Uncertainty and excitement mount around N.L. hydrogen potential
Posted on August 30, 2022 | By Ashley Fitzpatrick | 0 Comments
Atlantic Business Magazine has been told as many as 18 companies have expressed interest to the provincial government for wind-hydrogen-ammonia projects in Newfoundland and Labrador. At the same time, there is no clarity yet on how even one of the energy projects of the type and scale discussed to date would be handled on the province’s electrical grid.
The only project to start a public review process to date is that of early-mover World Energy GH2, including proposed onshore wind power production of 1,000 megawatt (MW) and a hydrogen plant with a demand of 500 MW. As a power producer, it would be the second-largest power-producing industrial facility in the province, second only to the hydroelectric power plant at Churchill Falls. The entire island interconnected system (the main power grid, limited to island assets) is only about 2,000 MW. Existing wind farms on the island have an installed capacity of 27 MW each, making the proposed development the equivalent of one of those farms more than 37 times over. As another comparison, the largest wind power facility in Canada, the Seigneurie de Beaupré facility in Quebec, has an installed capacity of about 365 MW, or just over a third of what World Energy GH2 has proposed for its first phase of development (with expansions tentatively proposed by World Energy GH2 for the next few years that would bring installed wind capacity to 3 GW, but not currently under review).
The World Energy GH2 project is not being proposed as a supply for the Newfoundland and Labrador power grid but a behind-the-meter facility, where an industrial user is effectively serving its own power needs. The company plans to use wind power to create hydrogen and hydrogen to create ammonia, then the ammonia will be exported. Even so, the project will need to interact with the provincial electrical system.
It will require direct interconnection with Newfoundland and Labrador Hydro assets at Stephenville (only natural, given Hydro assets are the island’s bulk power system). The company says it will have substations at the processing plant and on the Port au Port Peninsula (amongst the wind turbines) to help regulate and control the power flow. The company further suggests it will exchange electricity with the main grid as needed, selling excess wind power to Newfoundland and Labrador Hydro for the island grid in the winter and purchasing energy if and as needed in the summer.
Among other things, the Independent System Operator requires the company to have an overall set-up whereby, as electricity is humming through the bulk system and exchange ongoing with the island grid, the loss of a particular power asset would not cause any more than a 155MW loss to the grid. It means back-up. The company says it also needs options to firm up its power if a need arises. Here, it is looking at hydrogen-fueled turbines, rather than the usual gas turbines (given the plan is to have green hydrogen, created without use of fossil fuels) and exploring battery systems. Meanwhile, the facility is also being designed so hydrogen and ammonia can be flared in the case of an emergency.
“A full investigation will follow to meet N.L. Hydro requirements,” a regulatory filing has stated, though there’s no indication yet where Hydro stands on it all.
The 2024 suggested date for first hydrogen production in Newfoundland and Labrador is a hope of World Energy GH2. A 2025 date, also notably aspirational, comes from the speeches made this week on signing a memorandum of understanding between Canada and Germany for a ‘hydrogen alliance,’ aimed at kickstarting investment and development needed in both countries for hydrogen product trade. Neither is a hard deadline.
Nothing yet from N.L. Hydro
For the public, it will have to be made clear between Newfoundland and Labrador Hydro, the ISO and the province’s Board of Commissioners of Public Utilities (utilities regulator) what the power grid can technically handle, what risks and potential costs are involved (in the form of new infrastructure, rates, market competition) and what can theoretically be permitted, before a company can expect broad, social licence for a particular development. Given the desire to use the existing electricity grid and public assets to balance the wind-based hydrogen and ammonia production, there are responsibilities in the hands of Hydro right now, as well as any government member or private proponent.
At this point, N.L. Hydro does not know how any of the wind-hydrogen-ammonia proposals in public discussion — with their new power sources and industrial production facilities — could potentially affect grid assets or their broader business. Ahead of speeches in Stephenville last week, the province’s utility was asked if there was any specific analysis on just the World Energy GH2 proposal, on how it might affect anything from expected reservoir levels at N.L. Hydro facilities to infrastructure needs, or in terms of revenues or rates. Has there been specific analysis?
