North Dakota coal plant delays opening

December 01, 2011

A new coal power plant being constructed by a G&T cooperative was scheduled to begin operations in 2012. But thanks to lower-than-expected market prices for electricity and the cancellation of a facility that was expected to purchase the plant’s steam, that opening will be delayed indefinitely.

Great River Energy, which serves co-ops in Minnesota and Wisconsin, announced that its crews will continue to prepare the $437 million Spiritwood Station for start-up, but it will not generate power commercially until 2013 at the earliest. Located east of Jamestown, North Dakota, the plant was expected to burn lignite coal from a mine in the western part of that state. Spiritwood has already been fired with natural gas so that the plant could be synchronized with the power grid, and some coal will be burned to fine-tune its systems.

An announcement from the G&T described the move as a change in an “operational plan” and noted that it was due to “low prices in the energy market and reduced demand for electricity.” If a newly proposed biorefinery is built in the same community, Great River might bring the plant online sooner. Even though the plant is not expected to operate during 2012, Great River Energy still plans to spend $30 million in maintenance, interest, and depreciation costs.

Spiritwood was designed to be a highly advanced coal power plant with state-of-the-art environmental controls. The G&T chose the location and fuel with the support of North Dakota’s state government, anticipating that a planned ethanol plant would purchase the station’s steam. Unfortunately, the ethanol plant became a casualty of the nation’s economy shortly after construction of Spritwood began. With the loss of that major customer and thesoft market for electricity, “we could run it and lose money half the time,” a Great River Energy official told a local newspaper.

The decision to shut the plant down before it opened is a sobering reminder that even though demand for electricity is expected to grow over the next few years, investing in new power plants still carries substantial risks.  “It is probably the only coal plant built for base load that was completed and then mothballed,” observed Electric Power Generation Association President Douglas Biden.