Industrial cogeneration in Canada

A survey by province

Canada has a new association to promote cogeneration nationally. Here, President of COGENCanada Gordon Robb surveys the industrial cogeneration and wider energy scene by province, noting that woody biomass is perhaps the most important fuel sector.

The TransAlta 400 MW combined-cycle plant serves four petrochemical complexes in Sarnia, Ontario. The plant incorporates three 115 MW Alstom gas turbines and a 120 MW steam turbine

COGENCanada was created in mid-2004 to promote cogeneration and provide related training throughout Canada. The Association is also promoting cogeneration-based 'Eco Industrial Networking', a concept that involves using outputs and waste from one industrial process as inputs to other processes.

Canada's provinces have jurisdiction over electricity within the country. The Federal Government deals with nuclear safety and, through the National Energy Board, licences exports and certificates export transmission lines.

In 1976, the Federal Government introduced an accelerated depreciation rate or capital cost allowance of 50%, reduced in 1994 to 30%, on a straight-line basis as an incentive to build cogeneration systems. To qualify for this incentive, a specified fraction of the electrical output from a plant must be true cogeneration. However, a much more effective incentive is required. There is a case for modifying the arrangement to provide an incentive to build power plants near heat loads, whether or not the electrical output is large relative to the heat load. There is also a case for deeming all components essential to the delivery of the electricity and heat to be eligible.

A decade ago, electricity was supplied throughout Canada by vertically integrated monopoly utilities. With two exceptions, they have not built cogeneration systems, and cogeneration systems were owned by steam users. Most provinces are now in the process of restructuring.

Forest industries account for a large fraction of the cogeneration systems in Canada. In recent years the lumber and pulp and paper industries have become integrated, with chips for making pulp coming from adjacent saw mills. Wood residues from the saw mills are used as fuel for steam generation and cogeneration by the pulp mills, as is pulping liquor. There are also many newsprint mills in Canada. Paper mills using recycled paper are ideal candidates for cogeneration. However, the increased use of thermo-mechanical pulping has reduced the scope for cogeneration because that pulping process generates steam for paper drying.

Canada has had natural gas in both the east and west since gas started to flow from Alberta to Ontario and Québec in the TransCanada pipeline in 1957. Gas prices are rising – in August 2002 the spot price for pipeline gas to Ontario was CAN$3.04/GJ (US$2.53/GJ). In August 2003 it was CAN$6.15/GJ (US$5.12/GJ) and it remains close to this level.

Nova scotia

Nova Scotia Power remains a vertically integrated monopoly in the province of Nova Scotia. Most generation is with low-sulphur coal, although some oil is also used. The coal-fired plants are 'grandfathered', having been built before scrubbers were required. The electricity cost is relatively low. Natural gas has recently become available from the Sable Island offshore source, and ground has been broken for an LNG import terminal.

Natural gas cogeneration is likely to become viable in the future as additional increments of firm power are required. The province recently adopted a policy whereby if the Public Utilities Board deems a cogeneration system, proposed by an independent power producer (IPP) or steam user, to be superior to an increment of generation planned by Nova Scotia Power, then the utility must buy from the cogenerator.

Paper mills using recycled paper are ideal candidates for cogeneration

Kimberly Clark has a 28 MW steam turbine cogeneration system in its Nova Scotia kraft pulp mill. It uses the utility for stand-by supplies and frequency stabilization. Fuels are pulping liquor, wood residues and some heavy fuel oil. There is an IPP-owned cogeneration system using a fluidized bed to burn wood residue and selling steam to a newsprint mill. Here, the power is sold to the utility at a premium price while the mill buys from the utility at a lower price. Nova Scotia Power seems reluctant to enter into other such contacts.

The Bear Head (Point Tupper) LNG terminal will be a short distance from a 150 MW coal-fired power plant and a pulp and paper mill with biomass cogeneration. The plan is to use condensing water from the coal-fired power plant or the paper mill to vaporize the LNG, creating a cogeneration system. Also interesting is the paper mill's use of a thermo-mechanical pulping system which generates all the steam required for drying the paper most of the time. This reduces the scope for cogeneration.