- Oklahoma Gas & Electric (OG&E) will not extend a five-year power purchase agreement with a coal plant in the state, potentially causing the facility to close down as soon as this year, the utility confirmed to Utility Dive.
- AES Shady Point has been operating since the early 1990s but OG&E officials informed the plant last year of a possible shutdown, before reaching an agreement to continue operations through the end of this year.
- Shady Point's two coal units can produce a combined 350 MW. To replace the power, OG&E will seek 400 MW in a request for proposals (RFP) later this year. The AES coal plant intends to submit a proposal, signaling plant operators are unwilling to throw in the towel.
The financial impacts of coal plant closures on surrounding communities are a major issue, which President Donald Trump campaigned on. His administration is continuing to search for ways to keep them operating, along with nuclear plants, despite the challenging financials.
Closing down the AES Shady Point plant will impact about 100 jobs at the facility and up to 1,200 more in the related economy. But while OG&E officials are sympathetic, they say it just doesn't make financial sense.
"We are fully aware of the potential impact this decision will have on Poteau and the surrounding community," OG&E spokesman Brian Alford told The Oklahoman. However, he said the utility has not "received an offer connected to it that would be in the best interest of OG&E's customers."
"Outside of winning the OG&E RFP, it will be difficult for AES Shady Point as an independent power producer to compete in the SPP Market, and would likely face closing the plant on January 15, 2019," AES Shady Point Vice President Lundy Kiger told 5NEWS in a statement.
The company will continue to search for options, Kiger said.
The utility is "not putting any parameters around" its RFP and is "looking forward to seeing what is in the market," Alford told Utility Dive.
However, "our [integrated resource plan] does indicate a need for generation," Alford added. "We will need to replace the AES capacity, and thus the need for the RFP."
While the replacement power will most certainly be cleaner than the existing coal facility, that doesn't mean it will be renewable power.
"In this specific instance it is not clear that renewables are driving the decision," said Todd Foley, senior vice president of policy and government affairs for American Council on Renewable Energy.
"The trend we're seeing in the power sector is the retirement of aging coal and nuclear plants," Foley told Utility Dive. "And that trend is accelerating, largely due to cost reductions in renewables and natural gas, and demand by corporations, consumers and even utilities for cheaper sources of power, especially those with environmental benefits."
As utilities seek cheaper and cleaner fuel mixes, more coal and nuclear plants may be in danger of losing the support that have kept them afloat. Last year, four western utilities decided to shutter the coal-fired Navajo Generating Station in Arizona, by 2019. The closure could mean devastating revenue loss for Native American tribes in the area. The Department of Interior, part owner in the plant, has been trying to keep the plant running by encouraging Central Arizona Water Conservation District to continue purchasing the plant's power rather than move to renewable energy.