Belco developing LNG proposal for North Power Station
Belco is working on a proposal to use liquefied natural gas for power generation, according to minutes released by the Environmental Authority, Bermuda’s emissions regulator.
The utility’s previous proposal for LNG was rejected in the Regulatory Authority’s Integrated Resource Plan despite the North Power Station, commissioned in 2020, being designed to run on the fuel.
Excessive pollution from the plant has been blamed by Belco on the need to burn fuel oil instead of LNG.
In a meeting on March 23, the authority noted that Wayne Caines, the president of Belco, and parent company Liberty, which is owned by Canada’s Algonquin Power & Utilities, said the process of bringing LNG to the island had been simplified.
According to the minutes, Belco is preparing its next submission for the IRP. The submission is due in November.
“Mr Caines said that Belco is considering the use of LNG as a bridging fuel until a wind farm could be installed.
“He said that great progress had been made worldwide to simplify LNG transport and use, and that the parent company was committed to assist with this transition.”
In May 2020, Ian Robertson, Algonquin’s former chief executive, said the company would invest $300 million in Bermuda replace fossil fuels as a source of energy. LNG is a fossil fuel.
"Significant investment in fuel infrastructure“ was one of the reasons the RA rejected Belco’s initial LNG proposal.
The RA said at the time: “Although the LNG scenarios are expected to have lower system costs than the non-LNG scenarios under the base case assumptions, there are disadvantages in pursuing LNG, mainly driven by the significant investment required in fuel infrastructure.
“There is a risk of regretting the decision to invest in LNG.”
Belco was previously willing to commit significant investment in LNG, predicting it would result in reduced electricity costs and lower emissions.
Castalia, a consultancy, reported in 2016 that electricity generation in Bermuda could be switched over to LNG by 2020 for between $258 million and $315 million.
Leidos, an engineering consultancy, said that “LNG infrastructure for the full conversion of generation” would cost in the region of $140 million, in an IRP proposal produced with Belco in 2018.
When asked by this newspaper in March of this year, Belco declined to reveal whether it was working on a new proposal for LNG.
A spokesman said: “Belco won’t be commenting on the IRP until after the draft IRP has been submitted and is open for the consultation process.”
The existing IRP sets a road map for 85 per cent of the island’s electricity generation to be from renewables by 2035, and further thereafter. Any fossils fuels used now under this IRP are seen as a bridge to a renewable future.
The new IRP proposal must be received from Belco by November 17, after which a public consultation will be initiated in accordance with Section 42 of the Electricity Act, 2016.
A 2021 expert review of Belco’s operations by British-based Ricardo Energy & Environment considered that the use of a fuel cleaner than heavy fuel oil, such as light fuel oil, was the “most effective” way to mitigate pollution.
While Belco’s preferred option of LNG was ruled out under the RA’s 2019 IRP, cleaner “diesel-light fuel oil” is already approved used by the plant occasionally.
The utility and the RA have said that increased costs associated with burning cleaner fuel would likely fall to the customer, as per the Electricity Act 2016, regardless of whether it was deemed a remedial measure for pollution caused by Belco configuring the NPS as it did.
Belco is taking the RA to court over its refusal to allow costs to be passed on to customers for other remedial measures involving retrofitting the NPS with combustion-improving equipment, saying it would be “imprudent”.
The Ministry of Finance told The Royal Gazette in March that Belco could apply for relief, but the utility refused to say whether it would provide the support.
“LNG will be assessed as part of the Integrated Resources Plan (IRP), which is currently being drafted,” a Belco spokesman said in an e-mail response to questions.
• In January 2022, Belco completed the installation of equipment – shims and piston crowns – on the four North Power Station engines in an attempt to improve combustion and reduce emissions. This, along with the installation to deal with a fuel odour issue, cost the company $2.7 million.
• Belco also documented a further $1.4 million spent on remedial work related to soot emissions, namely roof painting and car restorations between 2018 and 2021. Water testing, water filtration and air-quality monitoring were also carried out in relation to soot and emissions, for which costs were not listed. In a promotional video in February, Belco said since 2020 it had painted and cleaned 502 roofs, cleaned 139 vehicles and 84 water tanks, and installed 44 filtration units.
• A capital acquisition was said to be in the works for improved soot collection technology using electrostatic precipitators. This continues to be explored.
• To address a separate issue of high levels of sulphur dioxide emissions reaching ground level, some engines have been operating on light fuel oil/diesel, a more costly fuel, when stopping and starting – times when emissions are more likely to occur.
• The latest Environmental Authority minutes also revealed that in late April, a team from MAN Energy Solutions, the engine manufacturers, was scheduled to visit Bermuda to attempt another measure — to adjust governor settings used to control the rate of fuel supply. The minutes stated: “The start-up programme is expected to be modified to reduce the amount of fuel used for combustion and to limit the amount of fuel used in the engine. This should result in more complete fuel combustion.”
You must be Registered or to post comment or to vote.
