Early retirement of the three coal units at the Martin Drake power plant of Colorado Springs Utilities (CSU) would have social benefits, like lower pollution, but would have higher costs than if the units were kept in operation over the long term with new environmental controls added.
That is the overall conclusion of a draft final report from consultant HDR Engineering on Drake that the CSU has out for public comment, including at a planned Dec. 3 open house. CSU has been looking for the past couple of years at alternatives for Drake, including renewable energy replacement options. CSU and its governing board are looking at making a decision on Drake’s future in 2014, and if early retirement is chosen that would mean the termination of ongoing emissions retrofits at the plant.
There are three units, Unit 5-7, at the Martin Drake plant which are currently operational. All three units are capable of producing full load output on either natural gas or coal. Fuel supply to the facility is primarily Powder River Basin coal from Wyoming with limited natural gas (primarily for boiler ignition) and biomass co-firing.
The Unit 5 boiler is a Riley Stoker Stirling type boiler that is nominally rated at 44 MW. The Unit 6 boiler is a Babcock & Wilcox Stirling design and is rated at 66 net MW. Unit 7 is slightly larger than the other two units with a nominal rating of 127 MW. This unit also uses a Babcock & Wilcox boiler.
The Drake units require upgrades to comply with Regional Haze, Best Available Retrofit Technology (BART) requirements in accordance with a current proposed plan and associated compliance schedule of January 2018. This will require the installation of new NOx and SO2 controls for all three units. These modifications to the units are currently planned to include the installation of ultra low NOx burners on all three units with the addition of overfire air to assist in reducing NOx. Also, Units 6 and 7 will require the installation of a flue gas desulfurization systems (scrubbers) to reduce SO2 emissions.
The end of 2017 is the earliest date studied for retirement of the Drake units, in order to comply with the haze requirements as of January 2018.
The work associated with the installation of the scrubber system is currently contracted with local company Neumann Systems Group with the majority of the costs for this project having already been spent or committed. It is expected that Drake 5, which is not getting the Neumann technology, will utilize a dry sorbent injection (DSI) system to control SO2 emissions. CSU’s intent is to initiate operation of these systems well in advance of the required compliance date with a forecast in-service date of January 2015.
Similar Reasonable Progress (RP) haze compliance requirements are in place for the 210-MW, coal-fired Nixon Unit 1 within CSU’s generation system with a compliance date of Dec. 31, 2017. So this unit will also undergo upgrades for a flue gas desulfurization system, low NOx burners, and overfire air system.
A range of Drake alternatives looked at by HDR
The Drake study was defined by a CSU Task Force to evaluate 12 alternatives of which eight were preset by the Task Force. These alternatives were structured to evaluate the range of financial, environmental, and societal considerations surrounding the potential decommissioning of the Martin Drake facility. The alternatives selected for evaluation encompass all of the following:
- Ongoing operation of the existing Drake units on coal or gas,
- A range of retirement dates for Drake,
- Varying degrees of site remediation and valuation for the Drake site,
- Utilization of the Drake site as compared to a greenfield site development,
- Renewable generation and the associated environmental benefits,
- The influence of demand side management on the results,
- Solutions that maintain a minimum 18% system reserve margin,
- Solutions based upon optimizing financial return on investment (FROI) parameters only, and
- Solutions based upon combining financial, environmental, and societal factors (SROI).
There are a number of factors and uncertainties that may pose a risk and/or may otherwise influence decisions surrounding ongoing operation of Drake, the study noted. These factors, identified as “decision drivers,” include regulatory or legal factors like new federal CO2 legislation, input from public interest groups, the performance of the ongoing environmental retrofit projects, needed capacity expansions, renewable portfolio requirements, fuel diversity, and other related factors.
“The Drake Power Plant is a relatively old plant compared to the overall age of the U.S. coal fleet currently in operation and should reasonably be expected to be retired in the coming years and replaced with a new power generation technology,” the study said. “The key question to be addressed by CSU and the Colorado Springs community is when to actually retire the plant. The alternatives analysis conducted through this study process provides the comparative analysis of the selected alternative to support such a determination by the decision makers.”
The calculated rate impacts associated with the most cost effective generation options for early retirement dates suggest temporary rate impacts in some of the five year periods of up to 7%. The CSU rate making process would likely serve to levelize these short-term rate impacts over a longer period of time as a more detailed rate making process or analysis was not performed as part of this study. “We don’t believe that this will negatively impact CSU’s ability to maintain its cost competitive regional pricing objective,” the study noted.
The analysis of alternatives has demonstrated that an earlier retirement does result in marginally higher financial costs to CSU, but conversely provides significant environmental and social benefits for the community. “The community decision will be determined by the weighting and prioritization of these financial and environmental considerations as clear trade-offs exist between the studied alternatives,” the study said.