“No, not specifically,” a Hydro staff member replied.
“Hydro undertakes a multi-year resource planning process known as the Reliability and Resource Adequacy which is submitted to the PUB [Board of Commissioners of Public Utilities, the utilities regulator]. As part of that planning, Hydro is undertaking a Wind Integration Study to better understand how wind generation will impact the existing electricity grid, including how much wind can get integrated into the electricity grid, and any upgrades required,” they stated.
Reliability continues to be an issue in long-term planning as a hangover of the Muskrat Falls Hydroelectric Project, with new continental interconnections for the previously isolated, island grid and delays in full operation of bulk transmission line. Hydro’s Holyrood Thermal Generating Station, a power-producing facility on the island, has also yet to shut down production for good. Until it does, electricity behind any hydrogen development could not be considered green, adding new pressures.
Hydro has heard from “numerous proponents” on wind-hydrogen-ammonia and will meet with anyone curious about the state of the provincial electrical grid.
“All proponents are treated in the same manner and have the ability to access the same information. Specifically, such information includes data related to Hydro’s system and the impact of the increasing demand for renewable energy sources and this information has been filed with the PUB as part the above-mentioned Reliability and Resource Adequacy Study, and its Network Additions Policy. Any subsequent decisions are subject to review by the PUB,” the Hydro rep stated.
“As wind development is in the early stages, Hydro is working with government as it develops guidance documents and processes to assist proponents seeking to pursue wind energy development projects in the province,” they added.
It’s a separate, particular challenge that power is politics at present in Newfoundland and Labrador. The ups, downs and financial damages of the Muskrat Falls Hydroelectric Project (originally the Lower Churchill Project – Phase 1) have left behind a traumatized body politic. By extension, people are likely to fiercely demand up-front knowledge if there’s any chance a proposed energy project could cost them, either now or in the longer term.
The mistrust that exists today is largely a direct result of failures in the political, bureaucratic and regulatory systems in handling the Muskrat Falls Project, as laid out in the final report from the public inquiry into the wildly overbudget development. Public mistrust will be a risk faced by any companies with power-dependent industrial proposals.
And the public view is very much on the mind of politicians. The day before the state event in Stephenville last week, I was contacted by a senior government source who commented negatively on the event. Among other things, they were afraid of what it could mean for public perception of the government as regulator and its willingness to properly assess hydrogen project proposals.
Their position was that the current Liberal leadership had gained ground there, when they announced a change in the Crown lands process earlier this year (a new nomination and bidding system for land for wind power projects was introduced and promoted as a means of leveling the playing field between proponents). The individual believed the state visit risked looking like the government was now willing to simply wave projects on, for the sake of expediency. “Whatever chance we had to remove the cynicism of this has really been sucked out of this by [World Energy GH2 director] John Risley and friends,” they said bitterly, referencing Risley’s efforts to successfully draw in state players.
The comments stood in contradiction to the positive, public celebrations to follow. And they speak to political sensitivities at play.
Premier Andrew Furey was reached and took questions on the commentary, while en route to the state event in Stephenville for the ‘hydrogen alliance’ signing. He was in the moment, naturally excited for an event with two G7 leaders that would be covered internationally. Had the concerns of local perceptions as expressed to me been brought to him? “Not at all. I haven’t sensed any discord or cynicism with respect to today. Quite the contrary,” he said.
He didn’t feel painted into a difficult position by the event, the result mainly of industry efforts and the federal government. Furey said there are “a dozen proponents, maybe 18 in total now,” with projects. However, he said, excitement at the political level in seeing interest is a long way from the provincial government ceding any of its responsibilities as a regulator.
“I’m quite proud of the process that [Natural Resources] Minister [Andrew] Parsons announced in late July that creates an open, transparent and equal playing field for all proponents across the province [seeking Crown lands for wind power]. Look, we’re in a climate emergency. Things have to move at an accelerated pace. But they will be done in a responsible and prudent fashion. The environmental assessment process is integral and won’t be compromised for any proponent. Period,” he said.
