Indianapolis Power & Light (IPL), a subsidiary of AES Corp. (NYSE: AES), said Feb. 25 that its Harding Street power plant has just burned its last coal as the company nears the end of a two-year effort to convert the plant to natural gas.
“This conversion project is beneficial for our customers and for the community as it will significantly reduce emissions and it is the most reasonable cost way to comply with environmental regulations,” said Ken Zagzebski, President of AES United States. “We remain focused on our mission to improve lives by providing safe, sustainable, affordable and reliable power to the Indianapolis community and will do so with a balanced approach of upgrading existing plants, converting units from coal to natural gas, replacing retiring units with natural gas and using solar power while also utilizing state-of-the-art battery technologies for grid reliability.”
The Harding Street plant, the second largest in IPL’s fleet, began operations in 1931. IPL received approval from the Indiana Utility Regulatory Commission (IURC) to invest approximately $70 million to convert Harding Street Unit 7. The conversion project is expected to be complete in April. This project, along with IPL’s future plans, will significantly reduce dependence on coal, making natural gas IPL’s largest source of capacity. IPL is also adding advanced battery-based energy storage to its fleet which will enable more efficient operation of the system, and will support the ongoing integration of renewable power sources.
AES subsidiary IPALCO Enterprises, the immediate parent of IPL, noted in its Feb. 24 annual Form 10-K report that in December 2015, IPL completed a project to refuel Harding Street Station Units 5 and 6 from coal to natural gas. “We expect to complete the refueling of Harding Street Station Unit 7 in the second quarter of 2016,” said the filing. “Once Unit 7 is refueled, Harding Street Station will no longer use coal as a fuel source.” Harding Street Unit 7 has a capacity of 431 MW (summer rating).
Also, the Form 10-K said that IPL plans to retire the four coal-fired units at the Eagle Valley plant in the second quarter of 2016. The replacement combined cycle gas turbine (CCGT) project at the Eagle Valley Station is expected to be placed into service in April 2017. The CCGT is one unit with an expected winter and summer capacity of approximately 644 MW to 685 MW. Eagle Valley’s four coal units have a combined capacity of 260 MW (summer rating).
Petersburg will be IPL’s lone coal-fired generator
The shutdown of coal at Eagle Valley and Harding Street will leave IPL’s 1,706-MW Petersburg plant as its only coal-fired facility. The Harding Street and Eagle Valley coal units have been operating under one-year extensions of the federal Mercury and Air Toxics Standards compliance deadline, with the extensions due to expire in April.
Said the Form 10-K: “Our largest generating station, Petersburg, is coal-fired. The second largest station, Harding Street, is converting its coal-fired units to natural gas and uses natural gas and fuel oil to power combustion turbines. The third station, Eagle Valley, is coal-fired, and we plan to retire its coal-fired units in the second quarter of 2016. The fourth station, Georgetown, is a small peaking station that uses natural gas to power combustion turbines. For electric generation, the net winter design capacity is 3,259 MW and net summer design capacity is 3,141 MW. Our highest summer peak level of 3,139 MW was recorded in August 2007 and the highest winter peak level of 2,971 MW was recorded in January 2009.”
Incidentally, the IURC on Feb. 24 concluded its latest fuel cost review case for IPL, noting in the final order: “According to IPL witness Nicholas M. Grimmer, Director, Fuel Supply, Logistics and Coal Combustion Product Management, approximately 98% of IPL’s internally generated kilowatt-hours (‘kWh’) on an annual basis are generated by coal-fired capacity. IPL currently has long-term contracts with four coal producers and receives coal from ten different mines. In some instances, IPL acquires additional coal needed through spot purchases.
“Mr. Grimmer explained that IPL strives to keep a 25-50 day supply of coal in inventory across its coal-fired generation fleet. He explained that although IPL has been working closely with its coal suppliers and transportation vendors, IPL’s system-wide inventory is currently beyond the 50-day maximum inventory target. He said mild weather, soft markets, and extended outages have all combined to reduce IPL’s coal bum below expectations. He said IPL is actively managing its inventory levels and expects to bring the coal inventory back into IPL’s target range in the near future.
“IPL witness Dennis Dininger, Director, Commercial Operations, testified regarding the operating changes occurring at IPL’s Harding Street and Eagle Valley locations and discussed the amount of firm natural gas transportation IPL will hold to support reliable generation at the Harding Street plant. He explained that securing firm transportation from interstate pipelines safeguards the delivery of natural gas while protecting IPL customers from market price volatility due to transportation constraints. He explained changes made by IPL to its schedules to better reflect the costs for coal and natural gas generation. He explained that having one line item for all of the gas-fired units is appropriate because these units share a similar cost structure.”
Indianapolis Power & Light provides retail electric service to more than 480,000 residential, commercial and industrial customers in Indianapolis, as well as portions of other Central Indiana communities surrounding Marion County.