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Expert review said change of fuel would reduce Belco pollution

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Belco’s neighbours have suffered soot emissions from the Pembroke plant for decades and while the North Power Station was supposed to bring cleaner electricity generation, the pollution continues. In the first article in an ongoing series, A Royal Gazette investigation examines the plant’s problems and whether a different fuel could have been the solution

Dirty air: Belco emissions are seen drifting down on to land in this supplied photograph

An expert review said in 2021 that the "most effective“ way to mitigate Belco’s soot emissions is for the plant to burn a lower-polluting fuel.

Ricardo Energy & Environment, a British-based global environmental consultancy firm, said the polluting events that dump soot on neighbouring properties are likely caused “at least in part” by the burning of heavy fuel oil, which Belco continues to use as its primary fuel.

Wayne Caines, the president of Belco and parent company Liberty, has attributed the “unforeseen challenges” at the North Power Station to Belco optimising its engines to run on liquefied natural gas andfuel oil but then only using fuel oil after the island’s first Integrated Resource Plan ruled out the use of gas.

Belco has told The Royal Gazette that switching from its 2 per cent sulphur HFO to a lower-polluting fuel has and continues to be considered, but that potential increased costs "may“ fall to the consumer.

After a public access to information request by The Royal Gazette, the Department of Environment and Natural Resources released a review commissioned by the electricity sector’s regulator the Regulatory Authority to assess how to mitigate emissions from the new North Power Station.

The document by Ricardo, dated June 8, 2021, provided an independent review of a report produced by Belco on January 29, 2021 in conjunction with NPS lead contractor Burmeister & Wain Scandinavian Contractor, which is headquartered in Denmark.

After an investigation by BWSC, Belco carried out a multimillion-dollar retrofit of the NPS as the primary abatement — installing shims and piston crowns — instruments designed to increase combustion pressure. These measures were already under way when Ricardo produced its review, and were completed in January, 2022.

Homes and other property affected by the Belco North Power Station (Photograph Supplied)

Ricardo, which describes itself as “the UK’s leading air quality monitoring organisation”, said: “It seems likely that the flakes are caused by deposit of particulate-forming materials inside the flue [chimney inside the stack], although this explanation has been rejected by Belco. If this theory is correct, it is caused at least in part by the use of HFO as a fuel.

“The most effective way to mitigate this problem would be to use a lower-polluting fuel such as diesel or natural gas, but this would incur significant additional costs.”

While Belco’s preferred option of natural gas [or LNG in its cooled form] was ruled out under the RA’s 2019 IRP, “diesel-light fuel oil” [LFO] is already used by the plant occasionally.

Asked what was required for Belco to switch to LFO, the RA said: “LFO is already an approved fuel through the IRP process. No further mandates are required.”

This suggests that nothing from a regulatory standpoint is stopping Belco from switching to a LFO now, although if it entailed a retail price increase, the RA — which approves retail tariffs — could reject it.

Temporary fuel switches to LFO designed to abate a separate problem emission of sulphur dioxide reaching ground level are already in place, the cost for which is being incurred by the customer, Belco revealed.

Asked if it would consider making an immediate permanent switch to a lower-polluting fuel, a Belco spokesman said: “Belco continues to evaluate alternative fuels.”

The RA, which in 2021 rejected a proposal by the DENR to amend the Clean Air Regulations to ban the use of fuels with a sulphur content of 2 per cent or more, said: “Any discussion regarding switching to another fuel will be discussed in the next IRP public consultation process.”

New consultation on electricity generation

Belco is working on a proposal for the Integrated Resource Plan, which is being updated this year.

While the existing IRP does not permit LNG, the Regulatory Authority made clear: “New energy-generation sources will be considered in the upcoming IRP,” meaning LNG could be back on the table.

Belco was willing to commit significant investment in LNG, predicting it would result in reduced electricity costs and fewer emissions. The consultant Castalia reported in 2016 that electricity generation in Bermuda could be switched over to LNG by 2020 with a price tag of between $258 million and $315 million.

Engineering consultant Leidos, in its IRP proposal produced with Belco in 2018, said that an “LNG infrastructure for the full conversion of generation to NG” would cost in the region of $140 million.

Belco declined to reveal whether it is 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.

Funding a fuel switch to mitigate pollution

As part of its review, Ricardo requested from Belco a three-way price comparison — switching to diesel fuel, using a lower-sulphur HFO and operating on LNG — but said Belco provided “no substantive response” in its reply dated May 12, 2021. Ricardo did not engage further on the option, but added “the fuel currently used is likely to be one of the root causes of the current problems and a change would certainly be beneficial in improving odours and deposits from the NPS.”

Bermuda’s emissions regulator the Environmental Authority did record in its minutes of May 25, 2021 that Belco said a switch to a “lower-sulphur marine diesel oil” would cause an increase in the retail price of electricity by $0.02 per kWh.

Regulatory Authority rejected alternative fuels that would reduce emissions

The Department of Environment and Natural Resources requested that the Regulatory Authority obtain from Belco indicative costs of various fuel options and the impact of fuel type options on Bermuda’s consumer “and potentially government tax revenue”.

The resulting letter memo from the RA to the DENR on January 19, 2021, obtained by this newspaper through a public access to information request, was referenced in consultant Ricardo Energy & Environment’s review on soot emissions.

Alternative fuels to Belco’s existing primary fuel — 2 per cent sulphur heavy fuel oil — were as follows: 1 per cent sulphur HFO; 0.5 per cent sulphur HFO; and “ultralight sulphur diesel”.

