Why aren't northwestern Ontario's state-of-the-art energy facilities producing any energy?

Unpredictable electricity needs in the region may have led to waste and wasted opportunities at a pair of biomass plants
By Jon Thompson - Published on September 6, 2017
The Thunder Bay Generating Station advanced biomass plant operates just two per cent of the time. (Jon Thompson/TVO)

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THUNDER BAY — Atikokan, located between Thunder Bay and Fort Frances, is home to the largest 100 per cent wood biomass generating facility in North America — but between 80 and 90 per cent of the time, it generates nothing at all. Thunder Bay boasts a state-of-the-art advanced biomass station, but for approximately 98 per cent of the year, it, too, lies idle.

Both facilities came about as a result of the 2003 provincial election, which saw all major parties pledge to phase out coal-fired power plants. Bill Mauro, voted in that year as the Liberal MPP for Thunder Bay-Atikokan, knew that the shuttering of the coal plants would have serious local repercussions: a reduced tax base, fewer employment opportunities, less energy security for northwestern Ontario. “In the Atikokan example,” he says, “the [declining] tax base and job loss could have fundamentally closed the town.”
 

The coal-fired plants were reborn as biomass-generating facilities, burning wood pellets to produce energy. The Atikokan Generating Station was, at a cost of $170 million, transformed into a 205-megawatt plant that became operational in July 2014.  The Thunder Bay Generating Station, with one of its two 153-megawatt units converted for under $5 million, came online in 2015.

The Auditor General's 2015 report criticized the new plants, saying generating electricity at the Thunder Bay station cost $1,600 per megawatt hour to produce — 25 times more expensive than other Ontario biomass station. The Atikokan station’s energy costs $528 per megawatt hour — eight times higher than average.

The plants were never meant to run full-time: they were created to supplement existing supply, which is why they’re inactive most of the year. The light production schedule prevents the creation of forestry and manufacturing industries to deliver pellet supply. Atikokan was expected to go through 90,000 tonnes of pellets each year, and a 10-year agreement was signed with California-based Rentech and Resolute Forest Products to provide them. Rentech converted a former particle board processing mill in Atikokan — located just 18 kilometres from the generating station —into a production centre for biomass pellet production.

When it came to Thunder Bay, however, the province directed Ontario Power Generation to issue a five-year contract for “up to” 14,000 tonnes of pellets every year until 2019. The plant has burned only around half that much annually.

Because of the tight timeframe and relatively small demand, private developers weren’t able to profit from establishing a similar advanced biomass pellet plant for Thunder Bay.  So the OPG had to look farther afield — to Norway, and a company called Arbaflame. It makes the pellets and ships them to northwestern Ontario. Thunder Bay, located in the heart of in a region long known for forestry, is now relying on wood products from halfway around the world.

The biomass facilities won’t be in a position to boost production and stimulate local investment unless authorities determine the demand is there — and not everyone is convinced it is. After the 2003 Ontario election, most of the region’s pulp and paper mills closed down due to a cooling global market, reducing the need for energy. Sluggish global mineral markets are casting uncertainty on the status of the two dozen mining projects in varying stages of development throughout the region.

While the technologically advanced plants have attracted interest across the continent and in Europe and Asia, the current North American political situation has made long-term export planning difficult. Doug Murray, CEO of the Thunder Bay Community Economic Development Commission, says prospective biomass producers saw potential in exporting energy to U.S. coal-producing communities along the Great Lakes.  American energy producers had been inspired to look for alternatives to coal because of greenhouse-gas reduction targets contained in the U.S. government’s Clean Power Plan. But the election of Donald Trump, who is an outspoken advocate of the coal industry, has thrown the regulatory demands into doubt. “The [Environmental Protection Agency] was going to dictate what they could do with their power. Now that’s come off. Now you have people saying, ‘Okay, which way is the future going?’” Murray says. “Legislative uncertainty is not an investment climate. Until people see direction, they’re going to wait.”

Biomass has also proved needed: in the summer of 2016, for example, the Atikokan plant ran for six weeks straight after an unscheduled Hydro One transformer outage. And there are some indications that local demand will rise. In August the Wataynikaneyap Power initiative added Pikangikum and Lac Des Mille Lacs First Nations to its $1.3-billion, 1,800-kilometre transmission project, which will ultimately connect 22 remote communities to the energy grid.

And while the planned East-West Tie Line promises to significantly reduce demand for regionally produced energy — the 450-kilometre transmission project would connect the provincial power grids, making it possible for the north to draw power from southern Ontario — its estimated cost has nearly doubled to $777 million, throwing the future of the project into doubt. If it never gets off the ground, biomass from Atikokan and Thunder Bay would be critical.

­Iain Angus, a Thunder Bay councillor and a co-chair of the Northwestern Ontario Common Voice Energy Task Force, is urging Ontario to make a long-term commitment to transforming the Thunder Bay station into a full-time facility. He argues such a commitment would also have the benefit of creating a base market in the northwest for biomass pellet production.

“The province needs to say to the OPG, ‘Make this your priority. Go ahead and put out a call for proposals for the provision of advanced biomass to the quantity you need to generate at full capacity,’” Angus says.

Mauro sees a future for industrial biomass production, co-generating plants, and possibly even residential biomass in communities without access to natural gas. He toured the Atikokan station with Premier Kathleen Wynne in August, and the government is currently putting the finishes touches on its updated Long-Term Energy Plan, scheduled for release this fall.

“The reliance on fossil fuels is coming to an end. It’s not a matter of if — in my opinion — it’s a matter of when. Ontario, when we look back in 10 years, is going to be seen as having been the leader — whether it’s wind, whether it’s solar, whether it’s biomass, whether it’s moving away from fossil fuels to produce energy, and all the ramifications of that. In my opinion, it’s just a matter of time.”

This is one in a series of stories about issues affecting northwestern Ontario. It's brought to you in partnership with Confederation College of Applied Arts and Technology. Views and opinions expressed in this article are not necessarily those of the college.

Ontario Hubs are made possible by the Barry and Laurie Green Family Charitable Trust & Goldie Feldman.

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