Issues

Coal: Baseload Generation

Baseload Generation: Coal vs. Wind

The baseload on an electric grid is the minimum level of demand on an electrical grid over a period of time, essentially the amount of electricity used by consumers every day. When describing baseload generation, the industry generally refers to power plants capable of delivering power 24 hours a day, seven days a week. In North Dakota that power is provided by seven generating stations that burn lignite coal. The Garrison Dam also provides a minimum level of baseload generation, as do nuclear power plants in Minnesota and other locations in the Midwest. 

Historically, most or all of baseload demand was met with baseload power plants, but with increasing levels of intermittent renewables like wind and solar, maintaining stability on the electric grid has become more challenging. The addition of more intermittent sources has caused concern about the reliability of the grid during periods of peak power demand on hot summer days or brutally cold winter nights. Nowhere has this risk been more obvious than California, which experienced rolling blackouts in the summer of 2020 in the midst of scorching hot weather and numerous wildfires, and in Texas, which experienced wide scale blackouts after ice storms associated with a bitter Arctic cold wave shut down much of the state's wind generation in February of this year. Several factors contributed to the power shortages, including heavy demand, unplanned outages at some natural gas power plants and limited options for importing power from neighboring states, but the predominant reason was the states' over-reliance on solar and wind generation.

Similar concerns are being raised in North Dakota as more and more wind generation is constructed in the state. Because wind power is “free” once plants are constructed, operators can bid their electricity into regional power markets at very low prices, even negative at times thanks to federal tax subsidies provided to wind power companies. The result is that wind generation is always at the front of the line when power is dispatched by regional transmission organizations, meaning coal-fired plants are not able to operate at maximum efficiency because the power they produce is not always needed. This scenario has created financial difficulty for plant owners because they are not able to sell as much power, and must reduce profit margins in order to compete with the subsidized renewable generation. 

This market distortion prompted Great River Energy (GRE), an electric cooperative headquartered in Maple Grove, Minnesota, to announce plans to shut down Coal Creek Station, the largest coal-fired power plant in North Dakota. The plant, located midway between Underwood and Washburn, features two units with a total generation capacity of more than 1,100 megawatts. The electricity is delivered to GRE member cooperatives over a high voltage direct current (DC) transmission line that runs 436 miles to Minnesota. The plant’s lignite supply comes from the adjacent Falkirk Coal Mine operated by North American Coal Corporation. Collectively, the mine and plant provide about 700 jobs to the local economy. In announcing plans to shut down the plant at the end of 2022, GRE said it would replace the lost generation with 800 megawatts of wind generation.

Recently it was announced that Rainbow Energy Center has reached an agreement to purchase Coal Creek from Great River Energy and plans to run the plant using current employees it will hire. An affiliate company, Nexus Line, LLC, will purchase the high voltage direct current transmission line that runs more than 400 miles from the plant to the Twin Cities area. The purchase of the plant and DC line are expected to close later this year. 

Other coal plant operators have publicly indicated their facilities are also operating under financial strain. The response of local governments in the coal-producing counties has further heightened the tension between the coal industry and wind farm operators. The McLean County Commission enacted zoning changes that require a one-mile setback from the Missouri River, Lake Sakakawea and Lake Audubon for electric transmission lines that would deliver power from wind farms to the DC line. The Mercer County Commission approved a resolution placing a two-year moratorium on new wind farm development, pending additional details about its impact to the coal economy which generates significant tax revenue to support the county, cities and schools. Mercer County imposed the moratorium in response to plans by Alberta-based Capitol Power to develop the Garrison Butte wind farm north of Hazen near the shore of Lake Sakakawea. The company indicated it had 100% of long-term land leases executed for the 151.8 megawatt wind farm, which would be spread over a 22,000 acre site.

