Otter Tail Power takes initial steps to develop 248-MW gas peaker

Otter Tail Power on June 1 filed its 2016 Integrated Resource Plan with the Minnesota Public Utilities Commission, which identifies how Otter Tail proposes to meet the capacity and energy needs of its customers over the 2017-2031 planning period.

Otter Tail said it has worked closely with stakeholders and regulators over the last year to develop a straight-forward plan that meets the requirements of these groups and at the same time keeps customer’s rates as low as possible. The preferred plan includes an addition of a 248 MW simple cycle natural gas combustion turbine plus an additional 200 MW of wind as a replacement for the retiring, 140-MW Hoot Lake coal plant.

Both Hoot Lake #2 and #3 (#1 was retired in 2005) were upgraded to meet the federal Mercury and Air Toxics Standards in 2015. These upgrades included new electrostatic precipitator components, as well as activated carbon injection.

In addition, Otter Tail has included an energy efficiency goal of 1.5% and will add 30 MW of solar to meet Minnesota’s Solar Energy Standard. The renewable additions included in the preferred plan will bring the nameplate rating of its current renewable energy generation to approximately 475 MW or about 30% of retail MWH sales.

Since Otter Tail’s 2010 Resource Plan and related Baseload Diversification Study was approved by the commission in 2013, Otter Tail has added 62.4 MW of wind generation and entered into capacity-only purchase power agreements (PPA) for Midcontinent Independent System Operator Zone 1 capacity that will cover the bulk of Otter Tail’s capacity needs until June 2021. In addition, the company has included in this new plan an energy efficiency goal of 1.5% to meet Minnesota state goals.

Otter Tail said its least-cost plan scenario identifies 200 MW of wind additions, with 100 MW added in 2018 and 100 MW added in 2020. The approved 2013 Resource Plan authorizes up to 300 MW of wind. Otter Tail’s request in this case is for the commission to repeat the authority granted in 2013 IRP Plan.

As for the 248-MW gas-fired project, Otter Tail said it has purchased an unspecified site and entered the MISO interconnection process for a simple-cycle combustion turbine located at that site. High-voltage electric transmission and a large natural-gas pipeline exist already on the parcel, so this turbine site will not require construction of additional transmission lines or gas pipeline. Additional pre-development activities are underway. “We expect to begin site permitting by early 2017 and to issue requests for bids for turbine supply, engineering, and elements of construction beginning in late 2018,” the company added.

As for acquisition activities relating to the wind addition authorized by the 2013 IRP approval, Otter Tail is discussing potential wind projects in North Dakota with developers. Each of the projects will be able to achieve commercial operation in 2018. “While the status of the Clean Power Plan remains uncertain, we believe that siting renewable generation in North Dakota in this timeframe best mitigates the Company’s risks under the Clean Power Plan while maximizing the value of Production Tax Credits,” the company said.

Otter Tail said it is in discussions with possible solar developers. By 2020, it plans to have sufficient solar energy procured, either through ownership or purchase, to meet Minnesota’s Solar Energy standard. “We believe that the capital cost of solar will continue to decline and the efficiency of those panels will continue to increase as we get closer to 2020,” the utility said. “We are also exploring the possibility of early compliance through the purchase of Solar Renewable Energy Credits (Solar RECs) in order to best take advantage of continued cost declines of solar components and to accommodate the different requirements of Otter Tail’s three state jurisdictions.”

Consistent with the commission’s previous approval of a Baseload Diversification Plan, Otter Tail is planning to retire the Hoot Lake Plant at the end of the MISO Planning Year 2020 —coincident with commencement of operation of the large simple-cycle turbine described above (the MISO planning year ends on May 31, 2021).

Otter Tail’s preferred resource plan will result in Otter Tail generating approximately 30% of its energy from renewables by 2021. After the wind, solar, and natural gas additions and the Hoot Lake Plant retirement, it’ll meet Minnesota’s greenhouse gas reduction goal at least until 2025.

The utility said: “In summary, our preferred resource plan furthers the vision set by the Commission in its Order approving Otter Tail’s 2013 Resource Plan. Consistent with that prior ruling, the preferred plan meets all legal requirements and allows the Company to continue providing reliable, low-cost electricity to meet our customers’ requirements.”

The company noted that the 248-MW size for the gas-fired peaker is a proxy number and may change once the combustion turbine (CT) bids are in. It pointed out that a CT can be converted to combined cycle (CC) operation in the future if circumstances so dictate but not vice versa. “Our proposed site is large enough to handle a CC conversion and we will engineer the project to readily accept conversion to CC should it be needed,” Otter Tail added.

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.