Gulf Power eyes new gas-fired capacity as early as 2023

The Gulf Power subsidiary of Southern Co. (NYSE: SO) said in its 2016 Ten-Year Site Plan (TYSP) filed April 1 with the Florida Public Service Commission that besides contracted solar capacity to be added in the near term, it is looking at building around 2023 a major gas-fired power project.

Gulf Power said its diverse fleet of existing coal, natural gas, oil, and renewable generating units that remain in-service following retirements of the coal-fired units at Plant Smith and Plant Scholz, combined with the capacity from a Shell Energy North America power purchase agreement (PPA) for capacity out of a plant in Alabama and a wind energy purchase agreement, will enable Gulf to meet its reserve margin requirements until June 2023.

Although Gulf’s peak demand and energy loads for the 2016-2025 planning cycle are forecasted to be slightly lower than the loads discussed in Gulf’s 2015 TYSP, the current analysis continues to indicate that combustion turbine capacity (CT) will be needed as early as 2023 in order to provide adequate capacity reserves on its system. Therefore, the schedules in Gulf’s 2016 TYSP reflect the addition of CT capacity in June 2023 following the expiration of the 885-MW Shell PPA in May 2023.

Gulf owns 50% of Plant Daniel in Mississippi, which is co-owned and operated by fellow Southern Co. subsidiary Mississippi Power. The Plant Daniel scrubbers were placed in-service in November 2015 and the Plant Daniel bromine and activated carbon injection systems were placed in service in December 2015.

In 2013, Gulf determined that the most cost-effective MATS compliance option for Plant Scholz was to retire the plant. Therefore, Scholz was retired in April 2015. In early 2015, the company finalized its MATS compliance strategy for Plant Smith. The most cost-effective compliance option was to retire the Plant Smith coal-fired Units 1 and 2 in March 2016. Plant Smith’s remaining non-coal units will continue to operate and generate electricity. Gulf’s mainstay coal generators located within Florida will remain Plant Crist Units 4-7.

Gulf moving forward with three contracted solar projects

Gulf Power has energy purchase agreements that secure cost-effective renewable energy from three solar facilities (Gulf Coast Solar Center I, Gulf Coast Solar Center II and Gulf Coast Solar Center III) and one wind project (Kingfisher Wind). The solar projects will be constructed at three military bases in Northwest Florida. The Kingfisher Wind project produces renewable energy from a facility located in Oklahoma.

In 2014, Gulf Power and Gulf Coast Solar Center I, II and III (which are subsidiaries of Coronal Development Services LLC) executed three separate agreements that provide for the sale of energy produced by the solar facilities to Gulf. Each solar energy purchase agreement has a term of twenty-five years and contains performance security provisions to protect Gulf and its customers in case of contract default.

  • Gulf Coast Solar Center I will develop, construct, own, operate and maintain a 30 MW solar generation facility on Eglin Air Force Base in Okaloosa County, Florida.
  • Gulf Coast Solar Center II will develop, construct, own, operate and maintain a 40 MW solar generation facility on the U.S. Navy’s Holley Outlying Field in Santa Rosa County, Florida.
  • Gulf Coast Solar Center III will develop, construct, own, operate and maintain a 50 MW solar generation facility on the U.S. Navy’s Saufley Outlying Field in Escambia County, Florida.

Each of the facilities will be directly interconnected to Gulf Power transmission facilities and the owners are fully responsible for the costs of interconnection.

In December 2014, Gulf Power and Morgan Stanley executed an energy purchase agreement with a term of approximately twenty years which is subject to early termination provisions. The Kingfisher Wind project, constructed as a result of this agreement, is located in Kingfisher and Canadian counties, Oklahoma. Included in the agreement are performance security provisions designed to protect Gulf and its customers in case of default. Morgan Stanley is obligated to deliver a fixed number of MWhs to Gulf in each hour of the agreement’s twenty year term, and Gulf will purchase the energy at prices as specified in the agreement. Morgan Stanley bears all risks and responsibilities associated with delivering energy to the Southern Companies Transmission System.

