“We will evolve our power supply to maintain reliability, reduce environmental impact, optimize cost and rise, and meet customers’ evolving needs.“
- How will MPW approach environmental compliance between now and the proposed dates of generating unit retirements?
MPW will continue to operate under its Core Value of Environmental Stewardship. For as long as we’ve been operating power plants, MPW has strived to meet environmental laws and requirements that regulate our operations. We’ve also been proactive in our efforts to minimize the impact of our plant’s operations on the environment; finding alternative beneficial uses for our by-products over the last several decades. All of our generation units will remain compliant with all environmental regulations and permits as MPW moves towards new generation resources. Some additional compliance projects may be required to meet new or changing regulations between now and unit retirement.
- Can Units 7, 8, and 8A be retired immediately?
Units 7, 8, and 8A remain an important part of MPW’s ability to reliably serve Muscatine. MPW is currently developing a new 161kV transmission line to the north of Muscatine. When this line is in service, it will provide the necessary support to allow for a retirement of these units.
- What is the size of the CHP Unit being considered to replace Unit 9?
MPW is evaluating different sizing options for the CHP unit ranging from 50 megawatts (MW) – 140 MW. Capital cost estimates for a unit at the top end of this range are around $180 million, but a smaller configuration would likely require less financial capital. (As a comparison, when Unit 9 was built in the late 70’s the cost was $250 million, or approximately $680 million in today’s dollars).It is most likely that the unit will be sized to cover only a portion of MPW’s load demands, leaving room to fill out our portfolio with additional diversity, including increased renewables. Having an “open” position in our portfolio would allow MPW to take advantage of low market pricing when available and continue to evaluate resource options as technologies improve in the coming years.
- What is the timeline for the 30 MW solar farm?
MPW is actively pursuing high-volume, long-term energy commitments to help make development of a utility-scale solar project a reality. With sufficient MPW customer participation, a solar farm could be in service as early as 2023. Due to the scale of this project, timing is subject to change. Activity on this project started in early 2021. MPW completed and published a Request for Proposals (RFP) in March 2021 and a pre-bid conference was held in April 2021 to review the RFP with developers. In May, twenty-one development firms responded to the RFP with 144 proposal options. Proposals were reviewed by MPW Staff and industry consultants, with five developers providing presentations of their full proposals to the selection team during the first week July 2021. PPA negotiations are expected to begin in August, with a signed agreement anticipated by the end of 2021.This project is expected to interconnect to MPW’s transmission system at 69,000 volts. To do this, MPW is obligated to register and apply for the upcoming Midcontinent Independent System Operator (MISO)’s Definitive Planning Phase (DPP) 2021 planning cycle. At the June 2021 Board meeting, the Board of Trustees approved a project to cover the application fee, study deposits, and milestone capacity payments for this MISO DPP study. MISO’s DPP study process determines project impact and costs to the transmission system. Any improvement costs identified by MISO are the responsibility of MPW and could impact this project’s future.
- Will natural gas-fired plants be phased out soon?
According to the US Energy Information Administration (EIA), natural gas, and even coal, will have a significant role in generation well past the forecast’s range. Natural gas and coal are dispatchable assets, meaning their output can be adjusted to meet the electrical grid’s changing needs. While the share of natural gas and coal-fired generation is expected to continue a decline, they are still expected to be needed to balance the load on the grid due to intermittent renewable resources.US electricity generation forecasts through 2050 show renewables continuing to grow (21% in 2020 growing to 42% in 2050). It also shows dispatchable, baseload generation from fossil fuel still playing a majority role in the US energy portfolio for decades to come – natural gas (36% in 2050), coal (11% in 2050) and nuclear (11% in 2050).
MPW’s plan to increase its renewables with local solar, transition from coal-fired to cleaner burning natural-gas fired generation, and leave a portion of its energy portfolio open allows MPW to invest in additional renewables or cleaner technologies as costs come down and technologies further develop.
- Isn’t renewable energy free or very low cost?
The cost of renewable energy sources has certainly come down over the past several years. It may seem that these resources are less expensive than fossil fueled resources, however, it’s extremely important to understand that the electric system must also be upgraded and modified to ensure these intermittent resources can provide the same reliability that we all have come to expect. When all of these system costs are included, it actually makes a transition to all renewable energy very expensive. An important note – a MW of installed solar/wind is not equal to a MW of installed gas or coal generation because renewable sources are intermittent and, therefore, cannot be dispatched on demand at the request of power grid operators, according to market needs. To maintain reliability, a significant “over-build” of solar/wind installations would be necessary. At this time, the best total solution would include renewables along with dispatchable gas and/or coal generation to achieve a balance of reducing carbon emissions, while also keeping reliability high and overall costs low.
- Aren’t batteries the solution to intermittent renewables
With traditional power resources, a home or business is connected to a local distribution grid so that it can be accessed 24/7. When using a renewable energy resource, back-up and storage resources must be included with the power generation opportunity. Those resources may come from solar or wind, however the sun only shines for part of each day and only if it’s not cloudy. Wind can be very inconsistent, reducing wind generator output that may not meet high demand, or peak, needs. The storage capabilities that would be required to ensure that customers have reliable service can push the cost of a new renewable energy system beyond what the average person or community can afford. Batteries are the most common solution to renewable intermittency, and although costs have come down, it is still very expensive to store the amount that is needed to be 100% renewable. To install enough battery capacity to handle MPW’s native load for the life of the solar array (30-35 years), the cost of the battery system alone is estimated to be around $1 billion.
- What is the current percent of renewables now in MPW’s portfolio?
The annual generation volume from the South Fork Wind Farm is about 5-6% (50,000 MWH/Yr.) of our total native system energy needs. This moves up and down slightly each year. In terms of the share of total energy produced by MPW resources, in 2020 SFWF produced over 8% of MPW production.
- Won’t natural gas be phased out soon also, making gas-fired plants obsolete?
According to the Energy Information Administration (EIA), while US electricity generation forecasts through 2050 show renewables growing, natural gas, and even coal, will have a significant role in generation well past the forecast’s range. Natural gas and coal are dispatchable assets and are needed to balance load and intermittent renewable resources.
- What is the expected cost to rate payers, with the changes MPW is proposing with solar and gas generation?
The lowest capital expense for MPW customers would be to continue burning coal. With our proactive interest and efforts in environmental responsibility, we’re pursuing the development of a solar farm, a Combined Heat and Power (CHP) Unit, and related transmission system upgrades. Modeling shows there’s not a significant cost difference between the balanced approach MPW is proposing as part of our Strategic Plan and maintaining Unit 9 with anticipated future environmental compliance costs. MPW’s latest 10-year financial projection included assumed modest, annual rate adjustments of around 3%, which is great news for MPW customers considering the significant transition we are facing. In any scenario, there will be associated costs with decommissioning and demolition of existing units but, as always, we’ll work hard to manage costs that affect consumer energy prices and rates passed on to customers.