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TMCNet:  Ames looks to its energy future with power plant conversion plans [Ames Tribune, Iowa]

[December 15, 2013]

Ames looks to its energy future with power plant conversion plans [Ames Tribune, Iowa]

(Ames Tribune (IA) Via Acquire Media NewsEdge) Dec. 15--Two and a half years ago, Ames was forced to confront a multimillion-dollar reality brought on by fossil fuels and the toxic emissions entering the atmosphere from the city's century-old power plant.


A new rule proposed by the Environmental Protection Agency (EPA) to more stringently regulate mercury and other toxins would require the city to make significant upgrades to its two coal-fired power plant units, at a cost later estimated at $71 million, or begin using natural gas, a cleaner and more efficient fossil fuel that emits virtually no mercury and far less climate-warming carbon dioxide than coal.

Converting the units could cost up to $53 million but, according to the EPA, play a role in cleaning the nation's air in an effort to save up to 11,000 people from premature death and up to $90 billion in health benefits each year.

In February 2012, the EPA finalized the rule, slapping Ames with an April 2016 deadline to upgrade, convert or shut down the units.

Last March, the Kansas-based engineering and consulting company Black &Veatch presented a study to the City Council that estimated the cost of converting the two units to natural gas at $36 million.

At a special joint meeting with the city's Electric Utility Operations Review and Advisory Board in November, the council voted 5-0 to approve the plan. Matthew Goodman, at-large councilman, arrived after the vote but later voiced his approval.

Next, the city will search for an engineering firm to design the retrofitting of the two units to burn natural gas.

The city plans to get that gas from a pipeline located north of Story City operated by Northern Natural Gas, of Omaha, Neb., a transport and storage company for local utilities.

To do that, Ames could either construct a connecting pipeline for an estimated $17 million or enter into a multi-year contract with Alliant Energy, a utility company based in the Midwest that the city is currently negotiating with.

"We're studying both options to see what's in the best interest of our customers," said Donald Kom, Ames' electric services director, who suggested the decision would come down to determining the cheaper alternative.

Either way, Alliant is already working on plans to connect to the pipeline.

"We're designing a project to handle anticipated growth throughout the Ames, Nevada (and) Boone area, which could include providing gas to (the Ames power plant)," said Heather Holmes, an Alliant spokeswoman.

Northern Natural Gas has contracted with Interstate Power and Light, a subsidiary of Alliant, to build a town border station -- a site along the pipeline where gas ownership changes hands to allow for local distribution.

Alliant is awaiting approval for the project from the Iowa Utilities Board and is in the final stages of designing a pipeline route but is uncertain about the project's time frame, according to Holmes.

Kom expects Alliant would be able to supply Ames with gas within the next two years, well ahead of the plant's April 2016 conversion deadline.

A departure from tradition In 1896, Ames residents voted 298-40 in favor of a $12,000 bond to establish a city-owned power plant.

By the turn of the century, the plant served 175 customers. Now it serves around 28,000.

Throughout those nearly 120 years, one thing has remained constant: The plant has always used coal as its primary fuel.

But that's all changing now, in Ames and cities confronted with similar dilemmas around the United States. Strict EPA standards proposed in September have coal producers worried that building new coal-fired plants will become cost-prohibitive, while new regulations for existing plants could lead to an increasing number of cities abandoning coal for natural gas, as Ames is doing.

In a fight for survival, the once-dominant coal industry has aggressively lobbied against the EPA regulations. In coal-rich states such as Wyoming, West Virginia and Kentucky, many blue-collar workers see coal not as a climate antagonist but as a guarantor of their livelihoods.

Kom doesn't expect that battle to play out in Ames.

"Our use of coal isn't so great that I think it would affect jobs out in Wyoming, nor do I think that our gas purchases would affect jobs at either Alliant or Northern Natural Gas," he said.

Ames buys its coal from Peabody Energy's North Antelope Rochelle Mine in Wyoming, the country's top coal-producing state, but the city's contract with Peabody expires at the end of 2015.

Transitioning to natural gas could negatively affect a half-dozen or so employees at the power plant, according to Kom, including coal mill maintenance workers and four coal handlers.

"We'd do what we could to retrain them and use them elsewhere, either in the plant or in the city," he said.

Currently, coal from a 40,000-ton pile that sits outside the plant is crushed into a fine powder and blown into burners, where it combusts. That heats water in boilers, which creates steam that is pushed through a turbine and turns a generator that produces electricity.

Those burners will have to be removed and replaced with gas-fired burners, a relatively difficult construction feat because of new equipment such as gas piping that will have to be built around existing structures inside the plant.

A transition fuel A popular energy industry talking point, echoed by President Obama during his State of the Union address in 2012, is that thanks to recent advancements in extraction techniques, the United States can produce enough natural gas to last 100 years.

It's an optimistic position.

"When you hear reports that we have 100 years' worth of gas reserves, that's assuming we use it the same way we have over the last several years," said Robert Brown, director of Iowa State University's Bioeconomy Institute.

Traditionally, natural gas has been used primarily in fertilizer production and to heat homes and businesses. From 1978 to 1988, Congress even banned natural gas power plants over concerns about fuel shortages.

But technological advances over the past decade in hydraulic fracturing, or fracking -- drilling into the ground and using a pressurized mixture of water, sand and chemicals to create fissures that allow oil and gas to escape -- have changed all that, allowing energy producers to tap into previously inaccessible, energy-rich shales.

That has led to a natural gas boom, causing prices to plummet. Gas is being used again in power plants. More than 100,000 natural-gas-fueled cars occupy U.S. roads. Energy companies plan to export natural gas overseas to areas such as Asia, where it fetches prices similar to 2008 prices in the United States, which were triple what they are today.

