Minnesota municipal agency outlines possible wind, gas additions

The Minnesota Municipal Power Agency (MMPA) plans to rely mostly on wind and gas-fired generation, with that gas generation distributed around in small increments, to meet its power needs over the next few years.

MMPA on Dec. 20 filed with the Minnesota Public Utilities Commission its 2013 integrated resource plan (IRP), which covers the period 2014-2028.

Capacity requirements in this IRP would have been greater, but for the new Midcontinent ISO resource adequacy construct that became effective June 1, 2013. “This construct requires each market participant to acquire capacity resources to cover its coincident peak with MISO rather than its non-coincident peak,” the IRP noted. “This new construct provides more diversity and reduces MMPA’s projected capacity needs.”

A big factor in this plan is that Elk River Municipal Utilities (ERMU) became the twelfth member of MMPA in June 2013. ERMU has a peak demand of about 60 MW. MMPA’s electrical power load is projected to increase by approximately 20% with the addition of ERMU. The Agency will begin providing wholesale power to ERMU on Oct. 1, 2018, under a Power Sales Agreement that runs through 2050. Therefore, starting with the summer of 2019, MMPA’s capacity requirements increase by 71 MW.

The Agency’s projected need for additional capacity grows from 9 MW in 2016 to 156 MW in 2028. This need is due to the expiration of existing capacity contracts, the addition of ERMU and member demand growth.

The Agency is developing a large number of resource prospects to meet its future needs in part because much about future power markets is uncertain. The Agency’s preferred plan to satisfy its capacity requirements includes owned distributed generation. And MMPA will continue its renewable generation efforts.

To meet the state’s Renewable Energy Standard (RES), the Agency constructed Hometown WindPower, a project that put a wind turbine in each member community (excluding Elk River which was not a member at the time) and at the Faribault Energy Park site. The Agency constructed and put in service the 44-MW Oak Glen Wind Farm (OGWF) and the 8-MW Hometown BioEnergy project.

MMPA’s peak load during the summer of 2013 was 329 MW on Aug. 26, 2013. MMPA has a power supply portfolio that consists of 342 MW of both contractual resources and Agency-owned generation for Planning Year (PY) 2014.

Hometown BioEnergy is projected to provide MMPA with 8 MW of installed capacity via anaerobic digestion to produce biogas that will fuel its reciprocating engines. The facility is projected to be in service by the end of December 2013.

In this IRP, MMPA is developing resource prospects with up to 333 MW of capacity. Because some of these prospects are wind projects, the total accredited capacity would be less than 333 MW. The resource prospects are:

Renewable

  • Wind PPAs – 138 MW
  • Exploring additional wind PPAs
  • Exploring hydro PPAs

Conventional

  • Distributed Generation, Natural Gas – Up to 155 MW

These resource prospects are greater than MMPA’s needs because of the uncertainty in the electric utility industry. By developing projects in excess of its needs, the Agency said it retains the planning flexibility that is vital to success in today’s market.

MMPA said it has signed three wind PPAs that total 138 MW of generating capacity, with specifics of those PPAs redacted from the public version of the IRP.

The Agency is pursuing distributed generation fired with natural gas in its member communities. Under this approach, MMPA would install gas-fired generators in 5-MW to 25-MW increments in larger member cities. The Agency estimates that it could install up to 155 MW of distributed generation fired with natural gas across its member communities by 2028.

MMPA’s preferred short range (2014-2018) action plan is:

  • 2015 – Add 10 MW of Distributed Generation
  • 2016 – Add 15 MW of Distributed Generation
  • 2017 – Add 15 MW of Distributed Generation
  • 2017 – Purchase 6 MW of Market Capacity
  • 2018 – Add 15 MW of Distributed Generation

The fuel scenarios in this IRP are based on natural gas prices of $3.18 to $6.36 per MMBtu in 2013 dollars. EIA’s 2013 Annual Energy Outlook projected natural gas prices to be about $5.20/MMBtu by 2028 in 2011 dollars. If natural gas prices return to 2007-2008 levels, then other technologies such as coal or nuclear could be lower cost resources, the Agency noted. However, long lead times of 10 years or more, as well as uncertainty surrounding environmental legislation, make committing to this kind of baseload generation difficult. Baseload resources also diminish the Agency’s ability to respond to changes in demand and market conditions.

MMPA’s preferred long range (2019-2028) plan is:

  • 2019 – 25 MW of Natural Gas Fueled Distributed Generation
  • 2019 – 39 MW of Market Purchased Capacity
  • 2020 – 25 MW of Natural Gas Fueled Distributed Generation
  • 2020 – 17 MW of Market Purchased Capacity
  • 2021 – 25 MW of Natural Gas Fueled Distributed Generation
  • 2022 – 25 MW of Natural Gas Fueled Distributed Generation
  • 2028 – 1 MW of Market Purchased Capacity
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.