Actions of the two counties have produced a lot of conversation about the respective benefits of coal vs. wind. Threats to reliability due to the intermittent nature of wind, and limits to available transmission capacity are key parts of the discussion. Coal-fired generation once dominated the energy mix in the Northern Plains and throughout the Midwest, but now represents only about half the available generating capacity. Political pressure and competition from cheap natural gas and wind generation will likely force additional coal plants to shut down. As more and more coal units are forced to shut down, grid reliability becomes a concern because a larger percentage of its generating capacity is intermittent. 

John Weeda, director of the ND Transmission Authority, cautioned state legislators to be wary of becoming dependent on renewable generation to power the grid. "Major change is coming, but I think we have to be careful about calling zero-cost energy going into the market our lowest-cost option, because there are other costs that we're going to start experiencing," Weeda said. "Pretty soon you're up into that 30-some percent range (of wind) where complexity starts to hit, and we're on the leading edge in North Dakota with all the renewable generation we have."

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Issue Updates

10/29/21 - "All of the Above Doesn't Work Anymore"
ND Public Service Commissioner Randy Christmann said he was once a believer in the all-of-the-above approach to electric power generation, but he told a crowd attending a meeting in Beulah this week that "all of the above doesn't work anymore."

10/22/21 - Coal Counties to Meet Oct. 27 in Beulah
Members of the Coal Conversion Counties Association will hear from a dozen speakers at their annual meeting Wednesday evening, October 27, at the Beulah Civic Center.

10/22/21 - EIA: Coal-Fired Generation on the Rise
The US Energy Information Administration expects 22 percent more U.S. coal-fired generation in 2021 than in 2020, according to its latest Short-Term Energy Outlook.

10/8/21 - FERC Okays Vote for Coal-Supply Chain
The Federal Energy Regulatory Commission approved a proposal this week from the Midcontinent Independent System Operator (MISO) to give voting rights to the recently-created coal industry affiliate on MISO’s Advisory Committee.

9/10/21 - Minnesota Stalls Coal Creek Deal: Regulators Want More Info about Buyer
The Minnesota Public Utilities Commission delayed approving the sale of Great River Energy's 436-mile direct current transmission line this week, citing the need for additional information about the company that plans to buy the DC line.

8/27/21 - Weeda: MISO Worried About Reliability: Coal Creek Sale Produced a "Sigh of Relief"
The operators of the regional electric grid that supplies electricity to much of North Dakota are concerned about the rapid pace of coal plant retirements and the threat it could pose to grid reliability.

8/6/21 - One Dissenting Vote on Coal Creek Sale: Minnesota Co-op Called CCUS "Speculative"
The electric cooperative members of Great River Energy voted overwhelming last week to approve GRE's sale of Coal Creek Station to Rainbow Energy Marketing, but the vote was not unanimous.

7/30/21 - GRE Members Okay Coal Creek Sale: Cooperative to Close Deal Late This Year
Great River Energy's member cooperatives have voted to approve the sale of Coal Creek Station and its associated direct current transmission line to Rainbow Energy Center LLC.

7/9/21 - Coal Creek Purchase Saves Jobs, State Leaders Are "Thrilled" With Deal
State legislators and other elected officials are singing the praises of the negotiations that led to the announcement last week by Rainbow Energy Center that it intends to purchase and continue to operate Coal Creek Station.

7/2/21 - Rainbow Energy to Buy Coal Creek, New Plant Owner To Pursue CO2 Capture
Coal Creek Station will be purchased by Rainbow Energy Center, which will continue to operate the 1,151-megawatt power plant. Rainbow has reached an agreement to purchase Coal Creek from Great River Energy and plans to run the plant using current employees it will hire. An affiliate company, Nexus Line, LLC, will purchase the high voltage direct current transmission line that runs more than 400 miles from the plant to the Twin Cities area.

6/11/21 - Enviro Actions Misguided: Opposition to Coal Creek Sale Pointless
Efforts by the Minnesota Chapter of the Sierra Club to block the impending sale of Coal Creek Station make no sense, and Minnesota policy makers should understand that. That's the view of McLean County State's Attorney Ladd Erickson.

