by nb41
Thu Jul 30th, 2009 at 09:35:29 AM EST
SUMMARY
From the Great Lakes Wind Collaborative comes news of the first major Great Lakes Offshore wind project (see Watertown Daily Times article). In effect, a 710 MW wind turbine array is planned for Duck Island Shoal, which is on the Canadian side of the NE corner of Lake Ontario, next to Main Duck Island, of course - here's the map. It's roughly 22 miles due west of Cape Vincent, NY, in some of the shallower waters of lake Ontario, though close to the drop-off where deeper waters are the norm. in general, Lake Ontario is fairly deep (average depth is over 86 meters/282 feet, but as you get near the mouth of the St Lawrence River, it gets shallower - maximum depth is 244 meters/802 ft). This spot gets the full force of the prevailing winds across the waters, which tend to be in the direction from the exit of the Niagara River to the entrance of the St Lawrence River.
This project has been in the works for a while, but a couple of key events have made this a happening project. The island has some of the strongest average winds in Lake Ontario, according to estimates derived from the Canadian Wind Atlas - the site is predicted to experience annual average wind speeds of 8.64 m/s at 80 meters above the water; slower in summer, and a very decent 9.5 m/s in the winter. It has a fetch of the prevailing winds of over 165 miles/265 km, and being Lake Ontario, icing is not a huge problem (though that part of the Lake may get iced up briefly, since it is shallow). It is also close enough to land to "wire up", and there is a big grid connection on the northern shore of Lake Ontario, so the electricity product can get to market. And there is a strong grid network around the edge of the lake (US and Canadian sides), a big market in Toronto and Montreal (~ 5 million people each), and pumped hydro/deferred hydro electricity storage capability en masse, should the need arise, in various locations in Ontario/Quebec and NY State.
DISCUSSION
The developer of this project is Trillium. This would be a first in many ways, including the first humongous wind turbines (5 to 6 MW size) to be used in North America. At 710 MW capacity, this would be 142 of them at 5 MW each. So far there are only 4 manufacturers of units that big (Areva (ex-Prokon-Nord), Bard, Enercon and REPower), and the latter two are busy setting up manufacturing facilities in Quebec due to the recent 2 GW RFP that they shared.
Maybe it is just coincidence, but this item about a recent revealing (and unflattering to the nuke industry) RFP bid for a pair of nukes in Ontario is good news for Trillium. It seems that in a recent bid for a pair of ~ 1 GW nukes for Ontario, the low bid came way above expectations:
"The only "compliant" bid -- one where the supplier would be sufficiently at risk if costs exceeded the amount quoted -- was reportedly a $26 billion quote from Atomic Energy of Canada, Ltd, equal to roughly $10,800 per kW. (If this sounds familiar, recall my January 2009 study estimated a new nuclear project would most likely cost approximately $10,500/kW)".
The next highest bid came from Areva:
"Another bid was reportedly received from French nuclear vendor Areva LP, which also "blew past expectations", at $23.6 billion. However, that bid was ruled non-compliant as Areva was unwilling to sufficiently shoulder the risks of cost overruns."
Let's say the size of these was 1 GW each. The delivered production capital cost (assuming 90 % uptime) would be $CAN 12 BILLION each, or $12 million per delivered MW. To put this in perspective, onshore wind turbines ($2 million/MW capacity) at a decent 30% operating factor would be $6.7 million per delivered MW, and offshore units at about $4 million per MW and a 40% operating factor come in at $10 million/MW delivered. Plus, there is a lot less lead time/construction time involved, and if one of the turbines screws up, the rest of them are still producing; but if one of the nukes screws up (and not even in a Chernobyl way, just a "does not work" way), well, there goes 50% of the revenue stream for this "paranukes" project. Ontario has a weird relationship with nukes (they use heavy water (D2O) moderated CANDU reactors), nukes have put the province into significant debt ($30 to $20 billion for decades). They almost bankrupted the province, and enormous tax payer subsidies have gone into this financial dead chicken hung around the proverbial neck of Province. Most people in the Province are not fans of nukes, but the Atomic division of Ontario Hydro (--> Ontario Power Generation) keeps on going no matter what - like a world unto itself. For some reason, Ontario Hydro never invested even a mere $1 billion for wind turbines - maybe they were afraid they like like wind energy and dump the nuke line....
