New York's coal-fired power plants: repower or take offline?

Mar 20, 2013

It's a tough environment for coal-plants in New York state. The state is home to some of the oldest power facilities in the country, which operate under stricter emissions regulations introduced by the Environmental Protection Agency (EPA).

The NRG power plant in Dunkirk presents a good case study for coal plants across New York, and the upstate region, that are now facing a changing energy landscape.

The four coal towers of the NRG power plant dominate the skyline of Dunkirk. For decades, the plant has been a large source of tax dollars and employment in both Dunkirk and the surrounding community.

State Sen. Cathy Young says this facility differs from others in one key respect.

“Often times, communities don’t want power plants in their backyard,” says Sen. Young.

“This is just exactly the opposite, because the people of Chautauqua County understand how critically important keeping this power plant is to them.”

Dunkirk Mayor Anthony Dolce says the residents of his city are well aware of the impact the local plant has.

“In 2012, NRG contributed 23.6 percent of our operating revenue through a PILOT agreement. And if that were to go away, I mean, a quarter of your operating budget is such a significant amount to try and make up through other avenues in my budget. So, NRG has always been a great community partner to the city of Dunkirk,” said Dolce.

But, like many other coal plants, Dunkirk’s future became uncertain with the rise in prominence and affordability of natural gas.

Is coal still a viable business?

After outlaying millions to bring the Dunkirk station up to speed with environmental regulations, and ensure it remained open, NRG posted significant losses in the year to February 2012.

The following April, the price of natural gas plummeted to an all-time low, taking electricity prices with it.

The result for NRG is that the company no longer sees the coal plant as a viable business. In March 2012, the company filed a notice of intent to mothball all four units at the plant, with the New York State Pubic Services Commission (NYSPSC).

However, the state says Dunkirk’s station is too integral to the reliability of Western New York’s electricity grid to shut it down completely.

Two of the four towers have already been taken offline, with a third to follow in May.

But the fourth will continue to run until a decision is made about what to do with the facility.

There are two options – repower the facility with natural gas, or bypass it with transmission lines that bring power in from elsewhere.

Mayor Dolce has a definite preference.

“The impact that NRG has is tremendous, and I think the citizens of Dunkirk are well aware of that. And that’s why they’re behind the re-powering of the facility,” he said.

NRG’s director of development, John Baylor says repowering the station fits the Cuomo administration’s Energy Highway blueprint for the state’s energy infrastructure, and the company would like to see that happen.

“If you don’t re-power the existing Dunkirk, then what’s at risk is really the jobs and the tax base for the community,” says Baylor.

He also notes that NRG would be bank rolling the repowering effort, whereas the cost for upgrading transmissions would fall on rate-payers and the state.

“The plant we’re proposing today is a 400-440 megawatt combined cycle unit and that’s about $500 million investment.”

Young says that level of private investment in western New York is one of the attractive features of the re-powering scenario.

“It would not only create 500 construction jobs during the building of the new plant, but it also would preserve existing jobs and that’s very important,” said Young.

Generation vs. transmission

Baylor says as far as NRG is concerned, promoting power generation and independence in the state are far better than relying on outside sources for power.

“Our view is that generation is going to be better than transmission. You have strong economic benefits from investing in the local community. Rather than just fixing the wires so that you can import more power from out of state,” Baylor says.

But not everyone is sold on the idea that generation is the way to go. Jim Burpee, President and CEO of the Canadian Electricity Association, says transmission and cross-border integration of supply makes more sense.

“The number one benefit of an integrated system between Canada and the U.S. has been, and continues to be, and will be going forward, reliability of the system. That really has contributed to a level of reliability that we might not otherwise see,” Burpee says.

And he makes another point. Canada represents a large source of cheap, non-carbon-emitting energy supplied right across the border.

“If there’s an objective to decrease the amount of carbon in the overall supply in North America then it would argue for more integration between Canada and the US,” he said.

But Burpee concedes that it comes down to where your priorities lie.

“It really comes down to what your long term objectives are, both in terms of the economics and what is the value of environmental performance.”

NRG’s John Baylor says their plan to re-power with a natural gas, combined cycle system would encourage green energy development within the state.

“The way I would think about old generation versus new generation is almost like looking at it like a Cadillac; you’re driving your parents old 1970s Cadillac and then you switch to a Prius. These new units are extremely efficient and it’s using natural gas which is much cleaner,” says Baylor.

Combined cycle systems

Combined cycle technology uses a two stage process that involves combustion of natural gas to create energy, and then the capturing of excess heat to create steam and produce more energy.

These systems have the ability to scale electricity production up and down very quickly; making the technology an ideal partner for green, and intermittent energy sources like wind.

“What’s unique about a combined cycle unit is that, unlike a coal unit, it can start up and shut down very quickly. Renewable technology, and the kind of renewable technology that is generally available in abundance here in New York state is wind,” Baylor says.

“It’s a more natural support in just the way that energy can be generated, turned on and off. It matches nicely with wind and other intermittent energy sources.”

So what’s the next step?

National Grid, which owns and operates the upstate transmission networks, will evaluate NRG’s repowering plan.

They will then make a recommendation to the Public Services Commission on whether re-powering the plant or upgrading transmission lines will be better for customers, the environment, and grid stability.

In a statement, National Grid said that they do not see themselves as being in competition with NRG.

“We do not view ourselves as being in competition with Dunkirk, nor do we believe we are in any way the root cause of why the Dunkirk facility is in the position it’s in economically.”

In Dunkirk, there seems to be overwhelming support for the re-powering scenario, even though the plant would require less manpower in the long term.

Mayor Dolce says the priority is to keep the plant open.

“Natural gas is just that much more efficient that they’ll go from 145 jobs when the process began down to 26. But the glass half-full look is, it will make the plant stable for the next 50 plus years,” said Dolce.

That trade-off is one that a lot of other power plants and their surrounding communities will also be weighing up, as the use of coal in electricity production continues to decline in New York and across the nation.