Several sites considered for new gas-fired capacity

Gulf’s current plan is to either construct new generating facilities or purchase additional generating capacity by June 2023 of the current planning cycle following the expiration of its 885-MW Shell PPA. The company’s next need is anticipated to be for CT capacity. Gulf will consider its existing Florida sites at Plant Crist in Escambia County, Plant Smith in Bay County, and Plant Scholz in Jackson County, as well as its greenfield sites in Florida at Shoal River in Walton County, at Caryville in Holmes County, and at North Escambia in Escambia County as potential sites for locating future generating units in Northwest Florida.

Each of these potential sites has unique characteristics that may offer construction and/or operational advantages related to the potential installation of natural gas-fired CTs, which is the next potential type of capacity needed. The potential sites are:

  • Potential Site #1: Plant Crist, Escambia County. The project site would be located on Gulf’s existing Plant Crist property. If a future project is ultimately located on this property, detailed studies must first be completed to determine the exact size and location of the project site within the plant property’s boundaries in order to meet Gulf’s needs while ensuring full compliance with local, state, and federal requirements. The existing Plant Crist facility consists of 924 MW of steam generation. The land adjacent to the property is currently being used for residential, commercial, and industrial purposes. This property is located on the Escambia River.
  • Potential Site #2: Plant Smith, Bay County. The project site would be located on Gulf’s existing Plant Smith property. If a future project is ultimately located on this property, detailed studies must first be completed to determine the exact size and location of the project site within the plant property’s boundaries. The plant property, approximately 10 miles northwest of Panama City, Florida, is located on North Bay. The existing Plant Smith facility consists of 96 MW of steam generation per the MATS compliance deadline extension, 556 MW of combined cycle generation, and 32 MW of CT generation. The Plant Smith property is dedicated to industrial use. The land adjacent to the property is rural.
  • Potential Site #3: Plant Scholz, Jackson County. The project site would be located on Gulf’s existing Plant Scholz property. If a future project is ultimately located on this property, detailed studies must first be completed to determine the exact size and location of the project site within the plant property’s boundaries. The plant property, approximately 3 miles southeast of Sneads, Florida, is located on the Apalachicola River. The Plant Scholz facility as a whole was retired in April 2015. The Plant Scholz property is dedicated to industrial use. The land adjacent to the property is primarily rural and in a natural state, but some agricultural development exists.
  • Potential Site #4: Shoal River Property, Walton County. The project site would be located on undeveloped Gulf property. If the project is ultimately located on this property, detailed studies will be required to determine the exact size and location of the project site within the property’s boundaries. This property, also referred to as the Mossy Head property, is approximately 3 miles northwest of Mossy Head, Florida. It is located on the Shoal River. The Shoal River property is currently dedicated to agricultural and rural residential use.
  • Potential Site #5: Caryville Property, Holmes County. The project site is undeveloped Gulf property that is bisected by the Holmes/Washington county, Florida line. If the project is ultimately located on this property, detailed studies will be required to determine the exact size and location of the project site within the property’s boundaries. This property is approximately 1.5 miles northeast of Caryville, Florida. It is located just east of the Choctawhatchee River. The Caryville property is certified under the Power Plant Siting Act for two 500 MW coal-fired units, but is also suitable for CT generating units. The site is approximately 2,200 acres in size and is adjacent to a major railroad line on its southern boundary. The land surrounding the property is primarily rural and is used mainly for agriculture and timber harvesting.
  • Potential Site #6: North Escambia Property, Escambia County. The project site is undeveloped Gulf property that is located approximately 5 miles southwest of Century, Florida. It is located just west of the Escambia River. If the project is ultimately located here, detailed studies will be required to determine the exact size and location of the project site within the property’s boundaries. The North Escambia property is primarily dedicated to timber harvesting and agricultural use. The property is in close proximity to transmission, natural gas pipelines, railroad, major highways and access to water, all suitable to accommodate new generation needs. The site is currently 2,728 acres and includes property located directly on the Escambia River to support the water supply needs for any future generating facility.
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.