Independence faces electricity source decisions
Independence officials know they will have to make some major decisions soon about the future of power sources for the city, and those decisions can’t be delayed too long.
The city doesn’t need a power source for its portfolio this spring, or even this year, but the process for deciding future sources must start soon, as any change takes many months, if not a few years, to implement.
Specifically, the question relates to the city’s six combustion turbines, which sit at three Power & Light substations around the city. Officials have known for a couple years the turbines, all at least 45 years old, are nearing the end of their useful lives. Power & Light Director Jim Nail told the City Council this week a small turbine plant to replace them would be the best fit not only for the future needs of the Southwest Power Pool, the city’s wholesale power broker that covers much of the mid-America plains, but also for the city’s long-term budget.
The council’s direction to pursue that route, based on a recommendation from the Public Utilities Advisory Board in November, is on Tuesday’s agenda. The projected costs are unknown but are expected to run into tens of millions of dollars.
“Obviously we need to take some time to get a greater understanding, but we can’t take too much time,” Mayor Eileen Weir said Monday. “We essentially made some commitment to this in the master energy plan (from 2018). So, this train has already left the station, and it’s going to take some time to come up with a funding plan, and this council is going to make a decision that’s going to affect Independence for generations.”
“We’ll have to get comfortable with that, or we’re going to have a problem in five years.”
Aging peaking turbines
Independence’s six turbines account for 93 megawatts of power capacity, most of which is necessary for IPL to satisfy its capacity requirements with the Southwest Power Pool. However, they’re mostly peaking stations – designed for use in times of peak demand such as the hottest days of summer – and provide just a fraction of the energy actually used by IPL customers.
A consultant’s report in 2019 said the turbines have been maintained well and could be viable for another five to 10 years but maintenance could reach nearly $47 million if done for the full 10 years.
Nail’s reasoning to seek proposals for some new generation with a turbine or turbines is multi-faceted:
• Seeking new capacity or energy contracts will only get more expensive, as large power plants for such contracts are slowly being retired while demand remains high.
• The 10-year contract finalized last year with Oneta in Oklahoma, which allowed the city to shutter the Blue Valley Power Plant, came at low cost, and simply adding to it would come at higher cost.
• An aeroderivative gas turbine, which Nail specifically hopes to pursue, can be turned on quickly and briefly to help SPP through peak usage times, and a new, more-efficient turbine would get the call more often than the current turbines.
• Less expensive turbines likely would require a much larger scale than what Independence needs to enjoy cost benefits.
• On-site generation lessens costs for reliable transmission compared with another off-site contract.
• Although Independence has contracts with two wind farms, as well as two small solar facilities that produce a fraction of consumed energy, renewable energy can’t be counted at full capacity because it’s volatile. The wind doesn’t always blow as much, and a cloudy day generates no power, so SPP can’t count on such sources for peak usage times.
Also, left unsaid but part of the equation: Independence maintains a federal energy license to produce power – a golden ticket of sorts that removes some red tape if the city does go the route of on-site generation.
“Many baseload plants don’t get scheduled to run unless they can run for days at a time,” Nail said referring to a plant like Dogwood in Pleasant Hill, where Independence has an ownership share. “SPP coordinators have to look for places to fill the gap quickly; large steam and combustion plants are not built that way, to turn on quickly and briefly, and running at low loads actually increases their costs. SPP is going to rely more on peaking units.”
A preferred approach
“We feel that the aeroderivative turbine fits well into the SPP market. Obviously this is a large-ticket item … but when they do run, they do provide energy to the market to offset costs.”
The latest reports show an aeroderivative turbine would cost nearly $1.2 million per megawatt. Nail said IPL has one vendor that has offered a refurbished 50-megawatt turbine like this for $37 million, which would be a significant discount, but right now they simply want to seek project proposals.
The city has two large contracts with coal plants, though experts say those two plants will be among the last ones retired – perhaps decades away.
Council Member Mike Huff encouraged the city last year to explore buying into a more permanent power source or perhaps building one to fill some capacity requirement, given interest for bonds is at historic lows. He added Monday that if the city hopes to attract some growth, it must make sure it can have a sufficient power supply.
“I’m glad to see something besides wind and solar,” Huff said Monday. “We need more than that; we need some generation. Our portfolio’s fantastic; we have a little bit of everything.”
Council Member Karen DeLuccie noted that such an expenditure, quite possibly larger than the Bass Pro development ($72 million) or Cable Dahmer Arena ($64 million), requires some community input, including public hearings.
“I really want as many smart people hearing all this information as possible,” she said. “This is a big enough deal that I think we need to do that. We’ve got an obligation to the citizens to make a good decision based on good information.”
Council Member Dan Hobart said the decision, while huge, is also exciting.
“What I’m most concerned with is committing the city to a $100 million spend that’s useless halfway through the spend,” he said. “I fully admit no one can predict the future, but we need to be looking at 40-50 years from now, and what’s the best decision for them.”
Weir agreed this energy decision will require community input, from economic development professionals and citizens alike, and must be part of the city’s immediate strategic plans.
“Once we start down this course, we can’t change our mind in three to five years,” the mayor said. “The price tag is jaw-dropping, to some extent, but we don’t have a whole lot of alternatives.”