The Grand Haven utility made the case for transitioning away from the coal-burning Sims plant with a new plan to purchase the majority of power off the grid.
Four options were put on the table by independent engineering firm Burns & McDonnell during five forums throughout the week.
Path 1: Continue operating the Sims coal-burning plant on Harbor Island. This option is the costliest path and would require a system overhaul costing $35 million.
Path 2: Retire the Sims plant and replace it with a 4-by-9 megawatt (36 MW total) reciprocating engine.
Path 3: Retire Sims and replace it with a 6-by-9 MW (56 MW total) reciprocating engine.
Path 4: Retire Sims and replace it with market capacity, purchasing all power off the grid with no local production.
The BLP staff and Burns & McDonnell (B&M) agreed that Path 2 is the best option, considering the Grand Haven City Council and customers’ desire to produce some local power.
While relying entirely on purchases off the grid is the cheapest option, B&M explained, that cheapest option isn’t always the best. Building a smaller, gas-fired engine would enhance flexibility and allow for future expansions, they argued.
BLP General Manager Dave Walters noted that the majority of municipal energy providers in Michigan don’t produce their own power.
There are two types of engines that could be considered: an aeroderivative engine, which is similar to a jet engine, or R.I.C.E. engines, which operate like an automotive engine. Both are quick-starting options and can be activated with less preparation than is required to run the Sims plant.
The energy plan will not focus on the Grand Haven downtown snowmelt system, according to BLP officials, but providing snowmelt will remain a priority for the utility. This could entail a natural gas-fired heat generator and electrical pumps.
Energy and capacity
As a municipal utility, the BLP is required to provide both capacity and energy.
Capacity is determined by the units the BLP builds, contracts and demand-side management. Under Path 2, BLP would maintain about half of its generating capacity requirements locally, but when it’s more economical to purchase energy from elsewhere, the local plant will not run and power will be purchased.
Electric energy comes from the units the utility builds, contracts, net metering, conservation and purchases through Midcontinent Independent System Operator (MISO) contracts.
Renewable sources cannot provide enough capacity alone by North American Electric Reliability Corp. (NERC) standards. To meet demands for capacity and energy, renewables will only be part of the equation to help reach 7.8 percent excess of demand.
Diversifying the BLP’s energy portfolio will ensure requirements are met on both fronts, according to Walters, and local energy will help maintain requirements for capacity and energy.
Reliability and rates
The likelihood of outages is not impacted by purchasing power off the grid, Walters said. Outages occur on the distribution side, he said, not on the transmission side.
The Network Integrated Transmission Service (NITS) is 99.9 percent reliable, he said, while outages usually occur when weather events impact power lines, for which restoring duties lie with the BLP.
BLP Power Supply Manager Erik Booth said the utility aims to keep rates flat for customers, after the concern was raised by representatives of Shape Corp. at a business forum on Wednesday.
Three years ago, Walters said, the BLP’s rates were the highest in the Lower Peninsula. While the average rate has decreased 6 percent over the past two years, he said, Consumers Energy rates are increasing. The BLP is aiming to get rates as low as the municipal average, Walters said.
The maintenance of Sims would require an immediate rate increase of 20 percent, Walters said, and the plant is currently draining funds for other projects.
Staffing and Harbor Island
While the Sims plant has staffed 39 employees, a new power facility would require 13-15 employees. Booth said staffing has been reduced with no terminations, and the smaller staff will save the utility $2.7 million on labor expenses annually.
BLP officials said the most-likely location for a new plant would be the current location of the Sims plant on Harbor Island. A gas-fired plant would require a smaller footprint, allowing the utility to potentially reduce its footprint. Other energy sources such as a community solar garden could also be considered.
Due to environmental contamination at the site, full remediation to a natural site would not be an easy process, Booth said. Pilings and other resources already in place at Harbor Island could be used to support a new facility.
Ponds at the site used to store the byproduct coal ash will be remediated during the transition away from coal.
Burns & McDonnell presented its initial findings to the City Council on Thursday. The council intends to vote on the closure of the Sims plant at its next meeting.
The final report by B&M is expected to be completed in December, with the addition of public input.