The plan to sell the largest coal-fired power station in North Dakota rather than close is almost final. The sale would allow the buyer the opportunity to move on to the more difficult task of making the plant financially sustainable and installing a carbon trap system.
Great River Energy of Minnesota originally intended to close Coal Creek Station’s plant. However, the company changed their mind and sold the plant after being pressured by elected officials in North Dakota. State officials have been tireless in their efforts to protect coal jobs. They helped to arrange the sale and plan to use government subsidies for retrofitting the plant with carbon capture systems.
Officials have been working to keep the plant operating as part of a larger pattern of state, local, and federal governments from Montana to West Virginia that downplay concerns about the high cost and emissions of burning coal and work together to ensure the future of coal-fired power stations and coal mines. Some of these places have coal industry leaders and government officials who embrace carbon capture despite warnings by energy analysts that it is a costly investment that is unlikely be successful in substantially reducing emissions.
The final step in the Coal Creek sale is a vote by rural cooperative utility boards across Minnesota in February on whether to approve a revised contract between Great River Energy Marketing of North Dakota and the buyer, Rainbow Energy Marketing of North Dakota. The revised contract includes a provision to allow delivery of wind energy from North Dakota to Minnesota and a small increase in Great River’s financial commitment to continue to buy coal power from the plant.
Minnesota environmental activists have opposed the sale of the property at every stage.
“We need somebody to be held accountable,” said Veda Kanitz, an environmental advocate who also is a customer of one of the co-ops, Dakota Electric Association, that receives power from the plant. “We’re not seeing a true risk-benefit analysis. And I don’t think they’re properly factoring in the climate impacts.”
Kanitz and other opposition parties are upset that Great River has agreed for Great River to purchase electricity from the plant as part of the sale. She believes this is not in the best interest of customers. The revised sale agreement says Great River will pay to receive 1,050 megawatts—nearly all of the plant’s generating capacity—until the end of 2022, and then receive up to 350 megawatts from the plant for eight years after that.
Great River executives state that they are trying balance the need to reduce carbon emissions and the need to retain jobs at the plant, as well as the adjacent North Dakota coal mine.
“We understand the economic impact and the social impact of what a closure event would be, and what that would mean for the communities and the people out there,” said Zac Ruzycki, Great River’s director of resource planning.
The New Sale Agreement
Great River, a company based outside Minneapolis, manages the supply electricity to 28 rural electric co-ops that serve around 700,000 customers. The company is asking its member cooperatives to approve the revised contract with Rainbow Energy.
One reason for the new agreement is that the old agreement, which the cooperatives voted to approve in June, expired because the sale had not been completed before December 31, 2021. (Connexus Energy, the largest of Great River’s co-ops, was the only member to vote against the sale, citing financial and environmental concerns.)
The main reason the delay occurred was because the plant sale includes the sale of the 436 mile interstate power line connecting the plant to the Minneapolis/St. Paul metro area. The line sale needed approval by the Public Utilities Commission of Minnesota. Instead of approving the sale immediately, the commission delayed its decision and requested additional information from Rainbow Energy to address concerns raised by those opposed to the sale.
This is the same power line which the construction of in the 1970s led to a years-long uprising by Minnesota farmers who didn’t want the line to run through their communities.
The transfer was approved by the commission on Jan. 6. Rainbow had demonstrated that it was qualified to pay the line’s costs.
The upshot is that the supporters of the sale have now cleared every major obstacle except for the co-ops’ vote on the new contract, which is taking place in February, with many co-ops voting on Feb. 9.
There are some differences in the new contract from the original. The contract also sets the terms for the sale of both the plant and the powerline. It also says that Rainbow Energy will permit Great River to use its power line to deliver 400 Megawatts of wind power. This is to be developed near the plants. Even though wind power will have priority over the line, it may be necessary to replace some coal power.
Ruzycki of Great River said his company had wanted to include a provision about wind power in the original sale contract, but couldn’t come to an agreement with Rainbow. The parties continued to talk about this and were able agree to the revised contract as they worked.
Great River has been in talks with a developer who would build the wind farms. Ruzycki declined further details, but said that more information would be available in the coming days.
Another change with the new contract is that Great River is agreeing to buy up to 350 megawatts of the coal plant’s capacity for eight years, starting in 2023, a change from the previous contract, which called for Great River to buy 300 megawatts during this period.
Ruzycki explained that Great River agreed because it was responding the member co-ops to concerns about not having access to sufficient electricity sources that were available 24 hours a day.
