The Sierra Club wants Duke Energy Florida to not only look for power generating options to replace its 789-MW Crystal River Unit 3 nuclear facility, it also wants this Duke Energy (NYSE: DUK) subsidiary to replace two aging coal units at the same site.
Duke Energy plans to issue a request for proposals (RFP) seeking options to generate electricity to replace Crystal River Unit 3, the club said in a Sept. 26 statement. Crystal River Unit 3 was idled some time ago due to structurual problems and the company more recently decided the unit wasn’t worth fixing.
“Duke Energy also operates two aging and obsolete coal-fired generators at the plant, and the utility has told state regulators it plans to phase out these coal units sometime before 2020, as the units are now too expensive to operate and require substantial upgrades,” the club said. “The Sierra Club has filed expert comments to state regulators arguing that Duke Energy can, and should, phase out these coal units faster and replace them with clean energy solutions like energy efficiency and solar power.”
Julia Hathaway, the Sierra Club Beyond Coal representative in Florida, said: “Duke Energy has taken a strong step in planning to phase out coal burning units at its Crystal River Power Plant before 2020, but the company’s new request for proposals to replace the power is a step in the wrong direction. Duke Energy relies too heavily on natural gas power for Florida, and as with coal, burning natural gas for power sends Florida’s energy dollars out of state. If natural gas prices increase at some point over the next few years, power prices will also go up, hurting Florida’s economy.”
Duke readies RFP for up to 1,640 MW of capacity
Duke Energy Florida (DEF) recently released pre-RFP documents ahead of a plan to formally issue the RFP on Oct. 8. There will be a pre-release meeting for potential bidders on Oct. 2.
DEF will be seeking proposals from potential suppliers of electric generating capacity and associated energy. In this RFP, DEF will be soliciting proposals for alternatives to the company’s next planned generating unit (NPGU), which is approximately 1,640 MW (summer) in 2018, with a minimum of 820 MW in service no later than May 1, 2018, with the balance of the capacity to be in service no later than Dec. 1, 2018.
The utility’s NPGU is a 1,640-MW, natural gas-fired combined-cycle (CC) resource in Citrus County, Fla. However, the company said it will consider other resource types within this RFP. The fact that the NGPU being used as a reference point seems to favor gas-fired capacity is apparently what caught the Sierra Club’s attention in its anti-fossil fuel fervor.
Capacity and energy must be from a dispatchable supply-side resource. The RFP allows for creative responses which employ innovative or inventive technologies or processes. Resources must be considered firm capacity including firm deliverability into DEF. The RFP allows for both tolling and purchase power arrangements. Existing and new capacity, including system power sales, are acceptable.
In addition to their base proposal, bidders may supply up to two variations (such as power augmentation, operating reliability impacts or financing terms) in project term and/or pricing at no additional cost. Acceptable bid proposals must be between a minimum of 100 MW (net summer) and a maximum of 1,640 MW (net summer). DEF is seeking delivery terms in the range of 15 to 35 years.
Crystal River Units 1 and 2 to survive until 2016, and maybe 2020
The two older coal units at Crystal River that the Sierra Club is targeting, Units 1 and 2, may get retired in 2016 due in part to the federal Mercury and Air Toxics Standards (MATS). But Duke Energy Florida has said it may be able to extend the lives of these two units to 2020 if test burns of new coal this year in those units pan out. The newer, bigger coal-fired Units 4 and 5 at Crystal River are equipped with new-ish emissions controls and are not in danger of shutting.
Under the terms of a revised air permit, subject to approval of the State Implementation Plan for compliance with the requirements of the Clean Air Visible Haze Rule, Crystal River Units 1 and 2 are required to cease coal-fired operation by the end of 2020 unless scrubbers are installed prior to the end of 2018.
Attached to the pre-RFP was a ten-year site plan (TYSP) that Duke Energy Florida (then known as Progress Energy Florida (PEF)) filed in April with the Florida Public Service Commission. “In this TYSP, PEF anticipates retiring these units in April of 2016 following the receipt of a one year MATS compliance extension from the Florida Department of Environmental Protection due to the need to make transmission grid upgrades to maintain reliability,” said the plan about Crystal River Units 1 and 2. “PEF continues to evaluate alternatives that would allow these units to operate in compliance with MATS during the period 2015–2020.”
Crystal River Units 1 and 2 have traditionally been fired with Central Appalachia coal. U.S. Energy Information Administration data shows that the plant got its coal earlier this year from various suppliers, including B&W Resources, Arch Coal Sales, James River Coal, Blackhawk Mining and Alpha Natural Resources. The test blends of coal this year at these units are of western bituminous and Powder River Basin coals. Units 4 and 5, which have SO2 scrubbers, burn high-sulfur coals from the Illinois Basin from suppliers like American Coal, Eagle River Coal LLC and Knight Hawk Coal LLC.
The coal units and their net capacities at Crystal River are: Unit 1 – 376 MW; Unit 2 – 497 MW; Unit 4 – 727 MW; and Unit 5 – 706 MW.
Duke Energy Florida also has gas plant retirements in the works
DEF said in the ten-year plan that it continues to look ahead to the projected retirements of several of the older units in its fleet, particularly combustion turbines at Higgins, Avon Park, Turner and Rio Pinar as well as the three steam units at Suwannee. The Suwannee units are anticipated to have their operational lives extended to the spring of 2018. The other units continue to show anticipated retirement dates in 2016.
“Given the retirements and anticipated retirements discussed above, particularly at the Crystal River Energy Complex, along with expected load growth, PEF is preparing to add additional resources in the period beginning in 2016,” said the ten-year plan. “PEF is currently negotiating with a number of counterparties including cogenerators, independent power producers and neighboring utilities to purchase energy and firm capacity to supplement PEF’s current owned generation and contracted resources. Based on PEF’s current projected needs, these contracts will vary in capacity and length, projected to be principally 2, 4 and 5 year contracts. Anticipated energy and capacity supplied by these contracts are reflected in this TYSP. Specific counterparties are not identified as commercial negotiations are ongoing.”
The utility also said it is preparing for the addition of two new combined-cycle units, one in service beginning in 2018 and the other in 2020. Early development of the 2018 unit, including site selection and preliminary engineering, was underway as of the writing of the ten-year plan.