NV Energy Proposes to Exit Coal Power Generation Early
Nevada power company NV Energy Inc. has proposed a plan to accelerate the retirement of its coal-fired generating facilities and the construction of natural gas and renewable power plants.
Reuters reported that NV Energy proposed its so-called "NVision" plan to reduce carbon and other emissions on April 3 as an amendment to Nevada Senate Bill 123, which revises several of the state’s renewable and other energy policies.
Over the next 10 years, NV Energy proposes to accelerate the retirement of its 553-MW Reid Gardner coal plant in southern Nevada and end its interest in the 2,250-MW Navajo coal plant in north-central Arizona.
There are four units at Reid Gardner. The three 100-MW Units 1, 2, and 3 are currently scheduled to shut down in 2020. The 255-MW Unit 4 is expected to close in 2023. Under the NVision plan, the company said it would shut Units 1, 2, and 3 at Reid Gardner in 2014 and Unit 4 in 2017.
“We’re not as long and strong on coal” as in past years, Kevin Geraghty, vice president of generation at NV Energy told POWER last summer. In spring 2011, the company’s six coal-fired units ran as baseload. By mid-June 2012, just two coal-fired units at its Reid Gardner generating station were operating, even in the face of summer-like temperatures above 100F and high air-conditioning demand. “It’s straight economics,” Geraghty said at the time. The Southwest has more than enough available capacity, with more on the way as major renewable energy projects near completion.
Geraghty told POWER the utility began preparing in 2009 to reduce its reliance on coal, largely in anticipation of federal environmental regulations. A first step for the utility was to change its coal procurement strategy from long-term contracts to spot-market purchases. Doing so enabled the company to reduce its exposure to take-or-pay coal and rail contracts and to become more flexible in commodity markets.
“Coal with a 10,000 heat rate doesn’t compete well with 7,000 heat rate gas,” Geraghty said. “It’s just out of the money.”
Reuters reported that the California Department of Water Resources, which owns part of Unit 4 at Reid Gardner, said last year it planned to divest its interest in the unit later this year as part of its plan to reduce greenhouse gas emissions. The Salt River Project in Arizona operates the three 750-MW units at the Navajo plant. NV Energy owns 11.3%. NV Energy said it was currently scheduled to divest Navajo in 2026 but would accelerate that under the NVision plan to 2019.
The Los Angeles Department of Water & Power, another partner in the Navajo plant, with a 21.2% stake, said in March it would divest its interest as part of its plan to stop burning coal. Other owners in Navajo include the U.S. Bureau of Reclamation, Pinnacle West Capital Corp.’s Arizona Public Service, and UniSource Energy Corp.’s Tucson Electric.
POWER reported in late January that the U.S. Environmental Protection Agency (EPA) was proposing requiring owners of the 2.3-GW Navajo station to install emission controls worth $1.1 billion to improve visibility at 11 national parks and wilderness areas in the Southwest.
The EPA’s Jan. 18 proposal, which cites requirements by Congress under the Clean Air Act, claims the power plant is "one of the largest sources of harmful nitrogen oxide emissions in the country." It calls for the installment of selective catalytic reduction technology, which, along with existing low-NOx burners voluntarily installed at the plant over the past three years, would reduce emissions by 84%, or a total of 28,500 tons per year, by 2018. The proposal gives owners of the plant an extra five years, until 2023, to install the new controls—an unexpected flexibility that recognizes the "importance of [the Navajo plant] to numerous tribes, and the environmental benefits provided by the early installation of low-NOx burners in 2009."
NV Energy said the NVision plan does not affect its current plans to retire the two units at the 522-MW Valmy coal plant in northern Nevada in 2021 and 2025, according to Reuters. Valmy is a 50-50 partnership between NV Energy and Idaho Power, a unit of Idacorp Inc. NV Energy operates the Valmy plant.
To replace the coal-fired generation, NV Energy proposed the development of 600 MW of new in-state renewable capacity by 2018 and the construction or acquisition of about 2,000 MW of natural gas–fired generation by 2025.
Sources: POWER, Reuters
—David Wagman, Executive Editor (@EPContentDirect)