Footnotes

The end of the age of oil generated electricity

Allow me to share with readers some pertinent facts of the oil fueled steam powered Canal plant. This was the most efficient oil fired steam power plant in the age when it was constructed in 1978. But times have changed. Modern natural gas fired combustion turbine plants are much more efficient now.

Specifically, the efficiency of Canal's unit 1, a base load unit is 38%. Unit 2, a cycling unit is 34%. And if unit 2 is fired with natural gas its efficiency is only 32%. Compare that to a gas fired combustion turbine plant where the efficiency is over 50%.  Almost half the generating plants in New England are now gas fired turbine plants. The hand writing is on the wall.

Before the world wide recession set in, when the price of crude oil was $140 a barrel, the cost of fuel alone (not including salaries and maintenance, taxes, etc) to generate electricity at Canal was about 15 cents per kWh. For a natural gas plant it was about 6 cents per kWh, for a coal plant about 2 cents, and a nuclear plant about a half-cent per kWh. Of course for a hydro plant or a wind farm, the fuel cost is zero. Most of the cost of generating electricity in a fossil powered plant is in the price of the fuel, about 60%.

Although the recession has drastically, but temporarily, lowered the cost of oil and natural gas, most believe the prices will escalate again as the recession eases and world-wide demand for these diminishing fuels becomes most evident.

As I suggested to the Sandwich selectmen, the stark reality is that without a "Reliability Must Run" status for the plant it just can't compete in a deregulated competitive whole sale market. The ISO NE ruling to stop the "Out of Merit" payments of some $100 million a year won't close the plant, competition will.

On top of the issue of the price of fuel oil and an outdated inefficient plant, the EPA ruling on the need for cooling towers that cost some $200 million to build, may be the death knell of the plant.

As a resident of Sandwich and as I look at the 500 foot Canal stack from my study window as I write this, it seems that Mirant has three options. Abandon the plant, worst case. Repower the plant with natural gas turbines, a good idea. Or sell the plant to someone who will.

Repowering both Canal units would preserve the tax base, provide New England much less expensive wholesale electricity, essentially eliminate the most unhealthful pollutants of sulfur dioxide, its formation of downstream fine particulate matter, and mercury. And in addition it would dramatically reduce the amount of carbon dioxide emissions by more than half, from the current level of about 1,800 pounds per MWh to about 800 pounds per MWh. In the public interest, eliminating the "out of merit" payments would reduce the wholesale price of electricity by an estimated one to two cents per kilowatt-hour in the southeastern region of Massachusetts.

The inevitable will happen. I believe Mirant must sell the plant or repower it with natural gas as the most expedient and pragmatic solution to their problem of obsolescence.

Change is happening. The age of oil fueled electrical generation is coming to an end. The age of renewable energy is just beginning. Natural gas fired power plants are the gap filler for the surge to renewables.