1 Canadian Clean Power Coalition: Delivering Results for Over a Decade Presented to Wood Pellet Association of Canada, 20 November 2013

Who Is the CCPC? An association of Canadian and U.S. coal and coal-fired electricity producers, government agencies and research organizations Industry participants include: –Alberta Innovates – Energy and Environment Solutions –Capital Power Corporation –Electric Power Research Institute (EPRI) –Nova Scotia Power Inc. –Sherritt International Corporation –SaskPower –TransAlta Corporation Government Sponsors: –Saskatchewan Ministry of Energy and Resources –Natural Resources Canada (CanmetENERGY)

Our Mandate The CCPC's mandate is to research technologies with the goal of developing and advancing commercially viable solutions that lower coal power plant emissions Our objective is to demonstrate that coal-fired electricity generation can effectively address environmental issues and move us forward to a cleaner energy future

New Coal GHG Regulations New plants must have GHG emission intensity of.42 t CO 2 /MWh compared to about.9 t CO 2 /MWh for new SCPC plants and 1.1 t CO 2 /MWh for old plants Plants greater than 47 to 50 years of age must meet the same intensity Plant by plant basis, no way to benefit from over complying at 90% capture No way to buy your way out, therefore no carbon market This requires about 60% CO 2 capture – cost prohibitive now New technologies may bring costs down 4

Alberta Plant Decommissioning 5

Will Biomass Be Used In the short term as long as the carbon tax is $15/t – not likely Biomass could be used to life extend plants for a short period of time without needing to install significant capital However, will have to compete with other kinds of CO 2 capture technologies to life extend for say 20 years 6

Will Coal Life Extend with Biomass? Coal plants will only operate for more than 50 years if: NPV n (Power Rev – Opex – Tax) > Life Extension Cost (Capex) + Cost of Other Emission Control Technology (Capex & Opex) + Cost of GHG Reduction Technology (Capex & Opex) Same equation for new coal plants except life extension cost becomes construction cost 7

Introduction FP Innovations studied co-firing at three coal plant at 10, 20 and 70% firing rates The costs for about a dozen kinds of fuel were estimated The volume of existing fuels were estimated within 100 and 150 km of the plants The proportion of farm area around the plants was determined for plantation crops Estimated costs for growing, harvesting, transporting, processing, storing, drying, handling, conveying and combusting 8

Biomass Requirements Assumes 16 GJ/ODt high calorific value of biomass 5% co-firing rate  minimum biomass quantity to be considered in the study 9 Power PlantBiomass Requirements (ODt/year) Co-firing rate 5%10%20%70% Wabamun Lake, AB (300 MWe) 80,000150,000300,0001,040,000 Shand, SK (276 MWe) 80,000160,000310,0001,070,000 Trenton, NS (150 MWe) 40,00080,000150,000520,000

Feedstocks 10 Biomass Type Availability/Potential in Study Area Wabamun, ABShand, SKTrenton, NS Agricultural Residues Wheat, oat, and barley straw Wheat and flax strawNot available Woody Biomass Whole tree chips Forest residual chips Not availableWhole tree chips Wood Pellets Industrial and premium pellets Premium pellets Short Rotation Energy Crops (SREC) Reed Canary Grass Miscanthus Jerusalem Artichoke Hemp Willow coppice Hybrid Poplar coppice Reed Canary Grass Altai Wildrye Grass Smooth Bromegrass Intermediate Wheat Grass Willow coppice Hybrid Poplar coppice Reed Canary Grass Miscanthus Switchgrass Willow coppice Hybrid Poplar coppice Municipal Solid Waste (MSW) MSW pellets or fluffNot available

