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More money sought for Healy power plant retrofit Up to $125 million from DOE pending to replace experimental equipment Patricia Jones PNA Contributing Writer
State and federal funds have poured nearly $300 million into an experimental design for a coal power plant in Healy, yet the facility sits idle while its owners scramble for more money to install conventional technology.
The Healy Clean Coal Project, designed to produce 50 megawatts of electricity a day for the Interior Alaska power grid, has not operated since January 2000. That’s when the Fairbanks-based Golden Valley Electric Association terminated a power purchasing agreement with the plant’s owner and developer, the Alaska Industrial Development and Export Authority.
Then, and now, GVEA claims that technology incorporated in the design of the experimental coal plant at Healy — while capable of producing electricity — does not work on a reliable, cost-effective basis.
“There’s not one other power plant like this in the world, nor is another one ordered. It’s simply a failure of the technology,” said Kate Lamal, vice president of power supply at GVEA. “Golden Valley does not want to be strapped with this. We need to make cheap and reliable power for our customers.” AIDEA has more than $80 million invested AIDEA, with more than $80 million in state bonds invested in construction of the Healy plant, can’t begin to recoup its investment unless it can sell electric power generated by the coal-burning unit.
In its current, unused status, AIDEA’s annual costs for the Healy Clean Coal Project are $6.5 million in debt service and $2.3 million for “warm storage,” said Lynn Kenney, public information officer at AIDEA.
“That’s keeping the heat and the lights on,” she said. “We’re aggressively pursuing all options to stop the outflow of cash from AIDEA.”
One of those options includes asking the federal government for more money to cover costs to rip out the experimental, clean burning technology and retrofit the plant with conventional equipment, similar to that used in the neighboring older power plant at Healy owned and operated by Golden Valley.
Already, the U.S. Department of Energy has funneled $117 million into the project, part of the original $292 million budgeted for the plant. The state Legislature in 1990 awarded a $25 million grant for the project and AIDEA raised $85 million in bonds. Golden Valley contributed about $7 million, which includes in-kind services and the use of equipment. History of plant The Healy plant was one of 40 projects selected by the U.S. Department of Energy’s Clean Coal Technology Program, an effort to come up with new methods of burning fuels by reducing pollutants that cause acid rain.
The Healy plant incorporates two new technologies that are designed to reduce the amount of nitrous oxide and sulfur dioxide released in the atmosphere. One of the technologies involves an entraining combustion system that burns coal in stages to minimize the formation of nitrogen oxide. The specialized combustor also melts earth and clay contaminants in coal, removing them as slag.
The second technology involves disposing of molten slag that accumulates on the walls of the combustor, using soot blowers to knock the material down, where it is treated with limestone to reduce the sulfur dioxide.
H.C. Price served as general contractor for the construction job, excluding the boiler, combustor and turbine, which were purchased and installed under separate contracts.
TRW Space & Technology Division furnished the experimental combustion system and JOY Environmental Technologies Inc. developed the flue gas desulfurization system. Problems during testing Problems arose at the plant during the testing phase, back in early 1998. Initial problems included coal buildup along the 250-foot delivery system, according to Mike Kelly, then the president of Golden Valley.
Additionally, the experimental technology required twice as much limestone as anticipated for the desulfurization process, and more workers to oversee operations in the plant, bumping up operational costs.
Golden Valley filed complaints with state utility regulators and in state court, and an independent power consultant was hired to evaluate whether the plant could operate on a commercial basis.
In the midst of a 90-day test in late 1999, an explosion in the coal pulverization area knocked the plant off-line for 36 hours. No one was injured in the blast.
The consultant found that, while the power plant performed in “accordance with design specifications and tolerances” during the test completed Nov. 15, 1999, that level of productivity came as a result of burning a higher grade of coal than originally anticipated.
The consultant also noted the presence of 17 contractors hired by AIDEA had “significantly” reduced downtime when equipment problems arose during the three-month test period.
Based on that evaluation, Kelly terminated the power sales agreement with AIDEA and laid off his staff at the Healy Clean Coal Project. Retrofit considered for idled plant Because the experimental technology cost more to produce electricity, Golden Valley refused to take over operations of the plant. The electric utility has lobbied for a retrofit, which would replace the experimental technology with conventional coal burning equipment.
“AIDEA has a huge investment … they’re loosing their shorts on this thing,” said Lamal, at Golden Valley. “They’ve got to get it operating to start paying off their bonds.”
U.S. Sen. Frank Murkowski included an amendment in the Senate’s energy bill that would allow a $125 million loan to AIDEA for the retrofit. That bill is still pending.
“We are very appreciative of Sen. Murkowski’s efforts. That gives us more options,” Kenney said.
She said that AIDEA is considering a less costly retrofit. “We would keep the basic technology in place … but work on solving some of the problems that did show up in the 90-day test,” Kenney said. “It would be much less than the $125 million full retrofit, where we would rip out everything there and start over.”
The partial retrofit doesn’t interest Golden Valley, Lamal said.
“We do not want to operate the existing technology,” she said. “For the same reason we did not want to after 90-day test. It’s not safe, economical or reliable.”
In the meantime, Golden Valley is pursuing a low interest loan for a full plant retrofit under the Rural Utility System, part of the U.S. Department of Agriculture. “We use RUS for funding for a lot of our projects,” Lamal said. GVEA other scenarios To meet the growing need for electricity in Interior Alaska, Golden Valley is moving forward with other options for new sources of power, Lamal said.
“We’ll be making a business decision when the engineering numbers come in — what we believe to be the best option for us,” she said. “September is the target we’re currently heading at.”
On the forefront is a heat recovery steam generator at the utility’s North Pole plant, which adjoins the Williams refinery just south of the downtown district.
The recovery unit being considered will take heat generated by the oil-fired turbine and turn it into steam, generating an additional 30 megawatts of power for the Interior grid.
“It makes the unit very efficient,” Lamal said. “We’re pretty definite we’ll be moving forward with that project.”
No dollar estimate for the heat recovery unit will be available, she said, until Golden Valley goes out for engineering bids.
“We want to have added generation by January 2005, because that’s when we will need additional power,” Lamal said. “We do not believe the Healy Clean Coal Project will be operational by then.”
Should AIDEA come up with funds for a retrofit, Golden Valley would be interested in renegotiating a power purchase agreement, Lamal said.
“There will always be a place for Healy Clean Coal Project in our power generation mix.”
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