Techno-economic assessment of pathways for electricity generation in northern remote communities in Canada using methanol and dimethyl ether to replace diesel

There are many small remote northern communities in Canada that are not grid-connected and which rely entirely on diesel electricity generation to meet their electricity needs. Electricity prices in these isolated communities are much higher than in heavily populated regions due to the high operating costs of the diesel power plants and the high cost of supplying fuel to these communities. Diesel fuel also poses a risk of an environmental disaster caused by a marine fuel spill. This study investigates the feasibility of replacing diesel for electricity generation with clean bio-fuels. A techno-economic assessment compared the full cost of electricity generation for diesel (base case) with methanol and dimethyl ether. Case studies were developed for three remote northern communities in Nunavut. From the cost models, full cost of diesel electricity generation including the bulk fuel purchase, delivery, and electricity generation at the three sites varied depending on the annual electricity demand; $0.66/kWh at 3300 MWh, $0.89/kWh at 1500 MWh, and $1.46/kWh at 1400 MWh, respectively. These costs compared well with actual customer rates at the two larger sites. Switching to methanol resulted in an increase of $0.046/kWh, $0.085/kWh, and $0.066/kWh, and dimethyl ether saw in an increase of $0.04/kWh, $0.11/kWh and $0.044/kWh, respectively, in the full cost of electricity. New bulk fuel storage projects increase the cost of electricity further between $0.05/kWh and $0.10/kWh. However, a $30/tonne CO2 penalty adds $0.08/kWh for diesel electricity generation, whereas bio-based methanol and DME would be exempt. In light of the potential socioeconomic benefits from switching to clean biofuels, as well as avoiding the enormous costs associated with the clean-up and economic losses due to a marine oil disaster, these clean fuel options seem reasonable as transition technologies toward renewable energy to replace diesel electricity generation in Canada's most remote northern communities.