NorthWestern Energy intends to build a $250 million, 175-megawatt power plant in Laurel as part of a plan to add 325 megawatts of dispatchable power to its Montana portfolio.
The utility laid out plans late Tuesday for the gas-fired
power plant, along with a 50-megawatt battery storage project and a five-year
agreement to buy 100 megawatts of hydropower. Details were announced in a press
release NorthWestern posted to Globe Newswire.
The new power plant in Laurel will be a reciprocating
internal combustion engine, or RICE plant. Easily ramped up or down, RICE
plants have become a popular tool for balancing generation intermittent
resources like wind and solar farms. For perspective, the RICE plant’s output
would be about 78% of the nameplate capacity of NorthWestern’s 30% share of
Colstrip Power Plant Unit 4.
“This resource portfolio addresses a key portion of our
immediate need for generation capacity while also allowing us to make progress
toward our goal of an energy supply portfolio in Montana that reduces the
carbon intensity of our electric generation by 90% by 2045,” Bob Rowe,
NorthWestern's CEO, was quoted saying in the press release.
The Laurel Generating Station is expected to be available to
serve customers by Jan. 3, 2024.
The battery storage project is expected to come online in
late 2023.
The projects announced Tuesday stem from a competitive
solicitation for resources issued at the start of 2020. The utility is expected
to report results of its request for proposal to the Montana Public Service
Commission at month’s end. The company reports receiving proposals from 21
bidders.
NorthWestern indicates it will apply in May for PSC approval
to add the RICE plant and the battery storage project to its portfolio.
The battery storage will be used to store wind energy when
generation exceeds demand, so the power can be delivered when needed.
At the start of 2023, British Columbia-owned BC Hydro will
supply NorthWestern with 100-megawatts of capacity through 2028.
NorthWestern has signaled a move toward gas-fired power
plants for several years. In early 2019, it was telling would-be investors that
it had a need for about 800 megawatts of dispatchable generation capacity. It
indicated that gas-fired power plants were the preferred source for the
generation and would likely be built 200 megawatts at a time.
Gas-fired power plants were also the focus of the utility's
2019 integrated resource plan. However, the day after a public hearing in which
NorthWestern explained its reasons for pivoting to gas, the utility announced
it intended to buy more of Colstrip Unit 4.
Puget Sound Energy and NorthWestern had entered a purchase
sale agreement in which Montana's largest monopoly utility was to pay the
aggregate price of $1 for Puget's 185-megawatt share of Unit 4. The two
Colstrip owners chose to withdraw from the agreement after utility analysts in
Washington determined that dollar deal was no bargain for consumers because of
related power prices and unpaid debt.
Word of Laurel’s gas-fired power plant leaked weeks ago in
the Montana Legislature as Sen. Steve Fitzpatrick, sponsor of a Colstrip bill
benefitting NorthWestern, testified that there would be a gas-fired power plant
in Billings. The son of NorthWestern’s former director of government affairs,
was 8 miles off the mark but was in the ballpark.
Fitzpatrick’s Senate Bill 379, supported by NorthWestern,
shields the utility from financial losses related to Colstrip by guaranteeing
full recovery of new shares in the plant, as well as determining that only
NorthWestern could decide when that was considered shut down. It set up
regulator-proof terms for passing on unanticipated costs to customers.
Relevant to the 175-megawatt Laurel RICE plant, SB 379 also
set up a formula to determining what customers were to pay for these
new-to-NorthWestern Colstrip acquisitions. A 185-megawatt share of Unit 4 was
likely to cost customers $486 million according to PSC analysts, who also offered
up an alternative $238 million price that eliminated basic costs like coal for
making coal power, power plant maintenance, and capital expenses.
Lawmakers were told there was no cheaper option.
“The only thing that's cheaper would be if you went down to
the store and got some candles down at Safeway and burned those. That's
probably cheaper. But nobody has produced anything that says that anything is
cheaper than this. Replacing Colstrip is not cheaper,” Fitzpatrick told
lawmakers last week.
What NorthWestern produced Tuesday was less than what PSC
analysts had estimated for the Colstrip terms offered by SB 379.
NorthWestern is also a gas company with 43.1 billion cubic
feet of owned reserves and retail demand of 560 million cubic feet annually in
Montana, as disclosed in corporate filings. The company owns three natural gas
storage fields in Montana, as well as two transmission pipelines through
subsidiaries, plus connections to four other transmission systems.
The Laurel power plant is the second gas-fired power plant
announced by NorthWestern in the last 12 months. The utility announced the
construction of a 58-megawatt RICE plant near Huron, South Dakota in May 2020.
The cost of that plant was $84 million.
There will be opposition to a gas-fired power plant. Carbon
dioxide emissions from gas-fired power plants are roughly 54% of a coal plant
producing the same level of energy, according to U.S. Energy Information
Administration. Peaker plants, like the one NorthWestern intends to build in
Laurel, have been promoted as a transition generator to an all-renewable energy
future.
With the advent of battery storage, there are renewable
proponents who say natural gas as a transitional energy source isn’t necessary.
