Great River Energy’s recent announcement that it intends to close Coal Creek generating station is, unquestionably, a blow to North Dakota. As someone who knows many of the people who work at the plant and the associated coal mine, I also find a personal sadness with the situation.
GRE’s announcement has spurred much discussion about the future of electricity generation in North Dakota. Judging from some comments in the media and actions by some local governments, there is an emerging, but incorrect narrative: Coal Creek is closing because of wind generation; renewables are only built because of government subsidies; and if there were no wind turbines in North Dakota, the future Coal Creek would be secure.
Portraying wind generation as the sole, or even main reason for closing Coal Creek is an oversimplification of a complex set of factors that impact our changing electricity grid. Singling out wind generation for blame, ignores the significant impact of low natural gas prices, against which coal more directly competes.
The hydraulic fracturing that takes place in North Dakota and elsewhere is having a greater impact on interstate electricity markets than wind, and statistics bear this out. Consider that the Midcontinent Independent System Operator, which operates the 15-state electricity market in which GRE participates, reports that during last summer, generation from coal accounted for 39.9% of all energy in its footprint, down from 50.1% two years prior; gas was 30.6%, up from 22.2%; and nuclear held nearly steady at 16.1%. As for wind generation, it was only 5.9% of all generation.
The “blame wind” mantra also suffers from a lack of appreciation for the variety of reasons utilities make the decisions they do. Utilities have different needs based on circumstance and location, and no two are in the same position. They operate in different states with different regulatory, legal and business demands placed on them. It is unsurprising then, that individual utility companies will come to different conclusions about the right energy resource mix for their customers.
The implication of this anti-wind sentiment percolating in certain circles is that it sends a harmful message: if GRE abandons Coal Creek, then North Dakota is closed for wind investment. It is a rejection of the “all-of-the-above” energy strategy that has made North Dakota such a success story the last two decades. The effect of this will be unfortunate. Private property rights will be harmed because landowners who want to financially benefit from having wind turbines on their land can’t have them. North Dakota schools and governments would be deprived of millions in tax revenue that could be spent meeting needs or reducing other taxes. Direct and secondary jobs from the wind industry would be diminished. Enacting anti-wind policies to protest the closure of a coal plant won’t save coal jobs, but it will ensure North Dakota loses out on other opportunities.
The important takeaway is that North Dakota produces much more electricity than it uses, so the state’s energy sector is going to be heavily dependent on what is happening in the broader multi-state regions in which the electricity business is conducted. Whatever policies are enacted in North Dakota are not going to stop other states from permitting wind, solar and natural gas facilities, so anti-wind policies in North Dakota are unlikely to aid any individual coal facility. They would however, ensure renewable energy developers invest their money elsewhere.
None of us know exactly how the electricity grid will roll-out in succeeding years, or what energy research breakthroughs await. The goal of state policy makers should be creating an excellent legal, tax and regulatory climate for all, so that North Dakota is a great place to invest, whatever the future holds.
Tony Clark was a North Dakota Public Service Commissioner from 2001-2012 and a member of the Federal Energy Regulatory Commission from 2012-2016.
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