5/28/21 - Fedorchak: Speak Up on Reliability
Grid operators, industry leaders and consumers need to be willing to speak up about growing concerns about electric reliability, because the problem will only get worse if they don't. That was the message from Julie Fedorchak, who chairs the ND PSC, in remarks this week to a Lignite Energy Council stakeholder meeting.

5/28/21 - States Resist Anti-Coal Policy: Bank Investments Could Be Pulled
North Dakota joined 14 other states in sending a strongly-worded letter this week to the Biden administration, chastising Climate Envoy John Kerry and others for privately pressuring U.S. banks and financial institutions to refuse to lend to or invest in coal, oil and natural gas companies.

5/21/21 - Grid Operators Urged to Speak Up: PSC Says Reliability Concerns Must Be Aired
Following a legislative session in which ND utilities resisted bills aimed at holding them accountable for keeping the lights on, the Public Service Commission this week pressed regional transmission operators to speak up about growing concerns about grid reliability.

4/23/21 - Coal Tax Reduction Signed into Law: Burgum – Let’s Make ND Carbon Neutral
Burgum signed legislation that provides an 85% reduction in the coal severance tax for five years touting the opportunity presented by the potential development of Project Tundra, which would capture carbon dioxide from Milton R. Young Station, and sequester it underground.

4/16/21 - Clean Sustainable Energy Fund Ok’d: House Also Approves Coal Tax Reduction
Representatives passed a bill that establishes a Clean Sustainable Energy Authority with a vote of 76-12, sending the measure to the Governor's desk. By an even wider margin, House members approved a measure that will reduce the coal conversion tax by 85 percent for the next five years.

4/9/21 - Committee Okays Coal Tax Holiday: Reduction Give Industry Time to Adjust
The Senate Appropriations Committee has approved a bill providing a five-year reduction in the coal conversion tax to give the state's lignite industry time to adapt to changing market conditions. The legislation would reduce by 85% the amount of conversion tax paid by power plant operators.

4/2/21 - Committee Okays Reliability Measure: “Qualitative Benefits” of Power Considered
SB 2313 as amended in committee will allow the ND PSC to examine the "qualitative benefits" of generation assets owned by investor-owned utilities. Rep. Bosch, who chaired a subcommittee appointed to work out disagreement between the PSC and utilities, said the new language allows the commission to assign a higher value to baseload plants that provide 24/7 power.

4/2/21 - Coal Plant Shutdown Study Proposed: Bonding, Reclamation Costs to be Examined
What began its legislative life as a bill that would have required the Public Service Commission to conduct hearings in affected counties if a coal plant shutdown was proposed has been amended to instead study the ramifications of such a shutdown.

3/26/21 - Coal Creek Sales Talks Down to One: GRE in Exclusive Negotiations to Sell Plant
Great River Energy is now in exclusive negotiations with a single buyer to sell Coal Creek Station and GRE’s high-voltage, direct current transmission system. Last year GRE announced plans to retire Coal Creek Station, a 1,151-megawatt coal-fired power plant near Underwood in the second half of 2022.

3/26/21 - Lewis & Clark Plant Shutting Down: Coal Plant Generated Power Since 1958
Montana-Dakota Utilities will shut down the Lewis & Clark Station, a 44-megawatt lignite-fired plant that has been generating electricity since 1958. The company also plans to shut down the two coal-fired units of Heskett Station in Mandan next year.

3/19/21 - Leaders Discuss Coal Creek Future: “Bullishly Optimistic” About a Deal
Congressman Kelly Armstrong and state policy leaders participated in a wide-ranging discussion of energy issues. The roundtable touched on several topics impacting ND’s energy future, but the one that drew the most discussion was the future of Coal Creek Station.

3/5/21 - House Okays Coal Insurance Study: Lignite Industry Coping with ESG "Attack"
North Dakota legislators have approved a bill directing the state Insurance Department to study the cause of recent sharp increases in the cost of insurance to the lignite industry and any possible solutions to reduce the cost.

