Deal Announced to Close Louisiana Coal Unit
Credit to Author: Darrell Proctor| Date: Thu, 09 Jan 2020 03:38:53 +0000
The post Deal Announced to Close Louisiana Coal Unit appeared first on POWER Magazine.
The Arkansas Public Service Commission on Jan. 8 approved a plan to retire the Dolet Hills power plant, a coal-fired unit in Mansfield, Louisiana that serves part of the state. The Sierra Club, one of the environmental groups that had called for the plant’s closure, announced the Arkansas PSC had approved a settlement with Southwestern Electric Power Company (SWEPCO), a partner in sharing the plant’s electricity production with plant owner Central Louisiana Electric Co. (Cleco).
The Dolet Hills plant burns lignite. The faciility’s one coal-fired unit entered service in 1986. Cleco in January 2019 had said it would only operate the plant during summer months.
Cleco had invested in upgrades to the Dolet Hills plant in 2015 and 2016, and had previously said the plant was not expected to retire until 2046. Environmental groups had long sought closure of the plant due to pollution concerns.
Both SWEPCO and Cleco in their 2019 integrated resource plans (IRP) said they were preparing to shift their focus away from Dolet Hills, instead concentrating on power generation from other sources, including renewables. SWEPCO in its IRP had said it would “continue to evaluate operations” of the Louisiana plant.
Cleco Adding Solar, Wind
Cleco in its IRP said it wanted to procure up to 400 MW of electricity from solar, and up to 1 GW of capacity from wind, by 2038. SWEPCO, a subsidiary of American Electric Power, in its IRP said it plans to add 1.4 GW of wind generation capacity over the next decade.
Cleco has been de-emphasizing coal-fired generation since its parent, Cleco Corporate Holdings, acquired NRG Energy’s South Central Generating business for $1 billion in 2018. As part of that agreement, approved by the Louisiana Public Service Commission in January 2019, Cleco said it was adding 3.5 GW of thermal power generation through South Central, but would reduce operations across 1.2 GW of acquired coal-fired capacity, shifting the then-721-MW Dolet Hills to seasonal operations, at a reduced capacity of 638 MW. It also announced it would stop burning coal by 2025 at a 580-MW unit at the Big Cajun II plant in New Roads, Louisiana.
Higher Prices for Coal
Cleco in its August 2019 IRP filing said prices for lignite coal had increased, negatively impacting the economics of the Dolet Hills plant, and noting “the economic difficulties that this coal unit is experiencing,” particularly when competing with natural gas-fired power in a state that ranks behind only Texas, Pennsylvania, and Oklahoma in natural gas production, according to the U.S. Energy Information Administration (EIA).
In the IRP, Cleco attributed the coal’s price volatility to “changes in quantity (mmBtus) delivered, not changes in cost. Unforeseen issues at the new mine [supplying the plant] have resulted in a prolonged period of lower than expected deliveries, which translate into higher than expected inventory costs on a $/mmBtu basis.” Cleco in the IRP said, “Dolet Hills will transition both its mining operations and plant operations to a seasonal dispatch, focusing primarily on the summer months [of] June through September.”
According to EIA, Dolet Hills has been the only coal-fired unit in Louisiana burning the state’s lignite coal. The rest of the state’s coal units burn Powder River Basin coal from Wyoming, or Illinois Basin coal from Illinois, Indiana, and Kentucky.
Wednesday’s announcement comes one month after Indianapolis Power & Light announced it would close two coal-fired units at the utility’s largest power plant by 2023, after pressure from state lawmakers and environmental groups.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
The post Deal Announced to Close Louisiana Coal Unit appeared first on POWER Magazine.