Technical and Cost Info 11 Power Plant Parameters Plant Capacity (MW)300 Capacity factor (%)90% Base Heat rate (GJ/MWh)10.0 GHG Intensity (tCO 2 /MWh)1.0 Cost of Coal ($/GJ)1.0 Power Price ($/MWh)90 Coal Calorific Value (GJ/tonne)19 Coal replaced (tonnes/year) 10% Co-firing rate124,484 20% Co-firing rate248,968 70% Co-firing rate871,389 Derate factor (% of biomass capacity) 10% Co-firing rate0% 20% Co-firing rate0% 70% Co-firing rate3% Biomass Processing Parameters Capital Cost Pellets ($/kW)260 Capital Cost Dry Biomass ($/kW)1,000 Capital Cost Wet Biomass ($/kW)1,100 Capital Recovery Factor0.146 Operational Costs (% of Capital cost)2% GHG Intensity – Hammer milling (kgCO 2 /MWh)15 GHG Intensity – Drying (kgCO 2 /MWh)8 Portion of biomass used at drier (%)18% Cost of energy – Hammer milling ($/ODt)2 Cost of energy – Drying ($/ODt)1 Carbon Credit Revenue ($/tCO 2 )15

Biomass Availability & Costs 12 Feedstock Type Biomass Available (ODt) Co-firing Rate Supported (%) Point of Origin Cost ($/ODt) Transportation costs ($/ODt) Power plant gate costs ($/ODt) 100 km Radius 150 km Radius 100 km Radius 150 km Radius 100 km Radius 150 km Radius 100 km Radius 150 km Radius Barley Straw5,7766,6360.4% Wheat Straw135,331368, %27.3% Flax Straw %0.1% Oat Straw22,89539,6421.8%3.2% Whole Tree Chips Woodlots216,526686, %57.5% Whole Tree Chips unused AAC110,542887,2069.3%74.3% Forest residuals FMU76,655751,8216.4%62.9% Forest residuals over AAC6,59160,4150.6%5.1% Wood Pellets BC1,810,000>100% Wood Pellets AB140, % MSW RDF with Edmonton 800,000 61% NA44-62 MSW RDF without Enerkem 700,000 49% MSW RDF w/out Edmonton 194,000 13% Miscanthus See area requirement table Reed Canary Grass Jerusalem artichoke Hemp Willow coppice Poplar coppice

Plantation Area Required 13 SHORT ROTATION ENERGY CROP (SREC) Area (ha) required for each energy crop to sustain the co- firing rates (%) Percent (%) of area required to sustain the co-firing rates ( CR %) 100 km Radius150 km Radius CR 10%CR 20%CR 70%CR 10%CR 20%CR 70%CR 10%CR 20% CR 70% Miscanthus11,76223,52582,3372.0%4.0%14.1%0.6%1.2%4.0% Reed Canary Grass 29,38158,763205,6705.0%10.1%35.3%1.4%2.9%10.1% Jerusalem artichoke 8,29916,59858,0931.4%2.8%10.0%0.4%0.8%2.8% Hemp12,85425,70989,9802.2%4.4%15.4%0.6%1.3%4.4% Willow coppice12,85425,70989,9802.2%4.4%15.4%0.6%1.3%4.4% Poplar coppice12,20424,40985,4302.1%4.2%14.6%0.6%1.2%4.2%

Biomass Cost ($ODT) - 70% 14

Avoided Cost – 10/20% 15 NOTE: if the LCA value of 2.98 tCO 2 e/tonne of MSW pellets was utilized, the Avoided CO 2 cost low value would have decreased from $18.0/tCO 2 to $12.6/tCO 2,

Avoided Cost – 70% 16

Increase in Power Cost – 10% 17 NOTE: if the LCA value of 2.98 tCO 2 e/tonne of MSW pellets was utilized, the Increase in power cost low value would have decreased from $0.2/MWh to -$0.4/MWh (a decrease in power cost)

Increase in Power Cost – 20% 18

Increase in Power cost – 70% 19

Increase in Power Cost for Biomass and Nat Gas Co-Firing 20

Avoided Cost – Biomass/ Nat Gas 21

Co-firing Conclusions Co-firing CO 2 avoided costs may range from $20 to $100/t Won’t be adopted at $15/t carbon tax This may be lower than carbon capture costs Plants with short economic lives may benefits from co- firing rather than carbon capture Co-firing will increase marginal costs – Dispatch issues It may not be possible to co-fire enough biomass to meet new GHG requirements - Reduces amount of capture Co-firing can reduce sulphur emissions Largest cost is for biomass feedstock – need to refine costs