Great River’s commitment to buy power from Coal Creek includes conditions that require Rainbow to work toward installing a carbon capture system and eventually successfully deploy the system.
Rainbow Energy is a subsidiary to United Energy Corp. in North Dakota. This business is primarily involved in the oil-and-gas industry. Interviews were not conducted with executives of the company.
Rainbow announced in a news release it expected to close on May 1st and then would begin the multi-year process designing and installing carbon capture systems.
Wind Energy Opposition may be Thwing
It is significant that wind power was included in the sale agreement because it follows a period where local officials were hostile to wind energy as they considered it to be a threat to coal.
Great River announced that it would close Coal Creek in May 2020 and that it would replace some of its electricity supply with wind farms in the same area of North Dakota. The electricity will be delivered to the power line that runs to the coal plant.
McClean County officials, where the plant is located in response, put a moratorium on any new wind farms. This would mean that the power line wouldn’t have power to deliver after the coal plant shut down.
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Great River was able to focus on finding a buyer for the line and plant thanks to the North Dakota state leaders’ involvement. In March 2021, North Dakota Governor. Doug Burgum, a Republican, announced that Great River had entered exclusive negotiations with a prospective buyer of the plant, which he hailed as “wonderful news.”
His office and the Office of Lt. Governor. Brent Sanford was deeply involved in the whole process. He had made several years of public statements as well as behind-the scenes organizing to bring Great River and Rainbow together, and to help them reach an agreement.
McClean County leaders said they would lift the wind energy moratorium as long as development is done in conjunction with a plan to keep Coal Creek open. Officials say they are most concerned about the 700 jobs tied to the mine and the plant.
Environmental advocates are furious at this turn of events. They say closing the plant and focusing exclusively on the development of renewable energy is the best course of action. But the leaders of unions like Laborers’ International Union of North America say the proposed sale is the best possible outcome.
Kevin Pranis, a union official, stated that closing the plant was fueling a belief that renewable energy is a job-killer. He also warned that it could lead to the end of North Dakota’s renewable energy development for many years. The union has members who work at power plants, such as Coal Creek, or at wind farms.
Rainbow Energy, as he sees them, deserves to be able to test if carbon capture can work at Coal Creek.
“I think we’re moving forward, finally,” he said.
State Leaders Are Working to Preserve coal
North Dakota is just one of many states where leaders have been aggressive in trying preserve coal industry jobs, despite the fact that there are better alternatives and lower emissions.
Wyoming, West Virginia, and Montana officials, among others, have taken steps in order to slow down the closing of coal plants using state laws or regulatory actions. The ongoing legal battle in Montana over Colstrip Power Plant with a capacity to 1,500 megawatts is an example. A group representing Washington and Oregon utilities, which are majority owners of the plant, wants to close it. The Montana Legislature passed a law in 2021 that changed the plant’s ownership agreement in ways that impeded the closing and favored the minority owners that wanted to keep it open. The law is currently being challenged in court.
In most cases, utility ratepayers are paying the cost of operating old coal plants.
“The problem is our government is captive,” said Scott Skokos, executive director of Dakota Resource Council, an environmental advocacy group based in Bismarck.
He is referring to the fact that fossil fuel industries have a strong enough influence over government that officials often act as advocates for them, and not enough about the long-term public benefit.
‘These Are Not Good Projects’
People who follow efforts to develop carbon capture technology find that retrofitting Coal Creek with carbon collection makes no sense. Its costs are easily over $1 billion, and there is a low chance of it capturing any carbon dioxide.
“The track record is not great on the technology,” said Eric Gimon, a senior fellow at the think tank Energy Innovation.
The U.S. Government Accountability Office outlined some of the issues in a December report. They stated that government incentives to carbon capture have led almost all projects to fail.
But that doesn’t mean Rainbow is going to lose money on the deal. The government provides tax incentives to carbon capture, based on the amount of carbon that is buried or reused. If the Build Back Better legislation is passed, it might change the terms to increase the payments.
This means that Coal Creek’s project could potentially generate hundreds of million of dollars per annum in incentives for its owners, which could make it financially viable.
Also, Rainbow can make money with the interstate power line, a valuable asset for delivering electricity to Minnesota at a time when the grid doesn’t have enough interstate lines.
But focusing on whether the plant’s owners will make money is missing the larger point, Gimon said. At a time when the United States needs to drastically cut carbon dioxide emissions, he doesn’t think it makes sense to spend sizable sums of money to extend the lives of old coal plants.
“No, these are not good projects,” he said.
Source: Inside Climate News