Hydro does. It's been tough enough getting the company to accept wind turbines. A gas plant might be an even bigger challenge.

 

It could annul billions in power sales to the U.S.

 

Manitoba's long-term power sales -- 250 MW to Minnesota Power, 100 MW to Wisconsin Public Service and 125 MW to Xcel Power -- are predicated in large part on the greenness of our electricity, which helps American customers meet their renewable-energy commitments. Hydro itself made that clear a couple of years ago in a telling nugget buried in a submission to the PUB, which sums up many of the cons: "It should also be noted that pursuing an all gas reliability option would result in the loss of significant economic benefits to the province, the cancellation of lucrative export contracts, higher electricity bills to domestic customers, a reduction in interconnection reliability, stranded capital costs, and negative environmental impacts."

 

The NDP government hates the idea

 

Ask policy staffers what they think of a gas plant, and they respond with an eye roll that says "are you kidding me?" Ask Conservation Minister Gord Mackintosh what he thinks of the idea, and you get a point-blank answer.

"We have no plans for a gas plant."

On the other hand, the government said the same about a PST increase.

maryagnes.welch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 27, 2013 ??65530

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