A $600M solution: Holyrood thermal plant can back up Muskrat Falls for another 8 years

An independent assessment of the generating station at Holyrood reveals that the aging and polluting oil-fired plant in Newfoundland's Conception Bay can operate until the end of the decade as a backup to Muskrat Falls, but it won't be cheap and it could further affectpower rates.

Newfoundland and Labrador Hydro hired Hatch, an international engineering company, to conduct the assessment of the fuel-burning Holyrood generation station, which will be decommissioned when the costly Muskrat Falls hydroelectric project finally comes on stream.

Under one scenario, the report determined that Holyrood couldprovide "recall power" the term used to describe thetime between the call for power and synchronization with the grid on four hours' notice in the event of a major Muskrat outage.

However, such a scenario would cost more than $600 million between 2022 and 2030, with fuel and capital upgrades accounting for most of that amount, the report says.

Theroughly $65-million annual cost to maintain Holyrood is the equivalent to adding one cent per kilowatt-hour to power rates, according to previous disclosures by Hydro.

It's a cost that wasn't anticipated or included in cost estimates when the Muskrat Falls project was sanctioned a decade ago, since part of the justification for building Muskrat Falls was being able to close Holyrood.

But there are concerns about the reliability of the power line that will transmit Labrador electricity to the Avalon Peninsula, promptinga reliability and resource adequacy review of the province's power grid to determine what, if any, backup generation will be required when the Muskrat Falls project is fully commissioned.

The Hatch report considersseveral other options with longer startup times for Holyrood, but with only marginal savings over the four-hour scenario.

The assessment also determined that continued operation of Holyrood beyond 2030 may be viable.

"The plant, given its age, is generally in good running condition," the report reads.

The report into the potential long-term viability of the Holyrood station was received by N.L. Hydro on March 31.

Reviewing backup options

The Crown-owned utility is scheduled to deliver its recommendation on whether to maintain Holyrood, or invest in other forms of backup power,to the Public Utilities Board this summer.

"The analysis performed by Hatch will serve as an input to us as we work to ensure the long-term reliability of the provincial power system," a Hydro spokesperson wrote in a statement to CBC News.

"The Hatch condition assessment provides additional clarity to Hydro as we consider all options for reliable and least cost system operations."

Hatch recommends that a cleaner burning dieselauxiliary boiler be installed at Holyroodto keep the plant in warm idle mode, which would still incur annual fuel costs of roughly $25 millionand require a staffing complement of 58 people.

To continue operating Holyrood in its current form until 2030, as a major supplier of power to the grid, according to Hatch, would cost more than $1.3 billion, with annual fuel costs of $100 million.

Historically, Holyrood has provided up to 30 per cent of peak electricity needs in Newfoundland, burning up to 18,000 barrels of oil daily during the winter.

Burning heavy oil

Talk of a backup system to Muskrat Falls is a sensitive matter because of all the controversy and problems linked to the project, which is billions over budget and years behind schedule, and has required a multibillion-dollar bailout from the federal government to prevent electricity rates from soaring.

One of the original arguments for developing the 824-megawattpower-generating station at Muskrat Falls, and an 1,100-kilometre power line known as the Labrador-Island Link to the Avalon Peninsula, was that Holyrood would be closed and there would be massive fuel savings and reduced greenhouse gas emissions.

It was also said that Holyrood, which has been burning heavy oil to supply up to 500 megawatts of energyto homes and businesses on the the Avalon Peninsula for more than a half-century, was nearing the end of its useful life.

But reliability concerns about the Labrador-Island Link commonly known as the LIL haveforced Hydro and the utility regulator to consider backup options in the event of a prolonged outage.

• As software struggles persist, consultant says Muskrat Falls completion impossible to predict
• $5.2B deal reached between feds, N.L. government to stave off skyrocketing power bills

Construction of the Muskrat Falls power plant and theLIL is all but complete, but for years, GE has struggled to perfect the critical softwareneeded to operate theLIL. Repeated deadlines have been missed, and last month Liberty, the independent consultant monitoring progress on the project, said it was impossible to predict when the software might be complete and the project ready for commissioning.

• N.L. Hydro extends life expectancy of Holyrood plant by another year as Muskrat delays continue

The Hatch report, meanwhile, determined Holyrood is"generally in good operating condition," though major components such as turbines, boilers, condensers and fuel storage and delivery systems "will require continued monitoring and potential capital intervention" to allow the plant to continue operating.

A previous study determined that closing Holyrood would be the equivalent of taking 300,000 cars off the road.

From 2000 to 2010, the plant emitted an annual average of about 1.1 million tonnes of greenhouse gas emissions and an annual average of 11,610 tonnes of sulphur dioxide.

In a recent letter to the PUB, Hydro's senior legal counsel, Shirley Walsh, said Holyrood's future rolewill depend on factors such as costand its reliability in comparison to other options. She said current or anticipated legislative requirements regarding greenhouse gas emissions must also be considered.

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