National Grid told the New York State Public Service Commission in a May 17 report that it has found three options to be viable related to the planned repowering of the coal-fired Dunkirk plant by plant owner NRG Energy (NYSE: NRG).
Dunkirk is one of several coal-fired facilities in New York, with the latest being the Danskammer plant, to be headed for retirement in the face of new environmental mandates and a desire by New York State to get off of coal.
On Feb. 19, National Grid issued a request for proposal (RFP) to NRG seeking information on the potential repowering of Dunkirk. On March 26, NRG responded to the RFP proposing three repowering options:
- Option 1—a new 422 MW combined-cycle gas turbine (CCGT) and refueling of the existing 75-MW Dunkirk unit 2 with natural gas.
- Option 2—the refueling of the existing Dunkirk units 2, 3 and 4 with natural gas.
- Option 3—installation of 285 MW of natural gas-fired peaking units.
Each option proposed by NRG includes different commercial and schedule terms, and has different effects with respect to projected reliability, environmental and economic impacts.
National Grid evaluated the three Dunkirk repowering options and one set of transmission upgrades for the May 17 report. These are:
- Repowering Option 1—A new 422 MW CCGT located on the 230-kV network, and the refueling of Dunkirk Unit 2 (75 MW) on natural gas and located on the 115-kV system. According to NRG, the CCGT could be in-service by mid-2017, with the Dunkirk Unit 2 refueling occurring in 2015.
- Repowering Option 2—NRG would add natural gas-firing capability to Dunkirk units 2, 3 and 4 and provide 455 MW of generation.
- Repowering Option 3—NRG would install 285 MW of new gas-fired peaking units, capable of full-load operations in 10 minutes.
- Transmission Upgrades—National Grid would implement three transmission projects as of June 1, 2015, to avoid the need for continued reliance on the 2013 RSS Agreement upon its scheduled termination (on May 31, 2015), and two longer-term transmission projects to address longer-term reliability needs that remain after that date.
Repowering Option 3 too costly, but the other three look viable
Repowering Options 1 and 2 and the Transmission Upgrades each satisfy the reliability need identified by National Grid over the study period, and the relative reliability performance of the solutions does not provide a sufficient basis for differentiating among the alternatives on that basis, National Grid reported.
In the Jan. 18 order, the New York commission asked National Grid to compare the costs and benefits of repowering the NRG Dunkirk facility against implementing transmission upgrades proposed to address retirement of the plant, and to report the results of that analysis to the commission with a recommendation for action.
“Based on its analysis, the Company recommends the Commission support the implementation of the Transmission Upgrades solution,” said the May 17 report. “To arrive at its recommendation, the Company first considered whether a proposed option met the reliability needs. The Transmission Upgrades, as well as Repowering Options 1 and 2, each satisfactorily addresses the reliability needs resulting from closure of Dunkirk. Therefore, for each of these options, the Company looked at costs to customers, market effects, other economic impacts (e.g., jobs), and environment impacts.”
The repowering options would result in generation production costs that actually increase rather than decrease when compared to a base case. This is due to the fact that, because of its location, much of the generation produced by the repowered Dunkirk plant is projected to be exported to PJM (to the west) rather than consumed in New York State.
Dunkirk now operating under temporary transmission support deal
In March 2012, NRG Energy, the owner of Dunkirk Power LLC, filed notice with the commission of NRG’s intent to mothball the Dunkirk facility no later than Sept. 10, 2012. Based on transmission system studies, National Grid determined that Dunkirk units 1 and 2 were needed for an interim period to maintain system reliability until permanent transmission system reliability solutions could be implemented. Accordingly, the Company entered into a Reliability Support Services contract with Dunkirk for the period September 2012 through May 2013 (called the “2012 RSS Agreement”). The estimated cost of the 2012 RSS Agreement is approximately $37m.
National Grid said it is implementing certain near-term transmission projects that will reduce the reliability need for Dunkirk generation from two units to one unit by May 31, 2013. However, transmission solutions that could reduce reliance on Dunkirk generation to maintain area reliability altogether cannot be completed before June 1, 2015. Therefore, to maintain system reliability in the interim, National Grid and Dunkirk entered into a second RSS Agreement for the period June 2013 through May 2015 (“2013 RSS Agreement”). Cost of the 2013 RSS Agreement is about $72.7m.
NRG Energy said March 26 that an independent study shows that the proposed repowering of the Dunkirk to gas-fired generation would provide remarkable benefits to electricity ratepayers, as well as significant economic benefits locally and regionally. Rather than import power from out of state or even out of the country, the Dunkirk repowering will help ensure that the power used by New Yorkers is produced within the state, for the benefit of its people, NRG said. The study was conducted by Longwood Energy Group LLC and its partners (“the LEG Team”).
“The LEG Team analyzed the impact of the Dunkirk repowering project on the New York wholesale electricity market and the New York State economy,” NRG noted. “The analysis found that when operational, the repowered plant will reduce the wholesale cost of electricity in the state, which can be passed along to ratepayers by their utilities. Specifically, New York wholesale energy prices would be decreased by an average of $1.11 per megawatt hour with the plant repowered rather than retired, and in the Dunkirk vicinity, prices would drop by $2.35 per megawatt hour. Combined, electricity cost savings will exceed $300 million per year, more than $3 billion in total over the ten year period studied.”
Dunkirk now consists of four units with a total nameplate rating of 635 MW net. Units 1 and 2 are identical 100 MW units that began commercial operation in 1950. Units 3 and 4 are identical 218 MW units that went into commercial operation in 1959 and 1960, respectively. All Dunkirk units, when operating, have lately used low-sulfur Powder River Basin coal.