2/26/21 - Electric Reliability Measures Advance: Report to Study Grid Generation Resources
Separate measures aimed at addressing growing concerns about grid reliability and the future operation of the state's lignite-fired coal plants were approved this week by the North Dakota Senate.

2/12/21 - Fear About Possible Leland Olds Closure: Basin Electric Clarifies Employee Email
The email sent by the plant manager informed employees that "senior management has decided to set the end of life on LOS Unit 1 at the end of 2025 and the end of life for LOS Unit 2 at the end of 2030."

2/12/21 - Legislation to Support Coal Withdrawn: Wind Tax Legislation Off the Table
Bills aimed at supporting ND's lignite industry and discouraging unreasonable federal greenhouse gas regulations were withdrawn this week by their sponsors. Perceived concerns the wind tax legislation could adversely affect negotiations for the sale of Coal Creek Station was cited as reason.

2/5/21 - Bill Responds to ESG Pressures: Senate Approves Coal Insurance Study
A bill providing for an interim study of the availability, cost, and risks associated with insurance coverage in the lignite coal industry was approved by the Senate this week.

2/5/21 - Committee Okays $30M Coal Tax Holiday
The House Finance and Taxation Committee has given its blessing to a partial temporary reduction of the state's coal conversion tax, providing financial relief to the coal industry struggling to cope with an electricity market distorted by warped federal energy policy.

2/5/21 - Bill Requires Hearing on Plant Closing
If a utility is planning to shut down a coal-fired power plant, citizens of the affected communities should have a right to know and be provided an opportunity to comment on the decision. That's the gist of HB 1455, which was heard this week by the House Energy and Natural Resources Committee.

1/29/21 - LEC Hopes Biden Listens to Coal: Seek Support for Technology Research
Lignite Energy Council President Jason Bohrer is optimistic Biden’s energy and environmental officials will consider current efforts to capture carbon dioxide emissions from coal-fired power plants.

1/8/21 - Gov Promotes Growth in State-of-the-State; Coal Support Emphasized
Burgum said his administration is working hard to find a market-based economic path forward for Coal Creek Station, the planned closing of which was announced last May. He cited Lt. Gov. Sanford’s "tenacious and effective leadership" in pursuit of a new owner for the 1,100 megawatt facility. Burgum said research into capturing carbon dioxide emissions offers great promise in the state.

1/1/21 - Legislative Leaders Support Coal; Saving Coal Creek a Top Priority
The majority leaders of the North Dakota House and Senate both have coal near the top of their list of priorities heading into the 2021 Legislature.

12/18/20 - Lignite Council Offers New Teaching Tool
The COVID-19 pandemic forced the Lignite Energy Council to cancel its annual Teacher's Seminar this past year, but that didn't stop the LEC from expanding its efforts to teach adults and kids about the importance of the coal industry.

12/11/20 - Lignite Council Seeks Coal Funding Options
North Dakota needs to begin exploring ways to finance "large projects" that could potentially transform the lignite industry and the state's economy.

12/11/20 - Bohrer: MISO Taking a Look at Grid Resiliency
The resiliency provided by baseload coal-fired generation is still undervalued in electric markets, but the president of the Lignite Energy Council believes that may be about to change.

11/27/20 - NDIC: Address the Carbon Image Problem – Commission Approved Lignite Education Plan
The North Dakota Industrial Commission approved a grant request this week that will extend the Lignite Energy Council's education program another two years, but also urged the council to consider other avenues to influence young people's perception of the coal industry.

Resources and References


Media Coverage

Coal Creek Station finds new owner in Bismarck company
6/30/21 -
The West will play vital role in achieving state's carbon capture goals
6/23/21 -
Industry looking to lay framework for Burgum’s carbon neutral goal
5/20/21 -
Feds call on lignite to answer U.S. shortage of critical minerals
5/3/21 -
North Dakota lawmakers throw lifelines to the coal industry
5/2/21 -
Wyoming backs coal with $1.2 million threat to sue other states
5/2/21 -
Numerous lignite coal and oil bills clear 2021 legislature
5/1/21 -
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