At some point, Brown said, "we're back to having natural gas supplies that are again measured in an individual's lifetime rather than several generations." Mike Loeffler, a spokesman for Northern Natural Gas, said the gas in the company's pipeline system comes mostly from longstanding sources where production companies still use traditional methods. But that doesn't make it immune from price fluctuations, which would occur even in the absence of the fracking boom because, for example, of the increased costs of heating homes in cold winter months.

In late October, the Ames electric utility advisory board held two public input sessions about the potential power plant conversion. Most residents spoke in support of a switch to natural gas, but some expressed concerns about the uncertainty of the fuel's price.

"It's not going to stay cheap forever," said Kay Wall, an Ames resident who attended one of the sessions. "If coal can be cleaned up ... I don't like to see us getting rid of it in favor of natural gas. But it's certainly important to have clean air." Using natural gas, the city expects utility rates to be slightly higher per kilowatt-hour between 2016 to 2020, but to even out after that to roughly what rates would have been if the city had continued to use coal. Those rates, and not property taxes, would help pay for the conversion.

"When we looked at the cost to stay on coal versus the cost to convert to natural gas, the costs were actually similar," Kom said. "Coal will produce cheaper energy, typically, but the conversion, capital-wise, would be cheaper to do." Environmental concerns Had the city chosen to stick with coal, which for the time being is more expensive than natural gas, the plant would have emitted significantly higher levels of mercury and sulfur dioxide even with the stricter regulations. Burning coal would create 83 percent more emissions of carbon dioxide and other greenhouse gases, according to the city's electric department, although the plant would appear virtually the same to passersby.

There are environmental concerns about natural gas, too, mostly over new fracking techniques that some fear could leak dangerous methane gas into the air and water. The natural gas industry has said the concerns are overblown.

In northeastern Iowa's Allamakee County, a heated battle has broken out between environmentalists and the industry over whether to allow the region's sand to be mined for use in fracking.

In Ames, a chart comparing the pros and cons of coal and natural gas that was presented to the City Council in October didn't address production techniques but referred to natural gas as an "intermediate solution." "We're making a major investment, so for us intermediate is 20-plus years," Kom said.

Last June, Obama unveiled his new climate-change policy at Georgetown University. He praised natural gas as a carbon-reducing, job-creating "transition fuel" that would provide businesses time to "develop and then deploy more of the technology required for the even cleaner energy economy of the future." A renewable future For environmentalists such as Erv Klaas, of Ames, a professor emeritus of animal ecology at Iowa State University and self-described "global warming alarmist," it's tough to find policy makers interested in acting as swiftly as he thinks is necessary for the future of the planet.

At the electric utility advisory board's public input sessions in October, Klaas, too, expressed support for the plant conversion. But he also stressed the importance of aggressively pursuing renewable alternatives at a local level, as did several other Ames residents.

Cheryl Binzen, an Ames resident who attended one of the sessions, said, "I would hope that this interim step doesn't delay consideration of how we can incorporate more renewable energies." Roughly 15 percent of Ames' energy use comes from a wind farm outside Zearing, according to Kom.

In January 2010, the city of Ames and ISU entered into a 20-year joint contract with NextEra Energy to purchase 24 percent of the electricity produced by the 100-turbine farm. The rest of the 150-megawatt farm's electricity is purchased by Google Energy, a subsidiary of the multinational software giant.

The power plant produces 50 percent of Ames' energy, and the remainder is purchased off the grid, Kom said.

Ames is also home to the Arnold O. Chantland Resource Recovery Plant. The plant was established in 1975 as the nation's first municipally operated waste-to-energy plant (today there are 86). It converts garbage to what is called refuse-derived fuel, or RDF, which supplements the coal burned in the power plant.

Because burning natural gas is a more refined process than burning coal, the city expects the amount of RDF the power plant will be able to burn after its conversion to decrease by 13 percent. That could mean more trash will be sent to the Boone County Landfill, which also collects waste from Story County.

The landfill has the capacity to continue accepting garbage until about 2050, and for decades beyond that if the use of additional available land is permitted, according to Scott Smith, the landfill director. It also boasts one of the highest waste diversion rates among Iowa landfills.

Gary Freel, the Resource Recovery Plant's supervisor, is exploring emerging technologies that could convert garbage to gas and increase the amount of RDF that could blend with the power plant's natural gas. He and Kom have also discussed demand-side management strategies -- outreach efforts, for example, to encourage residents to consume less and restaurants to compost more.

"I think the city has always had a better than average long-term view," Brown said. "That was evident years ago with its adoption of waste-to-energy." Klaas, who has spoken with Kom and other city leaders about considering more renewable energy technologies, including community solar arrays, is more pessimistic. He points to a recent decision by the council to not adopt a city sustainability plan as evidence that the city is falling behind others in Iowa, such as Dubuque, which developed a plan in 2006.

"Ames is not a leader, it's a follower," said Klaas, who believes the city should take a more holistic approach to energy conservation.

Eventually, Brown said, the decision to more fully embrace renewable energy in the United States may come down to simple economics, with a dwindling supply of natural gas causing prices to climb and consumers once again to seek a cheaper alternative.

"We go through these cycles of denying that we need to be taking a longer-term view of how we deal with energy," Brown said. "Natural gas is here and is a good interim solution, but we need to be thinking beyond natural gas." ___ (c)2013 the Ames Tribune, Iowa Visit the Ames Tribune, Iowa at www.amestrib.com Distributed by MCT Information Services

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