Denton Williams, the former RA chief executive, wrote in the memo: “Taking into the consideration of the points [discussed] below, the RA is not able to support the proposed amendments to the Clean Air Regulations that would reduce the sulphur in fuel below 2 per cent.”

He said that, based on December 2020 fuel future prices, the total cost of fuel would increase by 22 per cent to 33 per cent. This would mean an annual price increase of $5.70 to $10 a month for a low-consumption consumer (300kWh/month) and $33 to $55 per month for a high-consumption consumer (1500kWh/month).

He said: “The lower calorific [heat] value of the alternative fuels [will] decrease the efficiency of the engines and result in higher fuel consumption. This will likely lead to higher volumes of fuel being procured and an increase in government tax revenue.”

He added that there would likely be a decrease in reliability that could lead to an increased probability of forced outages or an increase in the maintenance regime.

The Royal Gazette asked if a cost analysis was done on the light fuel oil, which the plant already burns, but was told by Belco: “Belco continues to systematically vet all options for resolving the issues experienced.”

An increase in retail price — that incurred by the customer — was the only option presented in the minutes. The RA recently conducted a consultation on how electricity bills should be calculated.

The Royal Gazette asked the RA if increased costs that might come with burning a lower-polluting fuel to address pollution apparently brought about by the actions of the company would have to be shouldered by the customer. An RA spokeswoman said: “In accordance with the Electricity Act 2016, all fuel-related costs are passed through to customers.”

She added: “Any costs related to fuel will be assessed by the RA during the Fuel Adjustment Rate, which takes place on a quarterly basis.”

Belco's ultimate parent company, Canadian renewable energy firm Algonquin Power and Utilities Corporation, has assets worth more than $16 billion and says it is committed to “environmental and social responsibility”. Asked if Belco and Algonquin are considering switching fuel permanently and if alternative ways to fund it are being explored, a Belco spokesman said: “Different fuel grades come with different environmental impacts and costs. Belco continues to vet all options for resolving the issues experienced, bearing in mind that some of them, such as switching fuel grade, may contribute to higher costs for customers.

“The Electricity Act 2016 provides that the retail tariff shall seek to enable Belco to generate a total revenue that includes recovery for reasonable costs in respect of expenses for fuel procured for generation that is efficiently incurred.”

In its Retail Tariff Review, the RA set Belco’s allowed revenue for January 1, 2023 to December 31, 2023, at $2.3 million.

How was the price increase for a switch in fuels calculated?

Words were missing from the Ricardo review in relation to an “RA Letter memo to DENR on the impact of changing to lower sulphur fuel on price …”. Asked about the contents of the memo, the RA spokeswoman said: “The RA asked Belco to provide various low-fuel sulphur alternatives to the fuel currently in use. The analysis of this information was used to provide a memo to DENR on the cost of changing to lower-sulphur fuels.” The RA did not detail how the price increase was calculated.

Belco said the calculation was based on “a cost of fuel differential and switching all engines in the NPS and East Power Station to marine diesel oil”. It added: “Two years later the price of fuel has changed, such that the cost would need to be recalculated.”

Belco added: “There are more cost-effective fuel types. However, they are less environmentally friendly.”

Asked if a cost analysis was done for switching to the LFO in use at present, whether it had been necessary to switch the fuels for the EPS, Belco declined to provide specific details.

Tests by NPS contractor BWSC concluded that the source of the excessive soot emissions was “incomplete combustion of HFO as the engines were starting and stopping and without load [not to full capacity]”.

According to Belco’s report, despite a permanent fuel switch assuring “a better fuel combustibility and thus reduced risk of soot formation”, the primary abatement method chosen was the shim and piston crown installations designed to improve combustion.

Cost to mitigate and remediate soot and other pollution

• In January 2022, Belco completed the installation of 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.

• On its website, 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 recent video, 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. However, Belco told us: “Initial indications are unfavourable, but we continue to explore the feasibility of using electrostatic precipitators.”

• To address a separate issue of high levels of sulphur dioxide emissions reaching ground level, some engines have been operating on LFO/diesel, a more costly fuel, when stopping and starting — times when emissions are more likely to occur. Belco said costs for these occasional fuel switches are already being passed on to the consumer. A spokesman said: “LFO/diesel is currently used for certain engines and under certain circumstances, but it comes at a higher cost to customers.”

As well as these equipment upgrades, the engines have been starting and stopping on diesel rather than HFO since July 2020, which Belco’s report said “has been observed to” eliminate soot emissions during start-and-stop operations. However, it noted that several engine trips, mechanisms designed to stop the engine for reasons such as safety, have resulted in soot emissions being recorded by neighbours.

The emissions continued, including a major fallout last July that left houses on St John’s Road caked in soot. The DENR told us there are on average two fallouts per month and as many as five.

The Royal Gazette is aware of at least three formal complaints of soot fallout lodged to the company this month.

Asked if it remains optimistic it can achieve full optimisation at the NPS using the existing fuel mix Belco responded: “Belco will continue to explore all technical options available.”

• Tomorrow: Belco rejects Ricardo flue theory

Wayne Caines, president of Belco, blamed “unforeseen challenges” at the North Power Station” for burning heavy fuel oil on engines that were otherwise configured (File photograph)

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Published February 27, 2023 at 2:02 pm (Updated March 03, 2023 at 2:26 pm)

Expert review said change of fuel would reduce Belco pollution

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