So, nukes are out, and so is the provinces 6 GW of coal burners, including that obnoxius acid gas/Hg vapor puker in Nanticoke (4 GW). This is North America's largest single point emission spot of CO2 pollution, it's 8 x 500 MW boilers are all unscrubbed of acid gases and the complex is a big contributor to particulate pollution in Buffalo, which is downwind 50 miles/80 km. Oh well, payback for so many humanoid turkeys in NY that voted Republican, maybe? Lots of lung problems, though, especially asthma....
The other key factor in the Trillium project is Ontario's Green Energy Act, and the Feed-In Tariffs for offshore wind (about 19 c/kw-hr CAN). If Trillium can pull this project off, and the project has an average 40% net output (284 MW), revenues of close to $CAN 480 million/year could be anticipated. While that may sound like a lot (well, it is), this project could cost about $US 2.8 billion/$CAN 3.3 billion. Of this, maybe $CAN 1.4 billion will be for the actual turbines and $CAN $1.9 is for the installation part - especially jack-up barges, foundations and underwater cables/offshore transformer stations. Of course, that $CAN 1.9 billion goes into jobs, and could eventually reach 114,000 job-years (at $CAN 100,000 per job (fully absorbed cost) and a job multiplier of 5). After all, employment is mostly what commercial scale wind turbines are supposed to be all about, with by-products of home-grown, non-polluting electricity that can replace electricity made by polluting approaches (coal, oil, natural gas, nukes).
This project would be going nowhere fast if Trillium had to marekt this power on either the Ontario and/or NY State grids via the merchant market mode. Electricity being a relatively price inelastic commodity means that a relatively small shift in demand leads to very large shifts in price. Due to the current recession/depression in the US North Coast/Canadian South Coast region (Ontario really got hammered with the auto industry turndown), and especially the lessened industrial output/demand for electricity, the price of electricity has collapsed in NY and Ontario. Wholesale prices were less than 1.9 CAN cents/kw-hr earlier this spring, or about 10% of the price needed to make such a project economically viable. For example, if the project produces about 2.5 TW-hr/yr, odd are the 1.9 c/kw-hr would just cover the O&M part of the project, or at least an appreciable fraction of it. But that could never covre the financing part of this project. And since Ontario Power Generation (OPG) is still infatuated (it is a bizarre love affair...paid for with Other People's Money (in this case, the people of Ontario's money) in this instance) with the nuclear Genie...well, they would/will be of no help. And if Ontario's merchant prices for (mostly polluting) power were not in the bottom of the dumpster, the presence of the Duck Island project would sink those prices (an example of Jerome's Conundrum). Rumor has it the nuke owners/entities were having to pay people to take their electricity in the some of off-peak period in April of 2009. How's that for a functional electricity market? So, the 20 year GEA contracts will make this Trillium project viable. Too bad NY State has to be left in the dust, so to speak, as they are still stuck with the merchant marketing model for wind energy - and as a result, the wind industry is kaputz in NY for a while, till prices recover, or until their Feed-In Laws (A187/S2715) get passed....
Cool. I'm jealous, but congratulations to all involved, and best of luck. Odds are, there will be even more jobs, especially for tower production/steel production (1000 tons minimum per unit). Towers made in a place like Hamilton (where a major steelworks exists) would minimize transport costs - just put them on a boat/barge, and the same goes for the foundations. Who knows, Trillium may even be able to make it worthwhile for one of the offshore manufacturers to open up blade and nacelle production in Ontario. That is one of their stated goals. And lots of money is sloshing around in Toronto these days, looking for a (reasonable probability of a) profitable home.
BTW, here is a link to the Green Energy Act (GEA). See NY Times article, too.
Nb41
