Ontario Power Generation (OPG) is hurriedly heading to market to secure wood pellets for the conversion of its Thunder Bay Generating Station.
Time is of the essence as the Ministry of Energy wants the northwestern Ontario power plant switched from running on coal to burning a specialty black wood pellet fuel by next Jan. 1.
This spring, OPG issued a Request for Indicative Pricing to scope out potential suppliers of “advanced biomass” who had until March 31 to declare their interest, and until April 2 deadline to submit their prices.
Chris Fralick, OPG’s regional plant manager, said multiple potential suppliers have come forward, but wasn’t able to say how many. That number is being kept confidential by OPG’s supply chain managers for competitive pricing reasons.
“We don’t want these individual proponents to know how many are out there.”
Last November, the government announced Thunder Bay would be the first biomass station of its kind in the world and will have a five-year contract to generate power. The generating station will be the last coal-fired plant in Ontario.
Though capable of producing 306 megawatts, the generating station’s role will serve as a peaking plant, kicking in only during periods of high energy demand.
Only one of the plant’s two generating units will operate – and at only two per cent of its capacity. OPG needs a relatively small amount of only 15,000 tonnes of pellets each year over a five-year period.
The ministry wants this particular pellet because it handles like coal and is durable enough to be stored outside.
However, it’s a relatively new product with two well-known suppliers -- Zilkha Biomass Energy of Texas and Arbaflame of Norway – who run demonstration plants.
OPG conducted a test burn of the Norweigan pellets last September and Zilkha is building a commercial-scale production plant in Alabama, capable of making 275,000 tonnes a year.
But Fralick said there are more companies out there with plans for black pellet plants.
“We need fuel on the ground as quickly as possible. We know there are only demonstration plants in operation now. We know there are plans for commercial plants and our contract may encourage some of that development.”
Since the supply of this pellet is limited, it might not come cheap.
What’s unknown is the price per tonne and the cost to ship the material to Thunder Bay. OPG needs the fuel by fall to begin re-commissioning the plant.
“This first 15,000 tonnes, we’re going to get that at a low a price as possible,” said Fralick. “We’ve given the government indicative prices that we thought would be reasonable in the short term…and we all know that the first batch is not going to be cheap.”
Since supply in limited, OPG is also willing to be flexible to companies by asking for half of the 15,000-tonne batch by October.
“We know it’s not easy coming from the existing suppliers that are out there,” said Fralick.
OPG is giving itself the option of going to the market again with a second Request for Proposals in 2016 if the pellet price is to exorbitant and the material doesn’t perform well.
“Getting the costs down is a primary one but also if we have issues, we’ll have an ability to change horses.”
Whether or not there’s a supplier closer to home remains to be seen.
Fralick said the Thunder Bay Community Economic Development Commission has taken an interest to see if a black pellet plant could be established regionally.
“We need to be realistic around the probabilities there. Fifteen tonnes is a relatively small amount. I think anybody that’s going to start a plant up is going to likely need to have multiple uses and customers.”
To the west, OPG is nearly completion of a $170-million conversion of the Atikokan Generating Station to burn more conventional white pellets.
The plant goes online this August. Two large pellet silos were built and new burners, controls and material handling systems were installed inside the plant. The commissioning is this spring.
Atikokan’s two pellet suppliers are Resolute Forest Products, which is building a mill in Thunder Bay and California-based Rentech, which acquired a mill in Atikokan.
