With decision day looming next month, SaskPower engineers are scrambling to rein in the rising cost of the corporation's proposed clean-coal project.
The project's manager says the clean-coal project -- which is already well over the projected cost of $1.5 billion -- is currently not cost-competitive with other power options, like conventional coal, hydro and natural gas-fired generation.
"From my perspective, I think we need to sharpen our pencils,'' said Max Ball, project manager of the clean-coal project. "It's my intuitive analysis that we're going to be facing pretty tough competition."
But Ball said the proposed 300-megawatt clean-coal plant -- the first commercial-scale, near-zero greenhouse gas (GHG) emissions plant of its kind in the world -- could be ready for the next phase of SaskPower's expansion around 2015.
"If clean coal doesn't win the competition in July, that doesn't mean we're done,'' Ball said.
Next month, SaskPower's board of directors will look at all the options -- including clean coal -- and make a decision to build 300 megawatts of capacity to meet rising demand by 2011-12.
But SaskPower will need another 600 megawatts in the 2015-17 period, as the corporation takes older, less efficient, higher GHG-emitting units off line, including Units 1 through 4 at Estevan's Boundary Dam coal-fired generating station.
"Every two or three years, we are going to be wanting to tap the wheel,'' said Gary Wilkinson, vice-president of planning, environment and regulatory affairs for SaskPower.
"Not only because of load growth -- the economy of Saskatchewan is humming right now -- but also because we're taking pieces away from the existing fleet, some of which are high emitters,'' Wilkinson said.
In the meantime, Ball and his team are endeavouring to carve out as much cost as possible before the project goes before the board in July.
Wilkinson said all large-scale capital projects are facing cost pressures from the skilled labour shortage, rising steel and materials costs and high energy costs.
For example, the 450-megawatt Keephills 3 coal-fired power project in Alberta is proceeding, despite coming at $1.6 billion, more than twice the original estimate of $750 million in 2004.
But SaskPower's clean-coal project, which uses new technology to capture carbon dioxide emissions from the plant for storage or sale to third parties, faces even more challenges, Wilkinson said.
"It's the first of its kind... Anytime you do a first-of-a-kind project, you tend to get a safety (factor) build into the estimates,'' Wilkinson said.
"One of things we're asking (Ball) to do is how do we remove some of that (safety factor) from the estimates.''
That's why SaskPower is requiring its contractors to check and double-check the efficiency and efficacy of their components and processes.
For example, Ball said Babcock & Wilcox (the boiler contractor) will test the 'oxyfuel' process used to capture the CO2 from the emissions stream at its R&D facility in Ohio using 3,000 tonnes of lignite coal from the Shand area, where the plant is sited.
"They will be doing an oxyfuel test burn on our fuel in July and August. That's ... to ensure that we know how (the coal) going to behave in the furnace,'' Ball said.
"Those are the sorts of things that help us reduce the uncertainty and that helps to reduce the cost.''
The Leader-Post (Regina) Tue 12 Jun 2007 Page: D1 / FRONT Section: Business & Agriculture Byline: Bruce Johnstone Source: The Leader-Post
Posted: Jan/9/2008
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