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Coal power struggles in competitive energy market

Coal Creek Station

Great River Energy has been running its Coal Creek Station coal-fired power plant at less than capacity in order to make room for more wind power coming onto the market.

The vice president of Great River Energy says he is hoping for a hot summer.

The electric utility company’s Stanton facility ran four out of the previous 18 days as of Friday, “which is very unusual,” Rick Lancaster, vice president and chief generation officer for Great River Energy, said.

“We just decided March 27 we would no longer keep Stanton as a must-run plant,” Lancaster said.

Stanton Station is fed by Powder River Basin coal hauled from Spring Creek Mine in Montana, a coal-producing area in turmoil due largely to the low cost of natural gas.

But wind is challenging the market as well.

As wind energy generation grows, coal mines are taking a hit, according to Ken Rutter, senior vice president of asset management and marketing for Basin Electric Power Cooperative.

“The cup can only hold so much water,” he said.

It takes 16 hours to bring Stanton Station to full load once it has been shut down so, in short periods where the price of power on the market drops below what Stanton could make it for, it made sense to keep it running.

With mild weather, those periods of lower prices are getting longer.

The plant powered up and ran March 27-28.

“Those were not windy days. The 29th, the wind started blowing again,” said Lancaster, explaining the facility was taken offline when market prices dropped. It returned to production twice for one-day stretches.

“It’s been off ever since,” Lancaster said. “We felt like we were economically forced into this. We need to do what’s in the best interest of our members, so we’re not operating the plant at a time when we’re not even getting paid for the coal we’re burning …. We’re really affected by whether the wind blows.”

Even GRE’s larger Coal Creek Station, which sends power to Minnesota via a direct current transmission line, has been affected to some extent, reducing its load and running lower than capacity.

“There’s a lot of natural gas in Minnesota,” Lancaster said. “That’s when we’re noticing the effect of low natural gas prices. On days when it’s not windy, the prices are not getting up to what they used to be …. Coal Creek is less affected by North Dakota wind and more affected by Minnesota natural gas.”

Excess power

Basin recently joined the regional transmission organization Southwest Power Pool as a way to buy and sell excess power. At 48 percent, this year set records for wind generation as a percentage of load in SPP.

“With all this wind that’s online, we need units that can move with the change in that wind,” Rutter said. “There’s value to the ability to move quickly.”

So far, Basin’s coal power has remained competitively priced on the power pool with a few minor instances of prices dipping below what the cooperative can make it for. The difference is coal plants can move generation at 3 megawatts a minute while natural gas can move 15 megawatts per minute.

As a result, Basin and GRE have found themselves leaning more heavily on its natural gas-fired peaking plants.

“Where they are proving valuable is in the real-time market,” said Lancaster, adding that GRE’s plants can be at full capacity in 10 minutes. Rarely are they kept running for a full day.

Basin has another advantage: It’s commercial customer base continues to grow. GRE, whose members are in Minnesota and Wisconsin rather than North Dakota, has not experienced the same growth.

“We’re in a bit more unique position compared to the rest of country,” Rutter said.

“We need to do what’s in the best interest of our members, so we’re not operating the plant at a time when we’re not even getting paid for the coal we’re burning …. We’re really affected by whether the wind blows.” — Rick Lancaster, president of Great River Energy’s Stanton Station

Reach Jessica Holdman at 701-250-8261 or jessica.holdman@bismarcktribune.com

"We need to do what’s in the best interest of our members, so we’re not operating the plant at a time when we’re not even getting paid for the coal we’re burning …. We’re really affected by whether the wind blows.”

-- Rick Lancaster, president of Great River Energy's Stanton Station

Rick Lancaster
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