Ontario Power Generation said March 8 that it is close to getting off of coal-fired generation and is making progress toward developing clean-energy replacements for that capacity.
In January, the provincial Ministry of Energy announced the shutdown of the remaining coal-fired units at the Lambton and Nanticoke stations by Dec. 31, 2013, ahead of the previous Dec. 31, 2014 deadline. OPG said in its March 8 annual earnings statement that it plans to place these coal units in reserve status and to preserve the option to convert them to natural gas and/or biomass in the future, if required.
For OPG, total electricity generated in 2012 of 83.7 terawatt hours (TWh) decreased slightly from generation of 84.7 TWh in 2011. The 1.0 TWh decrease was primarily due to a reduction in hydro generation as a result of lower water levels on the lower Great Lakes and the Northeastern and Eastern Ontario watersheds.
- Nuclear production of 49.0 TWh in 2012 increased by 0.4 TWh primarily due to fewer unplanned and planned outage days at the Pickering stations.
- Thermal generation of 4.1 TWh in 2012 represents an increase of 0.4 TWh, compared to 2011 primarily due to lower hydro output, increased electricity demand due to warmer temperatures during the summer of 2012, and the utilization of coal inventories prior to the shutdown of the stations.
The Darlington nuclear station achieved a capability factor of 93.2% in 2012, compared to 95.2% in 2011. This performance was mainly due to an increase in unplanned outage days. The capability factor at the Pickering stations improved to 77.8% in 2012 from 73.4% in 2011. This performance reflected fewer unplanned and planned outage days.
The availability of OPG’s regulated and unregulated hydro stations remained at high levels in 2012. OPG’s regulated hydro stations achieved an availability factor of 91.4% in 2012, compared to 89.7% in 2011. OPG’s unregulated hydro facilities achieved an availability factor of 91.1% in 2012, compared to 91.5% in 2011.
OPG is undertaking a number of generation development projects to support Ontario’s long-term electricity supply requirements.
- The activities associated with the definition phase of the Darlington refurbishment project continue. Based on the Environmental Assessment (EA) that OPG submitted in 2011, the Canadian Nuclear Safety Commission (CNSC) and Fisheries and Oceans Canada issued a final Environmental Assessment Screening Report in September 2012. The report was consistent with OPG’s analysis. It concluded that, taking into account the identified mitigation measures, Darlington refurbishment and continued operations are not likely to cause adverse effects on the environment. The CNSC’s decision on the EA is expected by the second quarter of 2013. During 2012, OPG awarded a retube and feeder replacement contract, which includes the planning, design and testing of tooling, design and construction of a full scale reactor mock-up facility for testing and training, and removal and replacement of major reactor components of the four reactors at Darlington. The procurement processes for the turbine and generator contract, and the defueling contract were initiated in 2012. A detailed cost and schedule estimate for the refurbishment of the four units is expected to be completed in 2015. The execution phase is expected to start in 2016. The Darlington units, based on original design assumptions, are currently forecast to reach their nominal end of life between 2019 and 2021. The objective of the refurbishment is to extend the operating life of the station by about 30 years.
- During 2012, OPG substantially completed a coordinated set of initiatives to evaluate the continued safe and reliable operation of Pickering Units 5-8 for approximately an additional four to six years. OPG completed needed work to demonstrate with sufficient confidence that the pressure tubes will achieve the additional life, as predicted. Continued work related to equipment improvements and inspections will continue until the end of 2014, as planned.
- In 2012, the CNSC approved the application for the Power Reactor Site Preparation for the new nuclear units at Darlington. Subsequently, a notice of application for a judicial review of the Licence to Prepare Site was filed by third parties. OPG is preparing its response to the application.
- All major tunnel lining activities at the Niagara Tunnel were completed in 2012, with the exception of pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock. This activity had progressed to 9,525 meters as of the end of 2012. In early March of this year, final testing is underway with water flowing through the Niagara Tunnel prior to declaring it in-service, more than nine months ahead of the approved project completion date of December 2013. Upon completion of the tunnel, the average annual generation from the Sir Adam Beck generating stations is expected to increase by approximately 1.5 TWh, depending on water flow. Life-to-date capital expenditures as of the end of 2012 were C$1.4bn. Total costs of the project at completion are expected to be about C$1.5bn, compared to the approved budget of C$1.6bn.
- The Lower Mattagami River project will increase the capacity of the four stations on the Lower Mattagami River by 438 MW. Concrete operations continued throughout 2012 at the Little Long, Harmon, and Smoky Falls sites, with all key milestone dates being met or bettered. In December 2012, there was a breach in one section of the recently installed cofferdam at the Kipling site. All other cofferdams on the project have been inspected and found to be safe. While the cost impact of this incident is not expected to be significant, work continues to finalize a remediation plan and to determine the impact on the completion date of the project of June 2015. Life-to-date capital expenditures were C$1.4bn as of the end of 2012.
- In the third quarter of 2012, OPG and the Ontario Power Authority (OPA) executed the Atikokan Biomass Energy Supply Agreement. The converted coal station is expected to have a capacity of 200 MW. The conversion project has an approved cost estimate of C$170m and is expected to be completed in the first half of 2014. Life-to-date capital expenditures were C$59m as of the end of 2012.
- OPG has suspended further work on the Thunder Bay coal plant conversion to natural gas, pending an OPA review of electricity needs in Northwestern Ontario. The OPA has informed OPG that more time is required to explore other options for electricity supply in the region.
- OPG requested deregistration of the Thunder Bay plant in November 2012. In January, the Independent Electricity System Operator (IESO) determined that at least one unit is required in Thunder Bay to maintain reliability of the IESO-controlled grid. Accordingly, OPG and the IESO entered into negotiations for a Reliability Must Run contract from Jan. 1, 2013, to Dec. 31, 2013. The contract has been executed by OPG and the IESO and is subject to OEB approval.
Gas-fired power projects under development by others at OPG sites
As of the end of 2012, OPG’s electricity generating portfolio had an in-service capacity of 19,051 MW. OPG operates three nuclear stations, five thermal stations, 65 hydro stations and two wind power turbines.
In addition, OPG and TransCanada Energy Ltd. co-own the Portlands Energy Centre (PEC) gas-fired combined-cycle station. OPG and ATCO Power Canada Ltd. co-own the Brighton Beach gas-fired combined-cycle station. OPG also owns two other nuclear stations, which are leased on a long-term basis to Bruce Power LP and are in the process of being refurbished and restarted.
During 2012, the province of Ontario announced the relocation of the Greenfield South gas-fired station development from Mississauga to a small portion of OPG’s Lambton station site. The parties are assessing this potential sale at fair market value and are performing due diligence on the site, OPG noted in an annual report filed March 7 with regulators. During the fourth quarter of 2012, OPG and TransCanada Energy executed an agreement of purchase and sale regarding a parcel of land on the Lennox power plant site at fair market value. Other site-specific arrangements for the development of a combined-cycle, natural-gas fired station were also included in the agreement. OPG noted that it does not have an ownership interest in either development.