Duke Energy Florida lays out retirement plans for coal, gas and oil units

Duke Energy Florida, for clean-air purposes, plans to retire its coal-fired Crystal River Units 1 and 2 in 2018, and also plans to retire due to factors like age some gas- and oil-fired peaking capacity over the next couple of years.

This Duke Energy (NYSE: DUK) subsidiary applied Jan. 30 at the Florida Public Service Commission for a ruling that either a possible buy of Calpine‘s (NYSE: CPN) Osprey gas-fired plant, or new simple-cycle gas capacity built at its Suwannee power plant site, is a best way to meet capacity needs out to 2018.

Supplying supporting testimony, with an overview of Duke Energy Florida’s resource needs, was Benjamin M. H. Borsch, employed by Duke Energy as the Director, IRP & Analytics—Florida.

Borsch noted that in February 2013, the company decided to retire its Crystal River Unit 3 nuclear plant (CR3). The company also decided to retire its CR 1 and CR2 coal units earlier than originally planned. These retirements account for over 1,500 MW of summer generation capacity on DEF’s system. The company had planned to retire  CR 1 and CR2 in 2020. But as a result of new EPA regulations, mainly the Mercury and Air Toxics Standards (MATS), the company faced the retirement of CR1 and CR2 as soon as 2015. However, the company now plans to retire CR1 and CR2 in 2018.

These and other retirement decisions and the company’s response to them, coupled with the company’s load growth, create a near-term need for generation, commencing in 2016.

Crystal River Units 1 and 2 cannot  meet the emissions requirements for MATS as currently configured and without changes in the coal fuel source for the units. The Florida Department of Environmental Protection has granted a one-year MATS compliance extension for these units, from the original April 2015, to April 2016. This extension was based on the time DEF needed to complete modest upgrades to the CR1 and CR2 units under a plan for limited continued operation of CR1 and CR2 in compliance with MATS. The FDEP also recognized that continued operation of CR1 and CR2 deferred or resolved significant Florida electric grid reliability issues. 

During 2013, the company further evaluated the continued operation of Units 1 and 2 (called Crystal River South) in compliance with MATS and other environmental regulations and determined that the company could continue to operate CR1 and CR2 beyond 2016 with certain modifications to the units and a change to lower sulfur coal blends. The company now plans to continue commercial operation of CR1 and CR2 until 2018. This decision reduces the generation capacity the company needs prior to 2018, but the company still needs generation capacity to reliably serve its customers commencing in this time period.

Combustion turbines at three plants to be retired by 2016

The company also projected the retirement of some of the oldest combustion turbines in its fleet in 2014 and 2016. These combustion turbines were installed in the late 1960s and early 1970s at Avon Park, Turner and Rio Pinar. They collectively provide 133 MW of summer generation capacity to DEF’s system. They are smaller, less efficient combustion turbines and they are increasingly more costly to operate and maintain. The company will retire all of these combustion turbine units by 2016.

The company also plans to retire its three 1950s vintage oil- and gas-fired steam generation units at its Suwannee power plant site by 2016. These are small units, collectively providing 128 MW of summer capacity to DEF’s system. These units were slated for retirement in 2018 as they approach the end of their life cycle. DEF will retire these units in 2016 to reduce the cost of the transmission upgrades needed for installation of the proposed peakers at this site, which are the preferred alternative to the Osprey power plant buy from Calpine. 

Due largely to the short life extensions for CR1 and CR2, Duke Energy Florida no longer needs up to 1,150 MW of generation capacity commencing in 2016, as it had been projecting a couple of years ago. The company’s need now is approximately 280 MW of summer generation capacity commencing in 2016 that increases to 470 MW in the summer of 2017.

Borsch said the most cost-effective resource plan to meet the company’s summer generation capacity needs commencing in 2016 includes the construction of a new 320-MW simple cycle combustion turbine plant consisting of two F class combustion turbine units at the company’s Suwannee power plant site. This is called the Suwannee Simple Cycle Project. This plan also includes the installation of a 220-MW chillers power uprate project for the company’s existing natural gas-fired, combined cycle power blocks at its Hines Energy Complex (HEC). This is called the Hines Chillers Power Uprate Project.

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.