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Coal plant players face off at energy conference Healy Clean Coal Project remains shuttered as developer clashes with utility about needed retrofit, power production costs of the experimental plant Patricia Jones PNA Contributing Writer
The major players involved in development of a $300 million experimental clean coal power plant located in Healy debated but could not agree on the future of that energy project.
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, safe and cost-effective basis.
“It would be unfair for Golden Valley to accept responsibility of the plant at this time,” said Dave Gardner, vice president of member and employee services at GVEA. “That would put the burden of responsibility on our ratepayers.”
AIDEA and GVEA both agree that some retrofit of the plant is needed, but the two parties remain far apart in their positions about what exactly should be done, and where the funds will come from to pay for the plant improvements.
The discussion came during a face-to-face debate held in Fairbanks, part of a remote energy conference held in mid-September.
Ongoing plant costs despite shutdown The bulk of funding for the original Healy Clean Coal plant design and construction came as a $117 million grant from the U.S. Department of Energy. The Alaska Legislature contributed about $25 million, with nearly all of the remaining amount coming from AIDEA bonds.
AIDEA is currently incurring about $9 million a year in costs for the shuttered plant, according to Dennis McCornhan, former AIDEA deputy director and the agency’s project manager for the Healy plant.
That includes the annual debt payments on about $80 million in bonds sold to help finance the project, and about $3 million a year to keep the plant in standby mode, he said.
“If AIDEA adds another $10 million in debt, there’s no guarantee. Golden Valley might not be willing to receive the plant,” he said. “We are paying old debt and then we would have new debt.
“We might do the retrofit and if it doesn’t work the way they want, they might give it back to us,” he added.
Full versus partial retrofit discussed GVEA’s Gardner said the utility wants a full retrofit of the experimental technology incorporated in the coal fired plant. Specifically, the experimental nitrous oxide emissions system should be replaced with proven technology similar to that installed at GVEA’s existing plant, also located at Healy.
“That is the only long-term viable solution,” he said. “Anything else would be a short term Band-Aid fix.”
He said GVEA is working with Alaska’s congressional delegation to “find funding to make the retrofit possible.”
U.S. Sen. Frank Murkowski included an amendment in the pending Senate energy bill that would allow a $125 million loan to AIDEA for the retrofit.
That loan would add to the power plant’s substantial debt load, McCronhan pointed out.
AIDEA is considering, in addition to the full retrofit, several other options.
One would include a limited retrofit, costing $15-$20 million, and would fix some of the plant’s operating problems while retaining the existing emissions equipment. That would allow the plant to operate under its existing emissions permits, he pointed out.
“One single thing that is bad on the project is the coal feed system,” he said. “The problem is known. How to fix it is not.”
AIDEA is also pursuing additional DOE grants of about $30 million, which would be used to help prove up the experimental technology, McCronhan said.
Final options include selling the plant, or decommissioning the equipment and salvaging what remains from the facility.
Power production costs crux of conflict The cost of producing power remains the main sticking point between GVEA and AIDEA.
GVEA’s Gardner said the plant would be economically viable if it produced power with a 3.4 cents per kilowatt cost. “Now it is well above it,” he said.
That power cost desired by GVEA is based on what the utility provider can pay for electricity purchased on the intertie from the Beluga gas-fired plant operated by Chugach Electric Association under long-term contracts, Gardner said.
But McCronhan said that power purchased is excess electricity, and it is not as reliable as operating a power plant in Healy. “Intertie power from Chugach can be cut off anytime,” he said.
The Healy Clean Coal Plant does operate at cost higher than 3.4 cents per kilowatt, McCronhan added. During a 90-day test conducted in 1999, the estimated per kilowatt cost was 6.5 cents.
“After the additional work, we believe it can be 4 cents,” McCronhan said. “But the power produced will provide energy at all times.”
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