Gainesville looks at different coals for Deerhaven unit

Gainesville Regional Utilities (GRU) is looking at the chances for burning higher-sulfur coal from the Illinois Basin and Northern Appalachia at its Deerhaven Unit 2, though the unit has been able to cost-effectively burn lower-sulfur coal since an SO2 scrubber was installed there a few years ago.

GRU noted in an annual Ten Year Site Plan filed April 1 with the Florida Public Service Commision that coal was used to generate approximately 32.7% of the energy produced by its system in calendar year 2015.

Thus far, GRU has purchased low-sulfur and medium-sulfur, high-Btu eastern coal for use in Deerhaven Unit 2, its only coal unit. In 2009, Deerhaven Unit 2 was retrofitted with an air quality control system. Following this retrofit, Deerhaven Unit 2 is able to utilize coals with up to approximately 1.7% sulfur content. Given the impact of impending environmental regulations on coal generating units, reduced demand, and depressed prompt prices for Central Appalachian (CAPP) coal, GRU has continued to purchase relatively high quality eastern coals.

Rates available under GRU’s rail transport contract with CSX Transportation also provide an incentive for GRU to purchase and transport its coal supplies on the East Coast. GRU’s forecast of coal pricing assumes that 2016 and 2017 coal procurement will primarily consist of high quality CAPP coals. GRU does not expect the favorable economics of rail transported CAPP coal to be diminished in the near term.

GRU added: “Although not included in its forecast pricing, GRU continues to evaluate the economics of Illinois Basin and Northern Appalachian (NAPP) coal supply. Pricing of these coals was sourced from Argus Coal Daily publications.

“GRU has a contract with CSXT for delivery of coal to the Deerhaven plant site through 2019. Rates for coal transportation are based on the terms of GRU’s existing rail contract and historical rates of escalation under the contract. A step increase in the delivered coal price is expected in 2020 resulting from higher transportation costs.

“In addition to the commodity price of coal and rail transport expense, GRU’s delivered price of coal also incorporates the cost of environmental commodities (pebble lime and urea) required for combustion of coal in compliance with environmental regulations.

Deerhaven Unit 2 was traditionally operated at baseload. The addition of a 102.5 MW biomass project through a purchased power agreement (PPA) in 2013 has resulted in seasonal operation and increased load cycling of Deerhaven Unit 2.

The 232-MW Deerhaven Unit 2 has an Air Quality Control System consisting of a “hot-side” electrostatic precipitator for the removal of fly ash, a selective catalytic reduction system to reduce NOx, a dry recirculating flue gas desulfurization unit to reduce SO2 and mercury, and a fabric filter baghouse to reduce particulates.

The Deerhaven Station is located six miles northwest of Gainesville. The facility consists of two steam turbines, three gas turbines, and the associated cooling facilities, fuel storage, pumping equipment and transmission equipment.

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.