Using our LNG Generators for Back-up Power

In light of recent media stories about how Yukon Energy’s new natural gas generators will or will not be used, we feel it is important to clarify some points.

Our thermal assets, which include our diesel and now LNG generators, are used for a number of purposes:

To restore power to the grid immediately following an outage;
To provide backup power to the grid when we have a loss of supply;
To provide ‘peaking’ power during periods of high system load, which are typically during periods of cold weather; and
To provide baseload supply to make up for shortfalls in hydro generation during drought years, as we last experienced in the late 1990’s.

With the addition of the Whitehorse LNG plant, Yukon Energy now has both diesel and LNG generators available to meet these needs. In some cases, LNG is the best choice. In particular, LNG is very well suited to provide back-up and peaking power for extended periods (4+ hours) due to the higher efficiency of the engines compared to diesel, and the lower cost of LNG fuel compared to diesel. For example, several years ago when we had a grid-wide winter power outage that lasted several hours, we would have used LNG to provide backup power had that option been available to us. Likewise, last November, when icing issues shut down our Whitehorse hydro generators, we would have used LNG our LNG plant to provide backup power if it had been in operation at that time.

It is possible to use LNG engines for to restore power immediately after an outage, but diesel engines are better suited to that task because they can pick up load in large increments, and so restoration times are shorter.

In the case of the Whitehorse power outage on July 10th, the event took place in the morning when people were getting ready for their day and businesses were opening or preparing to open. Knowing that, our staff made the decision to restore power using the Whitehorse diesel engines. This was the best choice given the circumstances. We hope no one would fault us for taking the necessary steps to get the lights back on as quickly as possible.

There has been some suggestion that Yukon Energy did not make it clear to our regulator, the Yukon Utilities Board (YUB), that we would still use our diesel generators in preference to LNG in certain circumstances. In our disclosures to the YUB, we did point out to the regulator that there would be cases that diesel would be used ahead of LNG. However this was not something that anyone spent a great deal of time on during the YUB hearing. Key here is that regardless of whether we use LNG or diesel for restoration, the business case for the LNG project does not change.

The economics as presented to the YUB were based on the forecast use of the LNG engines over their 40 year life for both for peaking during cold months, and making up for shortfalls in hydro generation during periods of drought. Outages and restoration events are infrequent and difficult to forecast, and do not have a material impact on the overall use and the economics of Yukon Energy’s thermal assets.

The July 10th outage was the first time this year we have had to use our Whitehorse diesels to restore power, and over the last few years there were likely fewer than half a dozen times Whitehorse thermal was used to restore power in Whitehorse.

The Whitehorse Diesel – Natural Gas Conversion Project remains a good initiative that will mean cleaner and less costly back-up power generation.