As Parsons was pulling his own truck into a parking lot in Stephenville, on a separate call, he said he hasn’t had anyone from the Liberal caucus come to him disapproving of how the wind-hydrogen file is being handled. “I’m not worried about the public perception because I have gone out of my way this entire process to make sure that it was seen as fair and transparent,” he said, pointing to the Crown lands change announced (with the minister responsible, Environment Minister Bernard Davis) and some comments since, suggesting proponents didn’t agree with that decision.
“People still have significant questions, concerns, opinions (…) and those are valid,” Parsons said. “Part of it is with all this attention being paid, I think there’s a misunderstanding that projects have been approved or projects are being fast-tracked. That’s not on. That’s not happening.”
Tracking project assessment
MHA for Stephenville-Port au Port, Progressive Conservative Tony Wakeham, was in England at the time of the state visit last week – for a grandson’s first birthday, on a ticket booked long before the event was organized. Reached last Thursday, he acknowledged he had expressed concern with the review for World Energy GH2 early on, based on the apparent speed on the process, but was pleased to see when Environment Minister Bernard Davis decided to require the filing of an Environmental Impact Statement, a decision that will offer more information through the process and more time for the public. Beyond that, Wakeham gave credit to World Energy GH2 and director John Risley for making an effort to further engage with groups of local people in the Port-au Port-Stephenville area with more details of the project plans.
Wakeham said there are people objecting to the project and people already cheering it on and calling for full steam ahead. “I would suggest most people are somewhere in the middle who really want their issues and their questions, and their concerns addressed,” he said, reiterating support for the ongoing review process.
He repeated more than once that the approach to the project in review and others to come has to be about “minimizing impacts and maximizing benefits.” He added it was disappointing the Liberal government has talked about the possibility of royalties or some other mechanism to draw more provincial benefit in relation to wind-hydrogen development, but it is not yet clear what will be put in place.
“We all want what’s best for Newfoundland and Labrador,” Wakeham said.
Independent MHA Eddie Joyce, representing the Western Newfoundland district of Humber-Bay of Islands, north of Wakeham’s district, said he would like to see the environmental assessment process for World Energy GH2 re-started. Not for the first time, Joyce pointed out the registration document outlined three phases of development, with the second and third phases being the potential expansion, expected would go through separate environmental review as needed.
“The problem with it — they know I know the process is flawed,” Joyce said this week. A former environment minister, he said the provincial government should not have let the review process get this far, without demanding all three phases of potential development be covered in the initial project registration and regulatory review.
It’s not clear how long any environmental assessment will actually take, in addition to work with electrical utility regulators. For World Energy GH2, Davis has yet to issue guidelines for the EIS document for the environmental review, for what the company must submit further to its initial information. A draft of the guidelines is first made available for 40 days of public review and comments, meaning the public can weigh in as the review process continues.
People in the province may not remember, but the environmental assessment for the Muskrat Falls Project was split. The generation portion of that project and transmission between Churchill Falls and Muskrat Falls in Labrador was reviewed and assessed separately from the transmission line connecting Muskrat Falls to the island of Newfoundland. The Maritime Link connection to neighbouring Nova Scotia was also separately assessed. The proponent company (Nalcor Energy) registered for the generation EA on February 17, 2009. Only days before, internally, Nalcor believed they could see the review completed by October 2010. The project was released from assessment on March 15, 2012. It was about three years from the start of the EA, and a year and a half later than the company had anticipated. At the same time, that was a joint provincial and federal government process under the old Canada Environmental Assessment Act, including hearings in Quebec and Newfoundland and Labrador.
For his part, Stephenville mayor Tom Rose is all optimism when it comes to ramping up a wind-hydrogen-ammonia Energy export industry and even first hydrogen from the World Energy GH2 project in the next few years.
“We’re very, very supportive as a municipality,” he said. Rose said the town council believes, in specific discussions with John Risley and the World Energy GH2 team, that the first company to the table has “done their homework” and will be able to progress, as people come to absorb what is proposed and see the company’s response to questions.
“And the great news is they’ve been a catalyst that have now attracted other investments from other major companies that are looking at this region to see if they can play a role, to be part of this green energy hub that we could be poised to be in North America.”
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